Many clients unknowingly make tax mistakes that cost them money or lead to audits. Financial consultants are in a prime position to guide clients away from these pitfalls with strategic education and careful planning.
One of the most common errors is underreporting income. Whether from freelance work, rental properties, or foreign assets, all income must be declared. Failure to do so — especially in an era of third-party data reporting — can trigger penalties or investigations.
Another issue is ignoring allowable deductions. Clients often overlook deductions such as retirement contributions, travel expenses, home office costs, or educational fees. Consultants can help identify and document these deductions accurately.
Missing deadlines is a frequent and avoidable mistake. Late submissions — even by a day — can result in automatic penalties. Encouraging clients to use SARS eFiling tools and setting calendar reminders ensures timely compliance.
Incorrect VAT claims are also a serious issue for small businesses. Claiming VAT without valid tax invoices or including exempt supplies in VAT returns can result in interest and penalties. Training clients or delegating VAT reporting to professionals can reduce risk.
Lastly, clients may mix personal and business finances, especially in sole proprietorships. This muddies record-keeping and complicates tax reporting. Advisors should recommend separating accounts and using simple accounting tools to maintain clarity.
Helping clients avoid these pitfalls doesn’t just save them money — it positions the consultant as a trusted long-term advisor.
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