tax-deductible

Tax deductible expenses for businesses in South Africa

Do you know the saying that says “money makes the world go round”? Well, so does tax – it makes the country go round. We have a couple of blogs that explain the tax system in South Africa, which we will link down below for you. In this blog, specifically, we will share with you various tax-deductible expenses in your business to help you lower your taxes. 

For context’s sake, TAX DEDUCTIBLE is an item you can subtract from your taxable income to lower the amount of taxes you owe. Let’s suppose you earned R100,000 during the tax year and spent R20,000 on company items. In this example, your taxable business income would be R80,000 instead of R100,000, lowering your tax bill for the year.

Day-to-day business expenses

These are general day-to-day office or business expenses, they are incurred as part of running your business, these include:

  • Employee costs and administration costs
  • Business/office rental costs
  • Office supplies
  • Phone costs
  • Travel and transport, including business vehicle costs
  • Uniforms (if needed)
  • Wholesale purchase costs for goods resold
  • Financial charges (such as bank fees), utilities
  • Legal fees
  • Insurance fees
  • Marketing, advertising, and promotion costs

Wear–and tear (in respect of certain assets)

Also known as depreciation, a wear and tear allowance may be deducted on movable assets used for the purpose of trade. There are no statutory provisions relating to rates of wear and tear, but the SARS has published a table of periods over which the assets may be written off. The rates of wear and tear, based on the cash cost, are calculated either according to the straight-line or diminishing-balance method.

Donations (to approved bodies)

Donations to certain charitable organizations approved as public benefit organizations are tax-deductible, up to a maximum of 10% of taxable income.

Bad debts

Bad debts are tax-deductible if they are owed at the end of the assessment year and they relate to an amount that has been included in the taxpayer’s taxable income in any tax year. Regarding questionable debts, a tax deduction is also offered.

If the loan was made as part of a money-lending business, any bad debts that result from it are deductible.

Education expenses

You can deduct the cost of schooling for yourself or your employees that are directly related to running your firm as a business expense.

Net operating losses

Any losses incurred in the same business in previous years can be carried forward as a tax deduction.

Bonus:

According to SARS, here are some deductions your employees can save from: 

Tax-deductible expenses for Salaries:

Pension fund contributions

Retirement annuity fund contributions

Provident fund contributions (only from 1 March 2016)

Legal costs – under certain qualifying circumstances

Repayable amounts – amount received for services rendered as refunded by that person

If you need any help with TAXES, don’t hesitate to get in touch with us:

Call: 0615238833Email: info@accasesolutions.co.za

Business hardships

Business Doesn’t Have To Be Hard. Read These 7 Tips

 If you have been in business for some time, you know how challenging the entrepreneurial journey can be, it can get lonely too. It’s worse if you are a solo entrepreneur or don’t have a dedicated team you work with. In this blog, we will share some tips that will help make your journey a little less of a pain in the butt. 

Running a business shouldn’t take up all of your time, especially with small tasks. Thanks to technology, there are automation tools, and many other business systems you can put in place, that can make your life easier. Which we will get into. These shouldn’t cost you a leg and an arm either, especially for small businesses. 

According to reports and statistics, some of the common reasons why startups fail are due to, but not limited to lack of knowledge, and poor sales and marketing. Let’s get to it below.

7 tips to make running a business easier:

(1) Build cultures: the culture of an organization affects the running of it largely. If you share the same values, beliefs, attitudes, and practices that you live by in your organization, not only will you work well together, but you will get more done. For instance, let’s take it back to one of our examples of the common startup failure reasons stated above – lack of knowledge. If you have a reading culture in your business you get to learn more and ultimately earn more. 

(2) Hire young people: this is practically free. Organizations such as SEDA can lend you, interns, for free. You don’t have to pay them a salary, but mentor them and give them work experience. This can also help you save coins on taxes, this is called Employment Tax Incentive.  In his 2022 Budget Speech, Finance Minister Enoch Godongwana announced an increase in the ETI values from 1 March 2022.

(3) Automate: we can’t emphasize how much time you will save by automating things. From bookkeeping systems, accounting, marketing, social listening, and so forth, these things can save you so much time yet do so much for your business to keep it running smoothly. It is even becoming unnecessary to hire an administrator because these things can be automated, even email responses. Depending on the kind of business you’re in, automate things where you can, while you tackle tasks that need your attention more. 

(4) Use customers as advocates: a happy customer will give you free marketing! You can use this as a strategy. You’d be surprised how easy it is to get people to do stuff, all you need to do is ask. If you are selling products, send them a personalized card and ask them to tag you when they use it. If you’re selling services, ask them to leave you a review on your page or website. Endorsements are effective, but you need to fully satisfy customers.

(5) Tell stories: people love hearing success stories and things they can relate to… which can help you with their confidence in your product or solution. Storytelling is the use of evoking emotions to connect your brand to customers. Be authentic when building your brand, show what it takes, or what it took for your business to get where it is. Share highlights of your business, awards, the evolution of your logo, social proof/client testimonials, and show them before and after service of a client’s success. Take your community along with you on your journey. 

(6) Keep your books updated: you can either do this by setting up software or hiring a bookkeeper to keep your books in check. It can be easy to use business money for personal use, especially if you’re a solo entrepreneur. Poor money management can lead to business failure. Not only does keeping your books up-to-date let you know how much you made or lost, but it also makes things easier during tax season. We have a full guide on this, which we discussed in our Bookkeeping Workshop. Get in touch with us if you are interested in getting the session recording + materials: info@accasesolutions.co.za 

(7) Cut down unnecessary costs: don’t wait until your ship sinks till you save, start now. Saving money is critical for the survival of your business. Cut down on traditional marketing and go digital, stop attending unnecessary meetings and do virtual meetings instead, unless it’s necessary to do so. Partner with other entrepreneurs, creators, or freelancers, in that way you save on costs while getting serviced. This can also take us to our first point – hire interns. 

Let us know if any of these have worked for you, or which ones you are going to try, Feel free to add more in the comment section down below. 

pexels-nataliya-vaitkevich-6863248

How to boost your business’s Tax Incentives by hiring young people

We had briefly touched on this in our previous blogs, but let’s get a bit deeper into it. President Cyril Ramaphosa emphasized the role of the government in helping businesses thrive in this year’s State of the National Address (SONA). This is mainly for job creation in South Africa. 

With the unemployment rate in South Africa (as discussed in our previous blog), the need to support small businesses so they grow, and also to encourage entrepreneurship, especially amongst the youth has significantly increased. 

Introducing ETI’s

The good news for businesses, they can utilize the tax benefit by hiring young people. This is called the Employment Tax Incentive (ETI), and it’s said to be one of the most powerful tax benefits out there. ETI essentially reduces your overall Pay-As-You-Earn (PAYE) contribution without affecting the employee’s salary. 

> Employers will be able to claim the incentive for a 24 qualifying month period for all employees who qualify.

> The incentive amount differs based on the salary paid to each qualifying employee and whether the qualifying employee was employed after the inception of the ETI programme. 

How ETI works

Simple example:

If you hire 4 young people with salaries of R5000 per month, the total monthly payroll for all 4 employees would be R7500 from your overall monthly PAYE liability in the first 24 months in which the employee qualifies.

This can be done on your payroll system, and your employee’s salary will totally be unaffected. 

NB: The value of the ETI the employer may claim depends on the value of the monthly remuneration paid to the qualifying employee. If the employee has worked less than 160 hours in the month, the remuneration amount must be ‘grossed up’ to 160 hours per month to calculate the value of the ETI. The amount can then be calculated and be ‘grossed down’ in the same ratio.

Source: SARS

The math is simple, employers are rewarded for hiring young people, in return, they gain skills and experience. The private sector grows, and the economy grows. 

Who qualifies?

In his 2022 Budget Speech, Finance Minister Enoch Godongwana announced an increase in the ETI values from 1 March 2022.

An employee qualifies for the ETI if he/she:

  • works for you assists in conducting business, and receives remuneration for their work,
  • is documented in your employer records according to the provisions of section 31 of the BCEA,
  • earns at least the minimum wage,]
  • is between 18 and 29 years old, or is employed in a special economic zone, and
  • has a valid South African ID, a valid asylum seeker permit, or an ID in terms of Section 30 of the Refugees Act.

An employee will not qualify for the ETI if he/she:

  • is a domestic worker,
  • is a “connected person” to the employer,
  • spends more time studying than working (unless the employer and employee have entered into a learning programme as defined in Section 1 of the Skills Development Act, or
  • earns a monthly remuneration of R6,500 or more.

We hope this helps you somehow, feel free to contact us if you need any more clarity. You may also refer to our blog about other effective and legal ways to avoid paying tax in South Africa: https://accasesolutions.co.za/2021/06/17/how-to-avoid-paying-tax-as-a-small-business-in-south-africa/

Vector illustration of a student wearing toga climbing stairs made from books

3 sustainable ways in which businesses can assist school leavers prepare for the work environment

 

This has probably been a dialogue for many years. With the unemployment statistics in South Africa hiking up so much, we are yet to have this chat again. We hope this blog sheds some light on business owners, even small business owners – just how they can help support school leavers as they prepare for the work environment. 

There’s a gap we need to bridge between students graduating – finding work. We have so many graduates yet no opportunities. Could it be that they are not workplace ready? Is it a skill problem? Are schools not teaching the skills that are needed in the real world? Are some skills useless in this ever-changing world of technology? So many questions. But these questions need answers if we want to grow as a country. Businesses will not hire a person that won’t increase productivity or help grow the business in any way.

South Africa has graduate unemployment of 12.5% – 22.4 percentage points lower than the national official unemployment rate.

Source: BusinessTech

High school is when learners start thinking about life after school as they also apply to tertiary institutions. Choosing a course can also be tricky, technology is advancing every day – making some skills less needed by humans, we live in an automated world. Things like basic admin and customer inquiries can be taken care of by a robot. In as much as businesses might discriminate against school leavers with no required workplace skills, businesses are also responsible for equipping those school leavers with the skills that they might look for.

..moving right along, let’s look at a few practical ways in which businesses can intervene. 

3 sustainable ways in which businesses can assist school leavers prepare for the work environment 

(1) Job shadowing programs for teens – this has been around for quite some time. This is where businesses use the art of apprenticeship to show the students new itineraries for jobs. This is essentially done during spring break, sometimes even on weekends. 

The great thing about Job Shadowing is that learners can start while they are young – this is a time where they are getting prepared for life after school and still trying to figure things out in terms of their interests, capabilities, and so on. At this time, test, break and make. There’s still have time to think about passions and plan out what they want to do for the rest of their lives. 

(2) Introducing programs that will help the teachers and students to understand what the companies need. This needs both the school and the business to work closely in order to find time and resources to make this kind of program succeed. This is what we touched on briefly in our introduction. It’s inevitable that times are changing, and therefore new skills are needed. 10 years ago, people didn’t make money off social media management, in fact, the career didn’t exist. In today’s time, people make 6 figures from it – it’s a career, and brands/businesses employ them every other day. Perhaps the next point can be an action step towards achieving this:

(3) They can speak at school student assemblies and advise employment opportunities and offer them the tools needed for a specific job – partner with local businesses to see what skills are in high demand and short supply. Some schools do have career days where learners dress up as their future selves working in their dream jobs, while other schools bring in professionals/experts to talk to the learners about career choices. This should be an annual thing in schools, especially for Grade 10’s or even Grade 9 when they are still making a choice about which subject stream to choose. They can create training programs to give not only graduates but also high school learners to equip them with the skills in those jobs with a path to a job at those companies.

businessstructures

Business Structures | 2022

Firstly, there’s a difference between a business structure and an organizational structure, don’t confuse the two. The distinction is that an organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward the achievement of organizational aims… while a business structure refers to how a company is organized, in regard to its legal status. This influences the day-to-day operations of a business.

When we talk of taxes, this is probably the most important decision you have to make. The most common forms of business are sole proprietorship, partnership, corporation, and S corporation… with limited liability company (LLC) and the limited liability partnership (LLP) being the most recent development to these forms of business. Each comes with a tax consequence, so choose wisely. It should match your business’s needs too. 

Sole proprietorship 

A sole proprietorship is when there is a single founder who owns and runs the business. It’s worth noting that in this form of business entity, the business is not separate from the owner. 

You own and have 100% control over your business and you are entitled to all profits, however, the risk is that if your business falls into debt, your assets will be seized to pay for business debt, and you are personally liable for any obligations.

If you decide to start your business as a sole proprietorship but later decide to take on partners, you can reorganize as a partnership or other entity. Be sure to notify SARS.

Partnership

This is established when 2 or more co-owners run a business together. Partners invest money, skills, and time into making the business successful. This means that you will have more capital to kick-start the business, more skills, and expertise, and you get to share the workload. 

The upside of a partnership is that you share control of the business – with which sometimes you might have different views, and dealing with people is not always seamless. Another important thing to note is that everyone is liable for debts whether they were caused by other partners or not.

Pty Ltd 

A Pty Ltd (proprietary limited company) is a private company and is treated as a separate legal entity. Even if you launch your business single-handedly, this type of business is registered as a separate legal entity. The owners of this kind of business are known as shareholders. 

Because the business is a separate entity, it continues to run smoothly even if you sell your shares or take on partners. Additionally, you/the shareholders are not liable for company debts. 

The limitation is that you can’t offer shares to the public or list the business on a stock exchange, as this is a private company. You can’t even go to meetings and make decisions alone, two shareholders must be at a meeting… except when the company only has one shareholder. 

Public Company (Corporation) 

A public company—also called a publicly-traded company—is a corporation whose shareholders have a claim to part of the company’s assets and profits. This kind of company trades its stock on at least one stock exchange. The daily trading of the public company’s stock determines the value of the whole business.

A Publicly traded company is different from a Pty Ltd in that shareholders can be anyone who purchases stock. With anyone being an equity owner of the business, this offers you more capital to work with, and the risk is spread out amongst the various shareholders. The more shareholders, the less risk everyone holds. 

It’s important to remember though, you will need to reveal some of your documents and annual accounts published for inspection to the public. This doesn’t enable you to guard your secrets effectively. And since there are more shareholders and leaders of the company, making decisions can take longer.

Franchise 

A franchise is a licensed business to a third party by the owner of a business. This gives anyone the right to operate the business or distribute goods and/or services using the business’s name and systems at a fee.

With this type of business, you can capitalize on the franchise’s successful track record and a positive reputation. On top of that, franchises have training programs designed to optimize how you run the business and bring you up to speed quickly, plus operational support. 

However, you will have to follow the rules, regulations, system operations, and directives of the franchise. It’s also worth noting that the cost of becoming a franchisee is high, and you are liable to pay royalties to the franchise for the use of their name and systems. 

Choosing a business structure 

The type of business structure will depend on the type of business and its needs. You can still switch between types as your business grows. 

You can start as a Sole Proprietor and eventually grow into a Pty Ltd or public company. Tell us in the comment – what type of business are you running or thinking of venting into? 

South-Africa-tax

How the tax system works in South Africa | 2022

With everything, you first have to understand the most basic things. Tax is simply a compulsory contribution to state revenue that every South African working citizen and business must pay. Non-South African residents are taxed on South African-sourced income. The majority of the state’s income is derived from income tax (personal and company tax).

Every year, the Minister of Finance presents the Budget, which outlines the total government expenditure for the following financial year and the ways in which this expenditure will be financed. Which we recently had on the 23rd of February 2022. See below:

This tax money pays for public goods and services, but it is also key in the social contract between citizens and the economy. Paying taxes fosters economic growth and development. 

Understanding taxes: types, filing for returns, refunds from SARS:

There are many different types of taxes. Just to mention a few, some include:

  1. Pay As You Earn (PAYE)
  2. Personal Income Tax
  3. Provisional Tax
  4. Capital Gains Tax
  5. Value Added Tax

An example: 

Ordinary taxpayers are the people who earn a salary from an employer. The employer deducts Pay As You Earn (PAYE) from their salary monthly and pays that to SARS on their behalf. Here’s an example of how Net Income will look like after taxes: 

Filing for tax returns

Income tax returns must be requested by registered taxpayers every year. The year of assessment for individuals covers 12 months, beginning on 1 March and ending on the final day of February the following year. Tax returns must be submitted to SARS on the date given, please note that SARS tax returns and CIPC tax returns are two different things and must be filed separately to both organizations respectively. 

Companies are required to submit an income tax return within 12 months from the date on which their financial year ends. People whose income comes from sources other than a wage  – such as a trade, profession or investments and companies – are required to submit two provisional tax returns and where applicable make two provisional tax payments during the course of the tax year and may opt for a third “topping-up” payment six months after the end of the tax year. – Source: SARS. 

You can submit tax returns yourself, or hire a certified and registered tax practitioner to file your returns on your behalf. Here are some things to consider when picking the best accountant/tax personnel for your business 👇

As per Tax Administration Act no. 28 of 2011, every person who provides advice to another with respect to the application of tax principles or assists with any tax matters for a fee must:

✅ Be registered with a 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.

Accase Solutions, for instance, is registered with the IAC, Institute of Accounting and Commerce as a Certified Tax Practitioner since the registration of Accase Solutions, practicing under practitioner number PR0100503.

Why SARS issues refunds:

If for instance, you take unpaid leave at work, the payroll administrator has to adjust your tax therein. If the adjustment is not made, it means that your company deducted more tax as it was based on a wrong annual income. In this case, SARS is liable to give you a refund.

The whole point of filing for tax returns is for SARS to determine all your taxes, and if you have paid, they conclude on the right amount. If you have overpaid them, they will definitely give you your money back. Understand that, you only get a refund IF you have overpaid because you filed for returns.

If you want a breakdown/in-depth understanding of different types of taxes, please refer to this blog: https://accasesolutions.co.za/2021/03/29/important-things-to-know-about-tax-in-south-africa/

458CED6E-25F7-40BA-B301-BF236C172D53

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. 

77C6C48F-1590-4FC8-B812-7E85A4F4B03E

RETIREMENT ANNUITY | RETIREMENT PLAN

What’s your plan after Retirement? How are you planning to continue living your comfortable lifestyle even after retirement? 

This is where Retirement Annuities come in. It is a lifetime guaranteed monthly or annual income for a retiree until their death. You might be asking how this is different from a Pension Fund or Provident Fund? Let’s break it down for you before we get any further… 

Different types of retirement vehicles:

Pension fund – You can only join a pension fund, through the company that employs you. Your money is managed by the trustees of the fund and your contributions as well as your employer’s contributions are tax deductible. 

Provident fund – with provident fund, you are able to withdraw the entire savings amount as a lump sum when you retire. 

Retirement annuity fund – a retirement annuity fund is independent of your employer, it allows you to choose what funds you invest this money in and you can also make monthly contributions. 

Retirement Annuity Plan 

Retirement Planning is important because it enables you to invest your money for a time when you will no longer be working but want to continue living comfortably with regular income.

However, this is barely ever enough to guarantee a comfortable retirement, simply because the value of money changes over time due to factors such as inflation and interest rates – which is why it is imperative that one makes additional contributions to their retirement plan, over and above the employer’s contribution. 

For example

Someone who’s been contributing R300 per month with their employer doing the same over the past 10 years, that amounts to R600 total contribution per month. This means that this person has saved R72 000 over the past 10 years. If this person continues to work for more than 30 years, given that nothing changes, a contribution of R600 per month over the next 30 years equals R216 000. Adding this to the R72 000 that was saved equals R288 000. 

Disclaimer: this amount does not take into account inflation and interest rates.

Retirement annuities can be taken up as an additional investment plan for retirement which will guarantee you fixed or variable payments over time during your years of retirement.

Over and above your Retirement Annuities, there’s a few things you can do to ensure you still live a comfortable life even after retirement;

1️⃣ Start saving and investing now.  Try to take up a minimum of 10% of your income and put into your savings and investments and increase this as your income increases over the years. You can also automate this process by creating debit orders so that the money is deducted automatically from your account on payday. It’s a great way to grow your wealth.

2️⃣ Adopt healthy lifestyle choices. Your mind, body and income are wealth-building tools. Don’t destroy them with unhealthy and expensive habits and addictions that are expensive to treat.

3️⃣ NEVER cash out your pension funds when you change jobs, rather transfer it to your new employer’s pension fund.

We have pretty much covered anything, you can look up different companies that offer different Retirement Annuity investment plans, compare and pick one that makes more sense to you.

E79EACC2-5EB2-4FFF-811A-D9A56D371E88

All about NPOs in South Africa

We have touched on Public Benefits Organizations not so long ago on one of our #FunFactsWednedays video, let us to continue this chat. 

What is an NPO?

We cannot assume you know, let’s get to understand what an NPO is. An NPO is a Nonprofit Organisation that plays a significant role in society, they take responsibility of the social and development needs of the country.

How to get started: 

Just like any other business/organisation, there must be intent or purpose of starting. Start here: 

1️⃣ Define your goal – before you could even register, you just at least know what your NPO will stand for. Knowing your WHY is important, it will help you navigate things more especially in cases where you need to go back to the drawing board. What exactly do you hope to achieve once you start the organization? Read more: What exactly do you hope to achieve once you start the organization?

2️⃣ Choose your board of Directors – selecting management of the NPO is probably the most fundamental step. Bring in like-minded people on board, it’s even better to get people from different industries who could come in with different perspectives during different situations. 

3️⃣ Draft your memorandum – this is important as it proves your intention to register the organization as a “not-for-profit” company – followed by information about how the organization would be governed, owned, and other important things to note therein.

Lastly, register. 

About registering your NPO

You can submit your non-profit organisation (NPO) application at your nearest provincial  social development office or a local South African Revenue Service (SARS) branch office. 

Benefits of registering is that its certificate:

  • improves your credibility and increases funding opportunities
  • it allows your organisation to open a bank account
  • helps your organisation with tax incentives.

The prerequisites of registering is that you must be one of the following:

  • non-governmental organisation (NGO)
  • community-based organisation (CBO)
  • faith-based organisation (FBO).

Do NPOs pay tax? 

However these organisations are “nonprofit”, they do not automatically qualify for tax exemption, the organisations that meet the requirements set out in the Income Tax Act, 1962 must apply for this exemption. Only IF the exemption application has been approved by SARS, the organisation will then be registered as a Public Benefit Organisation (PBO) and allocated a unique PBO reference number. 

These organisations can issue section 18A certificates – which allow for tax deduction to parties who make donations to such organisations. This becomes an attraction to donors because they get to enjoy these tax benefits therein by making donations to your organisation. 

As a member of a Public Benefit Company/Organisation, familiarise yourself with the conditions of the section 18A or contact Accase Solutions and we will gladly assist: 

✉️: info@accasesolutions.co.za

☎: 0615238833

8B0856B5-5DFC-4F4B-B539-FE07CF313D2F

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