The last week in February and the first week in March is an extremely stressful time of the year for most South Africans. Yes, starting with the President’s State of the Nation Address (SONA), closely followed by the finance minister’s budget speech, adds to the stress, but for most, their stress has less to do with politics and everything to do with taxes, financial year ends and price increases.
South Africa’s Fiscal Year End
Many companies choose to align their year-end with the government’s tax year. Why this period from 1 March to 28 February has been chosen in the first place is a combination of historical context and practicality with regard to collecting personal income tax.
Fun fact: The tax year is named by the calendar year in which it ends. For example, 1 March 2025 to 28 February 2026 is the 2026 tax year.
Any time a business is closing off its books for its 12-month business year, regardless of whether it aligns with the tax year or not, causes a lot of stress and risks many mistakes. Some issues include:
- Financial records are not maintained throughout the year
- Missing or misplaced documents, such as receipts and invoices.
- Incorrect entries due to human error.
- Time-consuming manual data entry.
- Ineffective communication between various parties.
- Insufficient knowledge regarding required documentation and processes.
Tips and Advice from Tax Experts
According to Rista-Mari Muller, Technical Accounting and Tax Manager at Outsourced CFO, the biggest mistakes that small business owners make when it comes to tax are a lack of planning. “The biggest mistake I see is that business owners don’t plan for taxes early enough. Tax becomes something they deal with when there’s a deadline looming, instead of something they manage throughout the year,” she shares. “When tax planning is reactive instead of proactive, it often leads to unnecessary stress, cash flow pressure, and sometimes penalties that could easily have been avoided.”
This is the reality that many businesses face: the tax burden increases due to poor planning and avoidable penalties. Yet, these can be prevented if managed effectively. “It really comes down to staying close to your numbers,” Muller explains. “Businesses should be reviewing their estimated tax position monthly, especially if profits are fluctuating.”
Instead of losing track of the actual cash flow in comparison to the projected numbers, businesses should make tax calculations a monthly exercise. “Tax shouldn’t be a once- or twice-a-year surprise. If you’re updating your forecasts regularly and setting aside money consistently, your tax bill becomes manageable and predictable.
“The key is to treat tax like any other monthly expense – because it is.”
New Tax Year, New Leaf
Muller notes that if you’re shocked by your tax, that’s usually the first red flag. This warning sign shows that your finances might not be as neat and tidy as you think. “Other warning signs include ongoing cash flow issues, not knowing exactly where your business stands financially, or scrambling for information close to deadlines,” she elaborates. “When your numbers are up to date and reviewed regularly, there shouldn’t be major surprises. If there are, it’s a sign that financial oversight needs attention.”
Now that businesses that had to submit their tax information at the end of February got a fright, it is not worth crying over spilt milk. Instead, breathe and ensure that the next year will be better.
“If you miss the deadline, don’t ignore it. Submit as soon as possible to limit penalties and interest. Then use it as a learning moment – put proper processes in place and start planning earlier for the next tax cycle.”
Aiming for next year, you have to ensure that, regardless of whether you end your business’s fiscal year in February or not, you have your provisional tax estimate in place.
“Before 28 February, the most important thing is to make sure your provisional tax estimate is as accurate as possible. That means updating your financials, reviewing your year-to-date performance, and adjusting your numbers if needed.”
Muller warns that if you encounter problems with your internal processes and record-keeping, you should do everything in your power to prevent those same mistakes from happening over and over.
“Start earlier,” she warns. “Every year, we see businesses leaving provisional tax planning too late. The earlier you engage with your numbers, the more options and control you have.
Good tax management isn’t about clever tricks; it’s about consistent planning and staying informed throughout the year.”
March Means Money Matters
Small business owners may have noted that the annual minimum wage increase also occurs in the same time frame – this makes sense if you think that personal tax is closely related to salaries and wages.
As of 1 March 2026, the minimum wage in South Africa is R 30,23, an almost 5% increase. The number isn’t pulled out of the air, but rather carefully calculated by the National Minimum Wage Commission, which is responsible for balancing worker protection with economic realities such as inflation, cost of living, unemployment and economic growth.
With small, medium, and micro enterprises (SMMEs) being particularly vulnerable to volatile inflation and slow economic growth, it is good to know that a formula that takes real-world circumstances into account is used.
“For small businesses operating on tight margins and labour-intensive operations, a proactive compliance check now can protect your business from avoidable legal exposure later. Partnering with a legal expert can help to prevent missteps that could have financial, operational, and reputational consequences,” says a Clientèle Legal representative.
However, entrepreneurs shouldn’t forget to adjust their prices accordingly, too. Where wages increase, so does the cost of delivering a product or service. In some cases, suppliers might also be increasing their prices, causing an accumulation of costs. Business owners should speak to their suppliers if they haven’t yet indicated that their pricing will be adjusted soon. Don’t forget to also include any other overhead expenses that you may not have recently adjusted.
It is also worth it to place a notice on your website that prices will increase on a specific date, and send personalised e-mails to your customers that communicate this. Freelancers who work on a retainer basis can benefit from this in the long run.
Tax and the other financial implications that go with it don’t have to be a punishment. Managing your cash flow effectively, prioritising record-keeping year-round and keeping your eye on the bottom line will empower you to conquer the tax burden.
