The importance of good bookkeeping

As we begin a new tax year and new financial year for some here is a look at what good bookkeeping is and why it is important. Some have made mistakes in the past which may or may not have cost them financially but we need to correct them going forward to ensure we have a good bookkeeping system that is as efficient and appropriate as possible depending on the size of the entity.

What is the bookkeeping? It is the organisation and storage of accounting and financial information by a bookkeeper. It is of great importance that the information is accurately and diligently captured so it can show a true reflection of the entity’s financial performance for a given period.  The purpose of bookkeeping is to collate all the financial transactions and business activities for a period and summarise it for various uses.  These financial transactions are the true reflection of the entity’s performance and a guide as to whether strategies are working or not or if reviews need to be done.  Shareholders will want to know how their investment is performing, Directors will want to know if the strategies in place are working and the list goes on. A bookkeeper will record all these daily financial transactions and this is key to any business.

From the bookkeeper, the information is sent to the Accountant who then is responsible for reporting on the financial position of the entity as well as managing cash flows of the entity. The information or reports from the Accountant are then used to reach decisions on how to manage the business, invest in it or borrow money for future business deals. This information can then be audited if the entity opts for an auditor if it is statutory to get audited financials.

By |2018-04-19T11:54:11+02:00April 19th, 2018|Financial Management|0 Comments

The VAT Effect

One of the most common buzz words in South Africa right now is the VAT increase. Individuals and corporates are wondering what effect this will have on the bottom line and if they will be able to cope with the consequence. We discuss the basic history of VAT and implications of this increase and how the VAT system works.
The origins of VAT date back to 1919 in Germany. France later introduced production tax; a form of VAT which was replaced with the producer’s income-based tax in 1948 and consumption tax in 1954.
The Statement of Standard Accounting Practice (SSAP, 1993) defines VAT as “a tax on the supply of goods and services which is eventually borne by the final consumer but collected at each stage of the production and distribution chain.”
VAT is charged on the supply of all goods and services made in the course of a business by a taxable person unless they are specifically exempt. VAT is levied at each stage of the supply chain, from the manufacturer to the wholesaler, to the retailer, taxing the value added by businesses at each point in the chain. For instance, raw wheat becomes more valuable as it moves along the supply chain to eventually be manufactured into bread or whatever the end product may be. This reinforces the principle that VAT is a tax borne by the end user in the economy, which are households. The increase in VAT from 14% to 15% increases inflation, as every supplier in the value chain adds 1% to their price, and thus the end user bears the brunt of that multiplied price increase.
Businesses are required to register for VAT if their turnover of taxable goods &/or services is above a given threshold, which is currently R1million. A registered business will pay input tax; which is VAT on its purchases and in turn, charges Output tax; which is VAT on its sales. VAT is not a business expense for a registered vendor, but a cost that is ultimately passed on to the end-consumer when they buy the final product. Vendors thus act as collection agents, collecting the tax on behalf of the government.

By |2018-03-15T13:56:13+02:00March 15th, 2018|Strategy|0 Comments

Do you need a Financial Review Engagement?

Getting a financial review for your business sounds much like the annual trip to the dentist – painful and expensive: but not necessarily so. An independent review of your financial status as a business is an excellent starting assessment to future growth and development of your entire business. As any Business Coach will tell you, “If it can’t be measured, it can’t be managed”

Financial review by EM-Solutions

So what is a Review Engagement?

For larger companies an annual financial audit is a legal requirement, for slightly smaller firms a review engagement, as guided by the International Standard on Review Engagements 2400, is compulsory. This includes:

  • Conduct adequate investigation of your paperwork and financial records
  • Establish if anything has been done incorrectly
  • Arrive at a conclusion on the financial statements as to whether they are legally compliant.

This can be as unpleasant as the Dentist, but essential for compliance.

But what about smaller firms that are forging ahead in what seems to be the ever increasing gale of issues and economic whirlwinds? A Financial Review could be the solid platform you need to launch your future strategy from to secure that all important loan or partnership agreement. This would save your company the costs involved in obtaining an audit but would still provide the bank or partners with sufficient assurance on your Annual Financial Statements.

Our team of qualified and certified practitioners is able to conduct a full review, offer Financial Management and Business Advice together with our Business Coaching and Marketing strategies will put your business in good standing for future sustainability.

So, do not put this off as you may do the Dentist. Contact us today to set up a non-obligation chat with our Finance team. It could be just what your future requires.

By |2016-11-01T10:20:08+02:00April 12th, 2016|Financial Management|1 Comment

How much should you budget for marketing?

Marketing Budget22Budget for marketing in businesses is not a one-size-fits-all. Hence many businesses find it difficult to allocate their budget and know just how much should go towards marketing. The thing is, not all businesses are the same. They all represent different industries and their turnovers are different. So is their marketing and audience.

There are factors that each business should look into when deciding on a budget for marketing. First, ask yourself these questions:

  • What industry are you in?
  • What do you want to achieve with your marketing?
  • What is your total revenue?

After answering the above questions, you can then decide how much you need to market your company. Bear in mind that companies that provide services spend a bit more than those selling products. And for small businesses, it’s a bit complicated than to just simply assign  a percentage and sticking to it.

Business.com suggests that as a small business, the best way to decide how much of your budget should really go on marketing is to do your research. Take a look at your previous marketing efforts and continue doing what works while reducing your budget on campaigns that don’t bring enough money.

Also, remember that new and emerging brands are looking to capture new market share and develop brand recognition with an audience that has absolutely no idea who they are. So, the new the company is the more expensive marketing is gonna be. But, if you aren’t well funded, make sure your rands are spent wisely and tightly to specific deliverables. There is nothing worse than spending every penny you have to build something the wrong way only to have to start over again. So do it right the first time.

The well established companies / businesses – those that have been around for 5 year and more, don’t need a huge budget for marketing, because their brand is already well known and there is no need for awareness.

Marketing fees can range depending on the age and size of the company and local or global marketing goals.

 

 

 

By |2016-11-01T10:20:09+02:00March 15th, 2016|Uncategorized|0 Comments

BOB episode 18 – Financial Calendar


 

As you know, this month is finance month and we are speaking all things numbers.

One of the key tools to a successful business is to have a “Financial Calendar”. In case you are asking yourself what that is, a Financial Calendar is a 12-month accounting period for a company or organization. It is a list of all the key dates and deadlines that your company has to comply with.

There is a whole lot of key dates and deadlines that a lot of businesses forget or miss, and have cost them a lot of money in paying penalties and interests. So please know those key dates. Things like: VAT returns, Tax return, salary related issues – all those form part of a financial calendar.

It is best that you know all these dates to avoid paying penalties that you don’t even understand, or worse, to get your company de-registered.  If you would like to know all about the important dates that your company should comply with, we will be talking about all of that in our finance workshop later on this week. To know more about the workshop please drop us an email on bruce@em-solutions.co.za or visit our website www.em-solutions.co.za

By |2016-11-01T10:20:09+02:00March 7th, 2016|Uncategorized|0 Comments