The Tax and CIPC Mistakes Online Sellers Make That Can Shut Down Their Business

Selling online in South Africa—whether on Amazon SA, Takealot, Shopify, WooCommerce, TikTok Shop, or Instagram—has never been easier.But with that opportunity comes a harsh reality:

Most online sellers accidentally break tax and CIPC laws without even realising it.

These mistakes can get your company deregistered, your tax number deactivated, your payouts frozen, and your entire business shut down.

In this Smartbook guide, we unpack the biggest CIPC and SARS mistakes online sellers make—and how to avoid them before they cost you your entire business.

1. Not Filing CIPC Annual Returns 

This is the #1 reason online sellers get shut down.

Most sellers think annual returns are “tax returns.”They’re not.

CIPC annual returns simply confirm your company still exists.If you don’t file them:

• CIPC starts charging late penalties

• Your status becomes In Process of Deregistration

• Banks and platforms see your company as non-compliant

• Eventually your company becomes Deregistered

A deregistered company:

• Cannot legally trade

• Cannot hold a business bank account

• Cannot receive payouts from platforms

• Loses its tax number at SARS

  
  

You can lose everything—even if your store is profitable.

2. Using a Personal Bank Account Instead of a Business Account 

This is one of the fastest ways to get your payouts flagged or frozen.

Payment processors, Amazon, and Takealot all check that your:

• Bank account

• Business name

• CIPC details

• Tax number

…all match.

Using a personal account creates:

• Risk flags

• Delayed payouts

• Account holds

• Tax problems

• “Unexplained income” for SARS

A business bank account is non-negotiable for serious sellers.

3. Registering a Company but Never Activating It With SARS 

When you register a company with CIPC, SARS automatically issues a Company Tax Number—but that isn’t enough.

You must:

✔ Appoint a registered representative

✔ Activate the company on eFiling

✔ Submit Zero Tax Returns (even if you're not trading yet)

If you don’t, SARS eventually marks your company as:

• “Inactive”

• “Deregistered for tax”

• “Non-compliant”

  
  

This blocks you from:

• Applying for funding

• Receiving tax clearance

• Registering for VAT

• Accessing Takealot & Amazon business programmes

4. Mixing Personal and Business Money 

This destroys:

• Tax records

• Profit calculations

• Your ability to claim expenses

• Your credibility with SARS

• Your ability to scale

SARS calls this “commingling of funds.”It’s a red flag for audits and can lead to disallowed deductions.

Always run your store through a company bank account.

5. Not Declaring Online Income to SARS 

If you’re making money online, SARS considers it taxable income, even if:

• You’re a student

• You’re selling part-time

• You haven’t registered a company

• It’s in your personal account

• You call it “side hustle money”

  
  

Platforms like Takealot, Amazon, courier companies, payment providers, and banks all share data with SARS.

Failing to declare online income is considered:

• Tax evasion

• Underreporting

• Fraud

Suddenly, your store isn’t a side hustle—it’s a liability.

6. Not Registering for VAT When You Hit the Threshold 

VAT registration becomes compulsory when your turnover exceeds R1 million in any 12-month period.

This includes:

• Amazon payouts

• Takealot payouts

• Shopify sales

• Yoco/Paystack/Payfast income

If you ignore it:

• SARS can backdate VAT

• Charge penalties and interest

• Freeze your bank account

• Audit your business

• Penalise you up to 200%

Most sellers don’t realise they hit R1m because revenue is spread across multiple channels.

Smartbook helps track this automatically.

7. Wrong or Missing CIPC Director Information 

If you:

• Change directors

• Add a business partner

• Remove a partner

• Change your address

…CIPC requires you to update this within 10 days.

If you don’t:

• Your company becomes non-compliant

• You cannot open new accounts

• Amazon/Takealot verification may fail

• SARS may block representative access

  
  

Director details MUST match across:

• CIPC

• SARS

• Your bank

• Your marketplace accounts

• Your payment gateways

One mismatch = instant risk flag.

8. Not Filing Beneficial Ownership With CIPC 

As of 2023, all companies must declare their:

• Shareholders

• Ownership percentages

• Ultimate beneficial owners

  
  

If not, CIPC may:

• Suspend your company

• Block your filing

• Prevent update

• Reject director changes

• Flag you as high-risk (AML regulations)

Many sellers don’t even know this rule exists.

9. Selling Without a Proper Business Structure 

Some online sellers make R20k… then R50k… then R100k…All through their personal account, without:

• a CIPC company

• a tax setup

• a bookkeeping system

• an accountant

• proper documentation

And then when SARS or CIPC flags them, they panic.

Your e-commerce store isn’t a side hustle. It’s a business. And it needs to be structured like one.

10. Thinking a Business Is “Too Small” to Register 

This is the biggest trap.

You don’t register a business because you’re big. You register because you want to become big.

A registered company gives you:

• Business bank accounts

• Access to suppliers

• Funding

• Tax advantages

• Legitimacy

• Legal protection

The ability to scale

✔ Eligibility for Takealot + Amazon business programmes

Your store can go from R0 to R100k a month faster than you expect…But only if your backend is set up correctly.

How Smartbook Helps Online Sellers Avoid These Mistakes 

Smartbook handles all your compliance so you can focus on selling:

• Company registration (R950)

• SARS business tax number

• Registered representative

• B-BBEE affidavit

• Beneficial ownership

• Annual returns

• VAT registration

• Accounting & business bank setup

• Full e-commerce compliance pack

  
  

We also ensure ALL your details match across:

• CIPC

• SARS

• Your bank

• Amazon SA

• Takealot

• Payment gateways

This is what protects your account—and your business.

Frequently Asked Questions (FAQ) 

1. Can CIPC shut down my business if I sell online?

Yes. If you don’t file annual returns or maintain your details, CIPC can deregister your company.

2. Can SARS freeze my payout account?

Yes. If your tax profile is non-compliant, SARS can place holds or audits.

3. Do I need a company to sell online?

For Takealot, yes. For Amazon SA, not required, but recommended for growth and compliance.

4. Can I get into trouble for using a personal bank account?

Yes. It causes tax problems, payout delays, and red flags with auditors.

5. Can Smartbook fix CIPC and SARS issues ?

Absolutely. Smartbook handles reinstatements, annual returns, tax setup, and full compliance for online sellers.