As a small business owner in South Africa, dealing with SARS is part of the job. But there’s a big difference between routine tax compliance—and getting flagged for an audit or penalties. The truth is, SARS has become increasingly data-driven and sophisticated. If your business triggers any red flags, you could find yourself under unwanted scrutiny.

At FirstPlace Assurance & Advisory, we help small businesses stay compliant and out of trouble. Here are five common warning signs that could put you on SARS’ radar—and what to do about them.

1. Inconsistent or Late Tax Filings

If your business is regularly late with VAT, PAYE, or income tax submissions—or worse, missing them entirely—you’re likely to raise red flags. SARS systems track filing patterns. Irregular behaviour can prompt penalties or deeper investigation.

What to do:

Set up reminders or automate your compliance calendar. Even better, work with a tax professional who ensures deadlines are met—accurately and on time.

2. Declaring Low Income While Living Large

If your business shows very low income but your lifestyle (or company spending) suggests otherwise—think luxury vehicles, big property, or high personal expenses—SARS may question the mismatch.

What to do:

Keep your business and personal finances separate. Be honest in your declarations, and don’t claim personal expenses as business deductions unless they truly qualify.

3. Aggressive or Unusual Deductions

Claiming excessive expenses, especially those not common in your industry, can attract SARS’ attention. Travel, entertainment, and vehicle costs are often misused and are high on the audit list.

What to do:

Make sure you have proper documentation for every deduction. Don’t overclaim. And if you’re unsure whether something qualifies, ask a professional.

4. Irregular Employee Declarations (PAYE Issues)

If your staff are not properly registered, or you’re under-declaring salaries and wages, SARS may pick this up through cross-checks with UIF, the Department of Labour, or employee filings.

What to do:

Ensure all employees are registered, PAYE is accurately calculated, and payments are made monthly. Keep a clean, transparent payroll record.

5. Cash-Heavy Business with No Trail

If your business runs mainly on cash but doesn’t keep clear records or declare income properly, it’s a red flag. SARS looks for businesses underreporting cash sales to avoid tax.

What to do:

Use point-of-sale systems and bank deposits to track income. Avoid under-declaring—it’s not worth the risk, especially with SARS’ growing use of third-party data to cross-check your numbers.

How to Stay Off SARS’ Watchlist

• Keep proper records. Don’t rely on memory or scraps of paper.
• File on time, every time. SARS doesn’t forget.
• Work with a professional. The cost of advice is far less than the cost of penalties or audits.
• Be transparent and consistent. Avoid sudden income drops or unexplained spikes.

Worried you may already be on SARS’ radar?

Don’t wait until there’s a letter in the post. At FirstPlace Assurance & Advisory, we help small businesses stay compliant and tax-smart—with peace of mind and no surprises.

Contact us today

Tel: 010 596 5902 | Mobile: 066 086 6065 | WhatsApp: 066 086 6065 | Email: office@firstplace.co.za | Web: www.firstplace.co.za