As the freelancing community in South Africa continues to grow, a lingering concern for many newcomers is how to manage freelance income and taxes in South Africa. While freelancing offers flexibility and autonomy, it also comes with managing your income and tax obligations.

Understanding how to manage your freelance earnings and taxes helps you comply with the law.

This article is a comprehensive guide to help you understand managing freelance income and taxes in South Africa.

Are freelancers required to pay taxes in South Africa?

Yes, if you are a freelancer in South Africa, you are obligated to pay taxes on your freelancing income. Freelancers are considered sole proprietors or self-employed individuals. This means you are responsible for declaring your income and paying taxes to the South African Revenue Service (SARS). Failing to do so can result in penalties and interest.

You are required to:

• Register as a taxpayer if your annual income exceeds the tax threshold.
• Submit an annual income tax return (ITR12).
• Pay provisional tax if your income is not subject to regular PAYE (Pay As You Earn) deductions.

How do you register as a provisional taxpayer?

Freelancers typically do not have employers deducting tax from their income. The SARS requires you to pay provisional tax twice a year (and possibly a third time, if necessary). To register as a provisional taxpayer and make these payments in:

• August (first provisional payment): This is usually based on your estimated annual taxable income.
• February (second provisional payment): This is usually the final tax due for that year and is based on any changes in your freelance earnings.
• September (optional third or “top-up” payment): This is a top-up payment if you previously underpaid your taxes or wish to pay more tax voluntarily.

Read also: The best digital nomad jobs to earn from anywhere in South Africa

How do you keep accurate records of your finances?

Effective record-keeping is essential for managing freelance income. Keep detailed records of:

• Invoices issued and payments received
• Business-related expenses (e.g. internet, equipment, software subscriptions, travel)
• Bank statements and receipts

These records are important for calculating your taxable income and for justifying deductions in case of a SARS audit. Using an automated invoicing tool like Grey’s can help you keep track of your income without stress.

Another suggestion is to have a separate bank account for your freelance earnings. This can help you track income and expenses more efficiently. It also makes it easier to set aside funds for tax payments and avoid mixing personal and business finances. You can open an account on a digital payment platform like Grey to receive money in USD, GBP and EUR from your international clients.

How do I know how much tax to pay as a freelancer in South Africa?

First, estimate your taxable freelancing income. This entails subtracting your allowable business expenses from your total earnings. Then, check how much you need to pay for that year on the SARS tax tables. Divide the tax into two. Pay the first half in August and the other half in February. If you made more money that year, pay a top-up in September.

Tips for managing income taxes as a freelancer in South Africa

Here are some ideas to help you simplify paying taxes in South Africa and maximise your income.

• Set aside money for taxes.

Unlike salary earners, you don’t have tax automatically deducted from your earnings. Earmark 25–30% of your income for tax purposes. This helps ensure you have enough funds when it’s time to pay your provisional or annual tax.

Read also: Navigating forex regulations as a freelancer in Africa

• Take advantage of allowable deductions.

You can reduce your taxable income by claiming business-related expenses. SARS allows deductions for:

• Office rent or a portion of your home if used as a home office
• Office equipment and supplies
• Business travel and communication expenses
• Professional fees and insurance

Ensure you keep supporting documentation for all claims. It is also important to consult a tax professional to be sure of what expenses are valid.

• File your tax returns early.

Ensure that your tax returns are submitted to SARS before the deadline each year. Late submissions can result in penalties and interest on outstanding taxes. SARS usually opens the annual filing season around July. They’ll announce deadlines through their website and social media accounts.

• Keep up with tax law changes.

Tax laws in South Africa can change from year to year. Stay informed through the official SARS website, financial news outlets, or a tax advisor to ensure your freelance tax strategy remains compliant and optimised.

Read also: How to handle foreign income taxes as a remote worker

Managing your freelancing income with Grey

Managing freelance income and taxes in South Africa requires discipline, organisation, and understanding the country’s tax regulations.

Grey helps freelancers streamline their finances by offering multi-currency accounts and an automated invoicing tool. This means you can receive money from your international clients in USD, GBP and EUR in one place and keep accurate records.

Get started on Grey today and download the app to manage freelance income and taxes in South Africa seamlessly.

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