Tax Day

The tax season is finally open for individuals to submit their tax returns. This year the season is shorter compared all the other years.  Submission of tax returns calls for proper planning to entail a smooth submission of returns.
Taxpayers need to ensure that they have allTaxpayersred documentation handy. These documents include IRP5, medical certificates, pension certificates, proof of medical expenses and all other relevant documents. If you are a first timer make sure you have registered with SARS and have a tax number. Once you get your tax number go on SARS efiling and create a profile. Once the profile has been created you can go ahead and submit your tax return.
Your accountant can help you with your individual tax returns by completing the return on your behalf and filing it through SARS efiling. Some taxpayers are not Tech savvy and prefer to submit their returns at the SARS branch close to them. This is time-consuming as one has to que at SARS to submit the tax return, I would advise that all taxpayers register of SARS efiling so they can submit their returns electronically from the comfort of their offices or homes. This is hustle free and very convenient.
An individual needs to ascertain if they have to submit a tax return. SARS has criteria to determine whether an individual taxpayer must submit a return information can be obtained on the SARS website.
For more information and assistance with your tax returns please do contact your accountant or tax practitioner who should be able to assist you with your tax queries or you can call SARS directly.

By |2018-07-05T15:55:52+02:00July 5th, 2018|Financial Management|0 Comments

Do you need to do your CIPC annual Return?

When we chat with business owners about their CIPC annual return, we too often get blank stares with a small side of fear.  “Oh no, not another compliance issue we need to take care of” is the reply.

Ok, so let’s put things right here and help lay your fear to rest, a bit.

Yes, every registered business needs to submit an annual return to CIPC. It is not a very tedious task and only takes a few minutes of online work. But it can only be done through a person or business that has a registered account with CIPC.  EM Solutions has such an account.

So, what needs to be done? On or as close to the annual anniversary of the registration of your business a submission needs to be made on the CIPC system detailing your last annual turnover, business email address and telephone number and description of the business.

Payment is scaled according to the turnover and ranges from R100 for turnover less than R1 million to R3000 for a turnover of more than R25 million. There are also late payment fees applicable to anything older than 3 months.

This equates to not a huge amount of money, but by not submitting your annual return could result in your business being listed as deregistered by CIPC. Once this happens, your bank will be notified and soon all your contracts, lease and creditors will become aware of this and you will become personally liable for any outstanding overdraft, accounts payable and surety that has been signed for.

Gulp! So please check when last you submitted your annual return or contact us to check for you directly on CIPC and we will advise you accordingly.

Compliance is just one of those things you need to do to run a sustainable business.

By |2018-06-18T09:12:08+02:00June 18th, 2018|Entrepreneurship, Financial Management, Legal|0 Comments

SARS Cuts Tax Deadlines

According to SARS statistics: The 2017 tax season saw 1.6million taxpayers filing tax returns at SARS branches even though they were not required to do so, from 1.8million in 2016. 868,562 taxpayers who are registered eFilers visited branches to file returns even though they could do this online, dropping from 935,269 in 2016. 120,000 tax practitioners visited SARS branches to eFile on behalf of clients (2016:132,000). Employers can register new job-seekers electronically via e@syFile, but still many of these flock to SARS to register manually. A whopping 1 million old returns were filed during 2016, with the number coming down to 733,000 in 2017.

In response to this overwhelming strain on its resources, SARS has shortened the 2018 tax period by 3 weeks. The tax season will start on 1 July and end on 31 October for non-provisional taxpayers. SARS says this will allow them to deal with audits and verifications before the December holiday break. This is also because taxpayers will be unable to attend to any requests send by SARS during the December period, resulting in a technical non-compliance which often results in taxpayers filing objections with SARS. This leads to further traffic in the SARS system.

Non-provisional taxpayers are individuals who earn a salary and do not have any additional income, for example, rental income, interest or any other income. Manual returns will have to be filed by 21 September.

In order to ease the traffic during tax-season, SARS says they have sent direct communication to taxpayers who might not need to file a return informing them of this. However, it is prudent to get a tax practitioner’s opinion before choosing not to file a return as some of these letters have been followed up by letters to disregard the initial directive. It is noteworthy that year-on-year, taxpayer circumstances may change and thus require one to file a return in order to comply.

SARS also promised that verification letters would be more specific; which will make it much easier for taxpayers and tax practitioners. This move will ease tax season headaches as SARS can send two or three verification letters, making it difficult for the taxpayer to understand what exactly SARS wants from them in order to comply.

Provisional taxpayers, however, will have until January 31, 2019, to file their returns.

Well, the goalposts have shifted and we will all have to redirect our aim so that we don’t miss out. The trend has been that most taxpayers procrastinate until the last minute to file returns or send the necessary documents to their tax practitioners and this may result in the late filing of returns, and SARS will not hesitate to charge interest and penalties.

By |2018-06-05T10:48:51+02:00June 14th, 2018|Financial Management|0 Comments


The moment that we have all been waiting for is a few weeks away. And yes SARS has announced the opening of the Tax season on the 1st of July and it will run until the 31st of October. Three weeks shorter than what we were all used to.

Taxpayers have to complete and submit tax returns before closing date to avoid unnecessary penalties from SARS. Submitting tax returns gives SARS the opportunity to assess an individual’s income earned, deductible expenses and tax paid over to SARS for the tax period and calculate to see if there is money refundable to the taxpayer or payable to SARS by the taxpayer. It can go either way, after completing the return the taxpayer can request a tax calculation that will show them who owes who money. In some cases, the employee who might have deducted more money in terms of PAYE hence SARS will refund the taxpayer and vice versa.

Now what does this mean for the taxpayer? It simply means the taxpayer has to start preparing to complete and submit tax returns. IRP5’s need to be in place, medical certificates, receipts for medical expenses and all other relevant documents that one needs in order to complete a tax return. If the tax return is going to be done by the taxpayer’s Accountant then all the relevant information needs to get to the Accountant in time. The sooner the tax return is completed and submitted the sooner any refunds can be paid to the taxpayer – time value of money. In the event the tax return is being completed by and Accountant, the taxpayer needs to be available respond to any questions or queries that the Accountant might have regarding the tax return.

By |2018-06-07T10:59:43+02:00June 7th, 2018|Financial Management|0 Comments

Financial Management – Two eyes are better than one

During this last week, we were asked to put together a report for a client, comparing the actual expenditure to date against the agreed budget. We pulled the actual information from the accounting package and sent the report to the client. After he looked at it he sent us a number of questions, checking where certain payments, which he was expecting to see, were allocated and clarifying some of the amounts. It made me realise that everyone has a picture in their heads of how they expect their financial reports to look, based on the payments you have made and remember.

Most bookkeepers use logic and a certain amount of guesswork to allocated payments and income to account categories. However, there are times where our logic and the client’s expectation don’t match up. That is why it is so important to check where the transactions are allocated within your financial reports. You want the reports to portray the picture you intended, so you need to control where entries end up. All accounting packages have some kind of transaction listing that shows what transactions make up the total for a category on the financial report. It is your responsibility to check that everything is in the correct place.

Bookkeepers are a bit like artificial intelligence, they learn as they engage. So effective communication regarding where transactions should be allocated will improve the accuracy of the allocations in the future. However, many people only look at the details once a year, if that, so there is no opportunity for growth and learning, and an improved accuracy. Incorrect allocations can have an effect on your profitability and your tax, so don’t brush them off as inconsequential, rather take the time to get it right the first time.

If you’d like someone to walk you through your financial reports and transaction list, and help you to know what to look for, give us a call and set up an appointment.

By |2018-06-05T10:29:55+02:00June 5th, 2018|Financial Management|0 Comments

When not to file a tax return

It’s one of the most asked questions when it comes to taxes: Do I really need to file a tax return? Most people would turn to the SARS website to find out what the authority has to say about filing a tax return.

On the website, SARS states that you do not need to file a tax return if ALL of the following applies to you:

  • Your total employment income/salary for the year income/salaryFebruary 2018) before tax (gross income) was not more than R350 000
  • You only received employment income / salary for the full year of assessment (March 2017 to February 2018) from one employer
  • You have no other form of income (e.g. car allowance, business income, taxable interest or rental income or income from another job)
  • You do not want to claim for any additional allowable tax related deductions (e.g. medical expenses, retirement annuity contributions, travel expenses, etc.).

Most times we assume that if our income is below the tax threshold or we earn employment income, we do not need to file a tax return. The first part, because SARS says so and the later; because the employer files this on our behalf.

But what happens when the employer doesn’t file the PAYE returns on our behalf and we realise 6 years down the line that this has not been done? Or we need to purchase a house and the bank requires a Tax Clearance Certificate (A document from SARS that shows that our tax affairs are in order)? SARS will not issue a Tax Clearance Certificate if we have not filed the returns for all those years that the returns are outstanding. Last year, SARS penalised tax payers who had not filed their returns regardless of the reasons why they had not filed these; even if their income was below the tax threshold. This is because there is no way SARS can tell that a taxpayer’s income is below the threshold unless a return has been filed.

So the question begs: When should I file a tax return? The answer; if you are wanting to avoid the headaches of having to file old returns when the information has far been lost; is always. If you are employed, this will help you to confirm that your employer or previous employer has filed your payroll return; as the information will self-populate on e-filing if this has been done. If not, it gives you an opportunity to follow up with the employer before they shut shop, or you lose contact with them for varying reasons.

Even though SARS states that you may not file a return in certain circumstances; they still stipulate that you should keep the documents concerning income earned for 5 years or until an audit has been concluded. They categorically state that a person who is not required to submit a return, but has during a tax period received income must keep records for five years if they are subject to tax but did not file due to an exemption or a threshold. Therefore it is always prudent to be on the safe side and keep all returns filed and up-to-date.

By |2018-05-24T12:46:07+02:00May 24th, 2018|Financial Management|0 Comments

Financial Management – The SARS piece of the pie

Income tax is the bane of our business and personal existence, but as upright citizens, we have to pay it. And the time of payment creeps up on us unexpectedly at least twice a year. Provisional tax is paid in Aug and Feb of every year. But those payments are not the actual tax expense that is reflected in our accounting records. Only at the end of the financial year, once all the accounting activities have completed and we have a set of annual financial statements, can we say exactly what profit (or loss) has been made, and therefore exactly what tax is due. Thus, your annual income tax return is a reflection of the final picture for the year.

Against this final financial picture is laid the provisional tax that you have paid during the year to see if you have over/underpaid. Typically the provisional tax is shown as an expense in the financial year until the final accounting entries to calculate the total tax for the year. Then the over/underpayment of tax is added/subtracted to make the tax expense account tie-up with the tax return. Any overpayment (where you paid too much provisional tax) is then shown on the balance sheet as a receivable, but if you owe SARS a bit extra in tax, this will reflect as payable in the accounting records.

It sounds like you only have to think about income tax a few times a year, but if you don’t plan for it, you can end up without enough money to pay it. We suggest putting an estimated amount aside in a separate account every month, to make sure you have enough money to pay SARS. To know what to estimate, you need a good and accurate idea of your monthly profit.

To help you stay on top of your estimated tax bill, give us a ring.

By |2018-05-22T11:00:44+02:00May 22nd, 2018|Financial Management|0 Comments

Is accounting only a matter of debits and credits

Often times some businesses do not value the importance of bookkeeping and accounting. Statements like bookkeepers do not bring the money so I can do without one are often heard. What most business owners fail to understand is even though bookkeepers and accountants do not bring in the money, they provide very vital support to any business.

Bookkeepers and accountants are trained to keep accurate records of transactions happening in any organisation. This information once captured into the entity’s accounting package is then used to draw up management report that is given to management and business owners so they can see at a glance how the business is performing. In short so they can see how their efforts are paying.

Bookkeepers and accountants do not just debit and credit accounts simply because for every debit entry there has to be a credit entry and vice versa, no. They have to follow certain acceptable financial reporting standards when they do the capturing and processing of financial information in the accounting package. This requires a lot of knowledge and ongoing continued professional development as changes in standards are brought in every now and again.

This is then used by different users of financial statements which vary from prospective Investors, banks if the entity wants to borrow money, shareholders etc.

We may not agree but accounting is the heart of a business. Without proper record keeping, how is a company going to know what their liabilities are and who owes them? Some transactions might just fall through the cracks. Remember we have among us some companies that will only pay upon presentation of an invoice and if the entity does not know who still owes and how much some money might never be received.

By |2018-05-17T14:36:50+02:00May 17th, 2018|Financial Management|0 Comments

Financial Management – The price of borrowing

In the profit and loss statement, there is a category of costs we haven’t yet discussed. These are the financing costs. They are a separate section of costs as they are not generated by the operations of the business, or the production of your product or service. The financing costs related to how you fund the ‘vehicle’ that is the business and are usually made up of interest paid to the provider of the funds. Interest is normally paid on the following types of funding:

  • overdraft on business accounts
  • short-term loans from the bank or other lending agencies
  • higher purchase agreements for vehicles, equipment and other assets
  • loans from members, directors or shareholders and their families

Finance costs do not increase in relation to sales or business growth, but rather are linked to the size of the funding received, the repayment period and the national interest rate. Financing of some kind is often necessary at some point in a business’s life; overdraft being the most common. When the cost of that additional inflow of cash is separated out and highlighted in the financial statements, how much is actually costs can be a surprise.

Deciding to access funding, in whatever form, should be a careful consideration, as the monthly commitment to repayments can be a challenge, and the cost can be crippling. The need for a continual inflow from an outside source means that the business is not generating enough cash to sustain itself and that something in the business operations needs to change. Rather than increasing costs through additional financing, a business owner should always look at ways to increase access to the cash available within the business first.

Should you wish for some outside insight into maximising available cash within your business, please make an appointment with one of our consultants.

By |2018-05-15T10:41:50+02:00May 15th, 2018|Financial Management|0 Comments

Financial management – how much is enough?

In the last blog, we looked at the operating costs of the business. We understood that these are the fixed costs of running the business that needs to be covered every month by the sales. In your budget, you’ll have put the sales revenue needed to make a profit, as your monthly or annual target. However, do you know how many products or days of service you need to sell to make that target? That number, the number of units sold to pay the operating costs, is called the Breakeven Point. How many sales are required for your income to equal your costs?

For this calculation, you’ll need one of the numbers previously discussed in this series – the gross profit per item. Since the cost price of your product is paid out of the sales income, only the profit on that item is available to contribute to covering the operating costs. To calculate the breakeven point you will need to divide your operating costs by the average gross profit. This will give you the number of products necessary to be sold in order to cover your costs.

What if you are a service business? Do you know how many staff you need to break even? Generally service business employs staff when the workload is too great for the current complement. However, it is important to calculate the optimal number of staff to cover costs and generate a profit.

First you have to calculate the gross profit on sales by deducting the average hourly cost for the employees from the average hourly charge out rate. It may be useful to do this per service type or employee group, if the rates differ vastly. Then you are able to divide the operating costs (net of the employee’s remuneration costs) by the average profit per hour to calculate the total number of chargeable hours to be worked to breakeven.

It can be helpful to then work that back into the number of full-time staff necessary to work those hours. To calculate the available chargeable hours, start with the calendar year, less weekends and public holidays, leave and staff development days, staff meeting time and general unproductive time. Typically it works out to less than 200 days of chargeable time per person. Divide the breakeven hours into days and divide by the number of available days for 1 person to calculate how many staff members you need. You might be surprised at how many staff members you require!

There are a lot of numbers in these calculations, and since we find numbers to be fun, give us a call if you need help with the numbers!

By |2018-05-08T10:00:57+02:00May 8th, 2018|Financial Management|0 Comments
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