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How to close off business for 2021 | Bookkeeping | Accounting


What better way is there than to prepare for the future by reflecting on your progress? This is why KPIs (key performance indicators) are so important. “It is better to move forward, than to move fast and backwards”. Now, how do you measure that you’re really going forward? 

What do the books say about revenue growth? The “books” are a business’s revenue, expense and income summary reports. Lucky for you if you are using an accounting software, it automatically closes your income and expense accounts at year end before adding your net profit (or loss) to your retained earnings account. If you have not automated this process and recording in your books manually, read on. 

Closing the books annually lets businesses draw up financial statements that give business owners insights into their business’s financial health. This also helps you to properly file for your income tax returns. 

Here are 5 things you need to do before you close off the business year: 

* Monetize all invoices.

Be sure to send out reminders to clients on outstanding payments and that all the invoices are being monetized. If some clients don’t pay you, you can write the invoices off as bad debt (or if you think they are never going to pay you-this is why contract agreements are important). Follow up on invoices and payments, and make sure all the business money has reached the business account. 

* Record your expenses.

ALL your bills go onto this; from things as little as internet costs, fixed costs, to variable costs. This includes incurred business expenses, keep track of those separately; you can claim tax deductions on these.

* Reconcile bank statements.

This is a common practice for many, even for personal finance. This will help you identify discrepancies, possible bank errors, or fraudulent activity that may have happened in your account. This can also help you reflect on some transactions you have authorized, that might kill your business, canceled and uncleared checks. 

* Profit and Loss.

This reports on your business performance over the year. This shows the value of sales, expenses, and overheads and the resulting gross and net profit or loss for the year. Run it from the first day of your fiscal year to the last. 

* Balance Sheet.

This report shows the worth of your business from the day you started trading, up to the end of the fiscal year. It includes your company assets and liabilities. 

That’s a few pointers from us. Let us know what your year end closing tradition is like, we would love to hear about the different ways for different businesses. 

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Black Friday for Business | 2021 | South Africa

Black Friday?  



Just so you know, Black Friday is the biggest international sale that was started in the early 1900s in USA and to date, it is still the biggest last Friday of November where consumers around the world buy necessities to prepare for the holiday and gifting season. It is an annual shopping event that businesses and customers all over the world eagerly anticipate

Small businesses can take advantage of Black Friday, this presents you with an opportunity to win customers and keep them coming back for more. Everyone likes saving and getting discounts.   

Although Black Friday 2020 was a flop for South African retailers – statistics show, with a huge decrease in in-store sales. Shoppers avoided malls and stores due to coronavirus – but also there was a lack of money in their pockets, because of the economic impact of the virus and lockdown. But this year, we’re getting more prepared and focusing on what we can change/improve. 

We had already had a social media post that summarises this, but in this blog we will discuss this in detail. Keep reading! 

Here are 3 things you can do:  

1️⃣ Social listening: Black Friday is on everyone’s lips, tune in your target market’s conversation to find out what kind of deals they hope to find. You can do a keyword research on either Google or Social Media to find out this information, see what people are mostly searching or talking about. 

That is why market research, before anything else is so important so you may know your customers. Know where to find them, how to find them, and how to entice them. 

2️⃣ Start preaching & marketing: customers research in advance, start advertising teasers. Some people already have a budget dedicatedly Black Friday deals, help them make buying decisions. On the day/weekend, people will be going straight where they want specific things and not hop into shop after shop. 

5 Black Friday Marketing Ideas:

  • On-site notifications
  • Popups
  • Email marketing
  • Flash sale
  • Social media ads 

3️⃣ Make the experience smooth: Over the past year, Covid-19 restrictions pushed many traditional stores and customers online. Online transactions increased by more than 60% – more brands selling online means higher competition. More customers, especially those who are new to the digital retail space, means new challenges and demands. 

Now that the restrictions are lifted, it might be quite a mess at physical shops, online shops also get a lot of traffic. Make sure you are prepared for the numbers and offer a variety of payment options. If need be, hire a VA (virtual assistant) if your business is online based and make arrangements with your developers to make sure your e-commerce site can take the traffic. If you have a physical store, prepare your team to be active and on the ground – helping customers. 

Before the launch of your Black Friday marketing campaigns, make sure you didn’t neglect the details that can make or break the customer experience. Take a careful look at your store or website and see if there is any room for improvement.

Do you have any Black Friday deals planned?  

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Work + Mental Health | #MentalHealthAwarenessMonth

October is dubbed Mental Health Awareness month, with 10 October being the World Mental Health Day – recognized by the World Health Organization. We can all agree that this year especially, has been a tough month for South Africa more specifically… with the civil unrest, looting and 3rd wave of the pandemic negatively affecting many South Africans – resulting in job loss, salary reduction, and work hours cut. 

This is not only affecting businesses and entrepreneurs, but EVERYONE. Work stress is quite common and can lead to bigger problems, such as depression and anxiety – if left unchecked. This does not only affect one emotionally, but it reduces productivity. 

Some of the common factors that can contribute to people’s mental health problems include:

* Hectic work schedules,

* Lack of support from seniors/management,

* Unhealthy work environments.

There’s ways to combat this without quitting your job – however sometimes it leads to that. Considering the amount of time we spend on work, it’s important to be in a stress free workplace. Stressful times will be there because of deadlines and other pressures, but that shouldn’t take up so much of your peace. 

The following 5 tips can help you improve your overall mental health at work. 

1️⃣ Identify the root of the problem 

 The first thing to solving a problem is understanding it, and where it roots from – notice the signs of the problem. Sometimes the problem doesn’t stem from work, it could be a more personal issue that’s affecting your work performance, relationships, etc. When our mind, body/soul doesn’t have balance, things go south. 

2️⃣ Take frequent breaks & harness your leave days 

Breaks are so important, let’s not romanticize hard labour and overworking. It’s good to put in extra effort in your work, but it’s just as important to get some rest. Whenever you get a chance; take a breather, take some time off. Listen to your body. 

3️⃣ Set small, manageable goals 

A to-do list can be so overwhelming really. Looking at all the stuff on the list and your mine is already telling you “we’re never going to finish this today”, that already kind of breaks your spirit. Break down bigger goals into smaller tasks, it saves you the anxiety and possible procrastination. Do what you have energy and enthusiasm for first: depending on brain power. Use all the help you have by delegating where you can, sharing tasks, and theme your day/week. 

4️⃣ Talk to human resource 

It is important to exercise your rights in the workplace, respectfully. It is said “If organizational or management issues are creating mental distress, it is important to alert a human resources professional at their organization to discuss”. You are not steering trouble, you are prioritising your mental health and that’s a good move. HR professionals are required to have this “on the record” if an employee is under emotional distress, by law required to address the issue. Sometimes it might not be problems you are experiencing in the workplace per se, but they need to know so the organisation can best support you. 

5️⃣ Knows your triggers and get help 

Unfortunately, expecting everyone to tiptoe around what triggers you is unrealistic. Learn to work through your own triggers, whether it’s work or personal. If need be, seek professional help which will help you figure practical solutions to deal with triggering moments. Journaling your thoughts and situations which lead to stress can also help you identify them so that next time they show up, you may quickly shut them down by doing breathing exercises, stretching, etc. You can also try setting boundaries, expectations, and any other way to protect yourself/your mental health. 


A bonus tip would be adding personal items to a workspace. This can help you feel better when you’re having a hard time. When people can look at reminders of their loved ones, favorite moments or hobbies, it can help them feel centered and positive as they think about the things that make them happiest.

Let us know how you combat mental health at work if you’ve experienced it, we’d love to hear from you!

Also if you missed this, we previously shared on How To Keep Employees Motivated and Productive around this time of the year as the manager. Find it here: https://accasesolutions.co.za/2021/08/28/how-to-keep-employees-motivated-and-productive/

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Bookkeeping Guide

Let’s not assume you know, and take it from the top. 

Bookkeeping is the recording of financial transactions made by a business, this means keeping track of what your business spends and what you receive. The  transactions would be recorded in daybooks, cashbooks, or journals, you can also use a spreadsheet program like Microsoft Excel.

Do you need a bookkeeper for your business? 

You can either do this by setting up a software, or hire a bookkeeper to keep your books in check. A Bookkeeper’s responsibility is to record, classify, and organize every financial transaction that is made throughout business operations. 

Amongst other reasons, one of the reasons why some startups fail is due to the poor management of money: sole business owners mostly can relate. It gets a bit challenging to separate business finances form personal finances, making it harder to account for some of the money that comes in, and goes out of the business because no one is holding you accountable for anything. This is where bookkeeping comes in. When studied thoroughly, you can see some of your spending habits which you need to change.

3 reasons why you need bookkeeping:

  1. To reflect on whether you are spending more than you make, vise versa. Moreover, bookkeeping enables you to seamlessly analyze your expenses, and adjust your budget, if need be. You will have a record of all your financial information you may need in a case where you want to plan or budget for the future. 
  2. You can curate accurate tax returns. Tax preparation can be a stressful season for small business owners, this is where bookkeeping comes in. Instead of looking through a pile of documents to get the required information, bookkeeping ensures that this information is well organized beforehand.
  3. We have mentioned before, cashflow is one of the struggles small businesses have. Bookkeeping will help you mitigate that challenge by keeping track of the cash going in and out of your business. Having this kind of information will give you the confidence and peace of mind you need to make financial decisions. 

Bookkeeping: How-To

  1. Record your sales (in a cashbook/spreadsheet).
  2. Note down every business-related purchase (keep proof of purchase).
  3. Regularly cross-referencing your business books against your bank statements to check that the transactions and balances match, A.K.A Reconciliation. 

Other things to note…

  1. Accounts receivable, i.e. issuing invoices and making sure they’re paid, and accounts payable, i.e.paying bills on time.
  2. Payroll (paying employees). 


Bookkeeping software

There are many small businesses that use online bookkeeping software to speed up the job, this also cuts down on human data-entry errors and saves time. The benefits of these tools include, but not limited to: automatically pay bills, send automated invoice reminders to people who owe you money, and allow you to check cash flow from your phone. 


Here are 3 softwares you can check out:

1️⃣ Sage 

2️⃣ Xero 

3️⃣ QuickBooks


I’m conclusion…

If you are too much of a busy for bookkeeping for your small business, then you can find someone to do it for you; outsource or hire. We have an article on what’s the best option between the two, again this depends on a number of things. If you wish to get a bookkeeper for your business, look no further: Accase Solutions would love to assist! Reach us here: 

 ✉️: info@accasesolutions.co.za

☎: 0615238833

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How to use customers as brand advocates

Ever heard the saying “people believe people, not brand”? This is mostly said in marketing, and that is why lately we see more brands work with Influencers. A campaign with a brand influencer is likely to perform better than an advert of a product without a user, a bonus is that influencer already have a strong community. In this article, we will show you a few ways in which you can use customers as your brand advocates. 



Businesses that market themselves on digital platforms use content to communicate with their customers, attract prospects and retain their current clientele. What we mean when we say your customers are your brand advocates is that they will create the content for you and do the marketing for your, this is called Customer Generated Content in marketing.

User Generated Content is the type of content that is created by users or customers of your brand. This content usually indirectly markets a given brand due to the relationship fans and customers have with the brand. This type of content is given by means of testimonials by customers to market your products or services.

Practical example… here’s a non requested review on Facebook and feedback;

 

Although positive customer feedback is important for brand success, taking proactive measures toward turning these satisfied customers into brand advocates is key to long-term loyalty and attracting new customers in the process. 

“It is harder to acquire a new client than to retain one”. 

Now the to the real question, how can a brand turn satisfied customers into loyal brand advocates? Here are 3 ways to do so:

1️⃣ Build a community  

A community is something a customer can FEEL part of, it gives a sense of belonging – it’s all about common interests and meaningful connections. 

The nice things about investing in an online community is that it is one of the most valuable thing any brand can have for long-term success. Some benefits include your people standing up for you. 

A community is also a great way to acquire feedback, it personalizes people’s experience and make them feel like they are talking to human beings, not brands. This is great because when they are not satisfied with your product, they will be able to talk and not go on to social media to “expose” you, they have a 2 way communication after all. 

2️⃣ Customer service 

More than anything, people remember how you treat them. Ever heard it been said “when your customer comes to you with an inquiry, they already have a competitor in mind”? The best way to win then over is through efficient customer service…and that means responding timely, politely and explaining clearly if need be. 


One of the best things about good customer service is that when things go wrong or they encounter a problem, they will communicate with the same energy, politely. 

3️⃣ After service 

Every relationship needs good communication to work, it’s a good practice to do so with your customers as well. Whether you’re asking for a review or any form if feedback, it’s always good to get feedback from clients. This also helps you know how good is your service, if you’re serving them well or need improvement. 

Some brands give points when you give a review. You don’t necessarily have to do this, however you have have that after sale conversations to make them feel you care.

These are just the 3 ways we wanted to share with you, there are definitely many more. If you have a way of getting your customer be loyal to you, let us know how you do that, we love hearing from you! 

Don’t forget to connect with us on social media for daily updates about the latest news updates, tips and other good content regarding business: @accasesolutions. 

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How to keep employees motivated and productive.


It is almost year end: people are getting exhausted, it’s been tough for all of us, we’re getting burnt out, etc. In times like these, it’s hard to keep focused, stay motivated and productive. It’s part of your responsibility as a manager to help your team, sometimes people are “too busy to get any work done”. This means that people are “working” but not getting any work done. Yep, it happens. 

5 ways to keep your employees productive and motivated:

1️⃣ Match tasks to skills/

Nothing beats team work. It’s not a cliché that “team work makes the dream work”, trying to do everything alone can be so exhausting, let alone something you don’t enjoy. Hence it’s important to know your team’s zone of genius so you can delegate accordingly, and know their chronotype. It’s also worth noting that someone might be good at something, but not enjoy it.  

A guide on how to know your zone of genius…

ZONE OF GENIUS

Write down the following:

1️⃣ things you love doing and good at at.

2️⃣ things you like doing, good at, and can get done.

3️⃣ things you don’t like doing, but good at.

4️⃣ don’t like doing and not good at.

The first point is very important to know, that’s when one operates at their absolute best and does it 10x greater because they enjoy it. A simple conversation can help you figure out this about your team, and then make decisions. 

2️⃣ Allow for flexibility/remote working 

Everyone is effective in different places, at different hours. Some work well in the office, at the coffee shop, some even at home. It’s best that you give people the flexibility and not “box them” in the office, as long as they get the job done. 

Consider your flexible and remote working policy.

 

3️⃣ Appreciate and/or reward them 

Humans are wired to gratification. Yes they get a salary and maybe bonus once a year, but that’s just compensation for the work they’ve done. It boosts one’s confidence to get noticed for their contribution. When you are confident, you are at your best and can produce more results. 

Everyone wants to feel valued in the workplace and being recognized for the work that they did. Nothing’s more motivating than your employer saying ‘great job’.

4️⃣ Support them 

You know what they say…

Give before you receive 

Listen before you speak 

Support others if you want support 

Show employees that as much as you wanna get good results from them, you care about them too/their well-being. Everyone has their own lives outside of work which may affect thief ability to perform their best. Provide support in their physical health, mental health, etc. 

5️⃣ Give them a great experience 

Your employee’s overall experience has a big impact on productivity. Everyone is driven by different goals and aspirations. Some employees are motivated by a good balance between work and life, while others are motivated by money.

Companies need to prioritize knowing what motivates and drives their people and work with them to create positive experiences so that they are doing their best work.

We hope this helps you if you are a manager, or a team leader. It is important to ensure everyone is not only getting the work done, but also we’ll taken care of so they can be their best. Let us in the comments how you plan on implementing some of the points, or what methodologies you use to keep your team motivated and productive. 

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Tax Season Readiness

The Individual Tax Season is upon us, many of you might have seen us share a lot about this. In this blog, we will not get into any technicalities, but rather share the administration side of things (or so to say). 

Why You Need To File For Your Returns 

As many like to say when starting a business that it is important for you to identify your WHY, and so it is for us to know WHY is it important to file for your returns. 

1️⃣ The first, most general reason is that you are being a good citizen. Remember that if you don’t file, you are committing an offence as per Tax Admin Act, which is punishable by law.

2️⃣ For financing purposes, you need to be up to date with your taxes. When you apply for a home loan or car finance for instance, they will check your tax compliance status (as they do credit checks), it becomes an issue if you are not compliant with the South African Revenue Services (SARS). It communicates a message that you are not a god citizen who pays their dues. 

3️⃣ You might have heard some people saying it’s Refund Season (although that is not necessary 100% true), but if you don’t file and SARS actually owes you a refund then you won’t get it due to non compliance.

4️⃣ Regarding your Retirement Fund – if you retire and your taxes are not up to date, it will be an issue for your funds to be released. 

Those are some of the reasons why you need to be tax complaint. If you want this a bit more detailed, we did share a blog previously. Check it out here: https://accasesolutions.co.za/2021/03/29/important-things-to-know-about-tax-in-south-africa/

Where To File For Returns 

Just to mention, you have various opinions available to you, you are not bound to use a tax practitioner (for example) because it does come at a fee. Here are some of the options available to you: 

1️⃣ You can use your SARS e-filing.

2️⃣ You can use your SARS Mobi App.

3️⃣ You can make an appointment (via SMS or online) with your nearest SARS branch. 

4️⃣ Or you can use a certified tax practitioner: we have pointers on this on our blog previously. 

Mistakes: Criminal Offences

In passing, we would like to share these few red flags/little things that gets you in trouble with SARS and are actually criminal offences:

➡️ Not updating your details (emails address, banking details, postal address, etc)

➡️ Not filing for your taxes 

➡️ Failure to provide information as and when requested to do so by SARS

… and a few more as listed below:

Auto Assessment 

Moving right along… let’s touch on Auto Assessments. 

How it works:

Previously, you would get a certificate from your third party (medical aid, employer, etc), log in and slot in the details manually. But now,  SARS is connected to these 3rd parties and sources/uses information from them to pre-populate your returns. When your employer sends you IRP5, it gets loaded. When your medical aid gives you your certificate, it gets loaded. Everything you get from different institutions automatically get loaded into the SARS portal and when you login, you will find all this information in one place. 

So before you ACCEPT the auto assessment option, it is your duty to ENSURE that all the details are correct if you are doing it by yourself. If you find that something doesn’t make sense, you can decline the Auto Assessment and “Edit” it. Although you might find that having a tax practitioner makes things a lot easier because we know better and understand some of the technical things you might not understand. 

Home (Office) Expenses Deduction

If you follow us on social media, you might have seen us touch on this. So this is relatively new to most taxpayers due to Covid19 and working from home conditions (it has always been available to commission earners), but be in the know that you are able to deduct your home office expenses IF you meet the requirements. Some of the requirements include but not limited to:

✅ Your home office is used SOLELY for production of income. 

✅ If the employee’s remuneration is only salary, the duties are mainly performed in this part of the home. It therefore means you perform more than 50% of your duties in your home office.

✅ Where more than 50% of your remuneration consist of commission or variable payments based on your work performance and more than 50% of those duties are performed outside of an office provided by your employer.

NB: Only expenses relating to the premises must be allocated based on floor area (such as rent, interest on bond, cleaning, etc.). Expenses that do not relate to the premises (such as clothing and furniture) do not need to be allocated based on floor area.

If you qualify for a home office deduction; enter the expenses amount calculated next to the source code 4028 (Home Office Expenses) in the “Other Deduction” container on your Income Tax Return. 

Medical Aid Rebates (Tax Credit)

How rebates work;

SARS will show you how much tax you’re supposed to pay for the year, and we consider the rebates which reduce your tax liability. 

For example; if you’re supposed to pay SARS R20 000 for taxes, and your rebates add up to R10 000, this will mean that from the R20 000 you’re supposed to pay, your tax will go down by R10 000 and you will only owe SARS R10 000. 

However, this is not “automatic”. The “refund” comes in when you did not owe SARS anything (sitting at R0), and the medical aid credits come in (as per example)…leaving SARS in a position of owing you money due to the rebates. 

Note that these are not refundable credits in a sense that if you did not pay tax for the year but you have a medical aid, you will not automatically get a refund from the rebates. The rebates DECREASE your tax liability. So if you did not pay tax for the year, you are not going to benefit from the medical aid credit. 

We hope that this blog enlightened you and answered some of your questions. Feel free to send us a DM on our socials if you need clarity, or drop a comment below. 

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How to pick the best accountant/tax personnel for your business

Picking the right accountant is important for your business’s financial future. An accountant manages your finances and plays a significant role on the direction of your business. So it’s important to do thorough research before you hire an accountant. 

An accountant can acts as your business’s financial guide by overseeing and/ or forecasting your company’s financial planning and recordkeeping. They can handle your bookkeeping, as well as help with tax planning and tax returns. 

A question that may arise as you read this may be, how do I CHOOSE the right accountant/tax personnel for my business?

Avoid being scammed and learn by reading on 🧠📚🤓👇

If you follow us on our social media, you would remember us touching a bit on this subject. Just to recap, as per Tax Administration Act no. 28 of 2011, every person who provides advice to another with respect to application of tax principles or assistists with any tax matters for a fee must:

✅ Be registered with Recognized Controlling Body that’s registered with SARS.  

✅ Be qualified.

✅ Undergo examination to evaluate their ability to competently perform functions of a tax practitioner

✅ Engage in continuing professional development.

1️⃣ Just to save you a bit of time, accountants in South Africa could belong to one of the other main South African accounting bodies:

Independent Regulatory Board for Auditors (www.irba.co.za)

South African Institute of Professional Accountants (www.saipa.co.za)

The Association of Chartered Certified Accountants (www.acca.org.za)

Chartered Institute of Management Accountants (www.cimaglobal.com)

The South African Institute of Business Accountants (www.saiba.org.za)

Institute of Administration and Commerce (www.iacsa.co.za)

Institute of Certified Bookkeepers (www.icb.org.za)

If your accountant belongs to one of these organizations, then that’s security for you! If there is an issue, you will be able to lodge a complaint with the respective organization. 

Accase Solutions is a company of Certified Tax Practitionership with accountants, tax and personnel involved in our tax accounting practice.

With all that said, we would like to top it off with a word that we are registered with the IAC, Institute of Accounting and Commerce as Certified Tax Practitioner since registration of Accase Solutions.

2️⃣ Your accountant needs to keep up with the ever changing technologies and should be using recent and relevant software solutions. Be it Sage Accounting Software, for instance, it’s important that they have the training and experience working with that tool. 

3️⃣ What evidence is there to support that you can trust them to manage your finances? Are they even real? Do they have references? What important information is there on their website? You might wanna call and check with the references if need be. 


Here are 3 reasons why you can trust Accase Solutions with your taxes and accounting:

✅ We are Certified Tax Practitioners, qualified and registered with Recognized Controlling Body.

✅ We are competent and can perform the functions of a tax practitioner & Accountants. 

✅ We are professional.

If you would like to consult with us, reach out to us here:

✉️: info@accasesolutions.co.za

☎: 0615238833 

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How to avoid paying tax as a small business in South Africa

Taxes? There’s no running away from it! Oh no wait, not only will it catch up with you but the new law says you are liable to jail time! But of course, there are legal ways to reduce taxes. Read on…

Firstly, let’s understand the difference; when you conceal (hide) income or information from tax authorities, it is called Tax Evasion and it’s illegal. Legally reducing your taxable income is called Tax Avoidance.

All business owners have asked themselves this question at some point, “ how can I reduce my taxes?”, if not having to pay tax at all. Look, not registering your business is not a way to run away from paying tax, you are running your business as a sole proprietor and still have to pay taxes, if not more. We’ve covered this before, refer to this blog: https://accasesolutions.co.za/2021/03/16/can-sars-tax-you-even-if-your-business-is-not-registered/

Deliberately understating sales or overstating expenses is also tax evasion so that’s not a strategy. Tax evasion is considered a punishable criminal offence and can have the consequence of penalties. A good tax avoidance strategy is if you use different ways to pay lower rates when it comes to taxes without breaking the law. 

Two (2) guaranteed strategies to legally avoid paying tax: 

1️⃣ Hire young job seekers

When you hire youth (18-35), you get ETI(employment tax incentives) for the first 24 months of the person’s employment (subject to terms).

These incentives you can apply towards PAYE that the company has to pay. For example if your total PAYE payable for the month is R3500 (for every employee in the company), but due to that one young person you hired, say you get ETI worth R1000 every month (this figure differs based on terms, as mentioned above. Then the company will only pay PAYE of 2500 instead of 3500).

2️⃣ Donate to a SARS registered charity 

According to SARS, donation does not have to take the form of money – it can include a physical asset or something that has a deemed value. Donations tax is calculated at a flat rate of 20% on the value of the donation up to R30 million, and at a rate of 25% on donations over and above R30 million. However, Sars makes provision for a donations tax threshold of R100 000 below which no donations tax is payable. Meaning you can make multiple donations throughout the year on a tax-free basis as long as the cumulative total does not exceed the R100 000 threshold.

Although passing your personal expenses through business has very limited personal advantage (since there’s not much you can buy), but you can’t buy what doesn’t make sense to your business. But you may also take advantage of this. For instance; if you are in a type of business where you use your phone to create content, you can buy the latest iPhone 12 and register it through your business. It makes sense because you do make use of a cellphone to deliver your service at best. 

Some key components to remember when planning and avoiding TAX:

❇️Timing 

❇️Gross income

❇️Income or capital 

❇️Deductions 

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Cashflow Management

Let’s talk money!

Have you ever heard it being said “if you can’t manage R1000, you won’t manage R100 000”?

Yup, that’s it! Managing your cash flow is basically tracking how much money is coming into, and out of your business. However, profit does not equal to cashflow. Cash flow is one of the most important components that makes the business successful, like many say…it is the blood that keeps the heart of the kingdom pumping! 

Businesses that have more cash going out more than it comes in completely die or get into debt they could have avoided. 

Back to Basics. 

You should be tracking your cash flow either weekly, monthly or quarterly. There are essentially two kinds of cash flows:

1️⃣Positive cash flow: when money coming into the business through sales for instance, is bigger than the money leaving business by means of salaries, expenses, etc.

2️⃣Negative cash flow: when money leaving the business account is greater than the money coming in. This screams TROUBLE for the business. 

Understanding cashflow 

Simple example: company x renders your services in May, and you invoice them on the 31st of May. Company x only monetise the invoice in around June-July, whilst you had salaries to pay. Thus cash outflow exceeded cash inflow in May. If many other customers continue to do this, you can almost see how your company could run into cash flow issues.

The cash flow statement basically records all of the organization’s cash inflows and outflows, and includes cash from operating activities. The cash flow statement is divided into three parts: investing, financing, and operating activities. Failure to manage this cash can lead to problems. 

We have mentioned the poor cash management may lead to cashflow problems or bankruptcy, but here are some of the causes:

1️⃣Poor understanding of the cash flow cycle – not having a clear understanding/ timing of cash inflows and outflows from the business. E.g. when to pay for accounts payable (what you owe to suppliers),etc.

2️⃣ Lack of understanding of profit versus cash – a business can be generating profits on its income statement and be burning cash on the cash flow statement.

3️⃣ Lack of cash management skills – it is important to acquire the necessary skills to manage your finance. If you are looking for this service, do get in touch with us! 

As they would say, successful financial management involves balancing 3️⃣ elements:

accounts receivable (what you are owed by the customer), accounts payable (what you owe to suppliers), and shortfalls (the amount of money you owe that exceeds your available funds). Make sure  one element doesn’t overtake the others. 

If you can’t afford to pay someone to do this for you, you can do it by yourself. Here are 7️⃣ tips to manage cashflow:

1️⃣Have an emergency fund 

2️⃣Encourage early payment from clients 

3️⃣Put cashflow over profit 

4️⃣Assign someone to monitor your cashflow 

5️⃣Drive and/ or boost sales 

6️⃣Reduce expenses where possible 

7️⃣Finance purchase orders 

An example..