However if you’re a provisional taxpayer the deadline was 22 Nov 2013 and if you are submitting it via eFiling the deadline was extended to 31st of January 2014 – provided all your tax affairs are in order.
You need to submit if you are:
Annual financial statements are very important as they provide you with a lot of information about your company and its future.
Annual financial statements can provide you with information such as earnings and if they’re higher or lower than the previous year, how sales are doing and whether the company is making more money than what it is spending. All these numbers should be clearly represented on a company’s annual financial statements.
Annual financial statements are a good indication of where the business is at financially and is useful in determining an estimate at how the business will do in the following year. It can also give a good idea of the management’s strategic plans and will let you know how management plan to build on the company’s current success, of improve on its failure if that’s the case. These statements can help management make intelligent decisions on what’s working and what isn’t in order for the business to succeed.
Annual financial statements are also important for investors to analyse investment potential and good financial statements help banks determine whether or not to loan money to a company. An annual financial statement can also help a company decide whether their customers and suppliers are going to be a good or bad risk to do business with.
An annual financial statement is the one document within a company that says “Take a look at what we do, what we’ve done, and what we will do.” Investors, banks, clients, and potential customers all rely on a company’s annual financial statement to determine how doing business with that company is going to help them. A company’s annual financial statement is usually readily available for perusal from the company itself or on their website and it is almost always free for investors, banks and a range of other people to have a look at.
The Close Corporations Act requires that companies provide annual financial statements and they are required to be in agreement with all accounting records of the company. If you and your business requires help with this, we at PATC can help you. We will work with you in order to provide an accurate annual financial statement of your company.
For more information on how we can help you do this, please contact us.
Image courtesy of FreeDigitalPhotos.net
When it comes to owning your own business and working for yourself, there are a lot of things to remember. All these aspects to remember are things that could help or hinder your business. One very important job to remember is that of record keeping. It requires a fair amount of patience and organisation but, if done properly, can help you in many ways.
Keeping good records can help you keep track of the progress your business is making, prepare your financial statements, prepare your tax returns and keep track of your expenses. It means staying on top of your business and being in the know of all that is coming into your business and what’s going out.
The type of records you need to keep depends on your business but the general rule of thumb is to clearly keep track of your income and expenses. The way to do this best can be alphabetically, numerically or by date and month. Some business people work best with everything arranged by month, others by name. Whichever way works for you, it’s best to be, and try to stay, organised.
If your records are organised and kept together, it’s easy to keep track of what’s happening and what you need for various times, e.g. tax season. If something also goes wrong within your business, good record keeping can help rectify the problem and potentially save you money. If you are not a very organised person and are someone who struggles to keep your records in order, we suggest hiring someone to help you keep your records in order.
It is suggested that you keep all records for a minimum of 7 years. By not keeping your records, or if you find yourself not being able to produce a record of something, SARS could penalise you up to 200%. Because SARS could ask for proof of something regarding your business at any time, we advise that you keep your records up to date and organised for the recommended 7 years. Additionally, if you cannot support any deductions you’ve made, SARS will question the validity of all your claims – an unnecessary situation one might find themselves in if only they had stayed on top of their records.
Because record keeping is so important, it is vital that it is done correctly. It can be as easy as keeping files and folders for each expense, but if you’re not a very organised person, PATC is on hand to help keep you on top of your business records. For information on how to keep good records, or how to be more organised with your records, contact us today and we’ll help your stay on top of your record keeping.
Image courtesy of FreeDigitalPhotos.net
What exactly are the rules and regulations regarding domestic workers?
Approximately 1 to 1.5 million South Africans work as domestic workers, gardeners and child minders. These days, there are far more rules and regulations regarding domestic worker than in the past. In present day, they are now considered regular workers just like a chartered accountant, or doctor would be. Therefore, they are entitled to the same benefits and answer to the same rules as anyone else. But what exactly are these benefits and rules?
General rules:
The general rules of a workplace now apply to domestic workers. The same notice period and termination of employment applies to domestic workers as normal workers. Transport allowances and bonuses are not specified and are therefore open for negotiation between parties. Working hours, public holidays, annual, sick maternity and family responsibility leave and deductions all apply to domestic workers the same way that they would to anyone else.
Wages:
Wages are calculated according to a table and take working hours into account. It also takes various areas into account. Domestic workers are entitled to a payslip which includes all regular information as any normal payslip. Deductions are permitted to be included; however, certain deductions are not permitted. These include; breakages, damages, clothing and training.
Termination:
Normal termination procedures apply to domestic workers. On termination of services, the employer must give the domestic worker a certificate of service.
Housing:
Should you provide your domestic worker with housing, it needs to fulfil certain criteria. It needs to be weatherproof and in good condition, it has to have at least one window and door that can be locked, and it needs to be fitted with a toilet and shower/bath, or it has to have access to another bathroom. A deduction of no more than 10% may be taken for accommodation.
UIF Contribution
If your domestic worker works for you for more than 24 hours a month, they must be registered for UIF. It is the responsibility of the employer to register their domestic worker with UIF and ensure that payment is made. Monthly contributions are 2% of the worker’s wage. If a domestic worker is employed by more than one employer, each employer must register the domestic worker separately and ensure payment is made.
It is important to be up to date with the regulations regarding domestic workers. As they are now considered normal workers just like everyone else, the same rules apply to them and the same consequences can apply to you should you not follow procedure.
For more information on tax and UIF, contact Professional Accountants & Tax Consultants and we can help you and answer any questions you might have.
What info do you need and how can PATC help?
You might be cringing at the thought of submitting your tax returns but it need not be that difficult, let us help you tick off the check list and get all your tax documents in order and we will submit your tax return for you.
Please note that although we will be using all of the above documentation to complete your return, it is NOT submitted to SARS with your return. You must retain this documentation for a period of five years in case SARS calls for them.
For a complete guide on all the documents you require for your tax return, or if you need assistance filling your tax return, please contact the tax consultants at PATC today!
People are subject to scams every day and they are becoming increasingly difficult to spot the difference between a scam and a legitimate email so you need to remain vigilant when working online. As a result of this increase in scams and phishing attacks SARS has created a section of the website where they will post updates of any scams they have heard about. Similarly they would like you to tell them about any emails you think are scams or phishing. To report or to get more information on phishing, please send an email to phishing@sars.gov.za or call the Fraud and Anti-Corruption Hotline on 0800 00 2870.
How do you know if a SARS email is a scam or not?
Fraudulent emails are always aimed at enticing unsuspecting taxpayers to part with personal information such as bank account details. Examples include emails that appear to be from returns@sars.co.za, or refunds@sars.co.za indicating that tax payers are eligible to receive TAX refunds. Once taxpayers put their personal information such as banking details into these false forms, the information is then fraudulently extracted by the criminals to clear out your funds.
Members of the public are randomly emailed with false emails made to look as if these emails were sent from SARS so take your time to look through your emails properly and follow these tips below: –
Do not open or respond to emails from unknown sources
Management accounting is a specialised type of accounting in which accounting firms focus on the requirements and use of accounting information to managers within companies. This information helps to provide managers with data and advice that allows them to make informed business decisions, while also improving management and control functions. Compared to financial accounting, management accounting differs in that it is forward-looking rather than historical, model based rather than case based, intended for managers rather than stakeholders or clients, confidential instead of publically reported and focused on the needs of managers rather than general accounting standards.
The industry has changed greatly as business trends have changed, with many changes in the best practices of management accounting. Professional accountants who specialise in management accounting need to realise that both traditional practices and innovative practices play a role in ensuring the best practices overall.
Some of the more essential core practices include the following:
1. Determine user needs
While financial accounting has set guidelines and practices, management accounting focuses on specific needs of the user. Every business is different, and every management requirement is also different, therefore accountants need to spend time identifying the exact needs in order to develop a strategy. Users request different reports and analyses depending on their objective, with anything from employee overtime hours to expenses and other areas to be considered.
2. Determine specific information required
Companies retain a wide range of information that pertains to the management of the business, from production costs to payroll information, expense information and other financial data. Professional accountants handling the management accounting for the company therefore need to understand exactly what information is required by managers to reach their specific goals and also determine which information is relevant to these goals.
3. Understanding the role of internal customers
For management accountants, managers and employees take the role of internal customers. Each person’s role within the company is different, and accountants need to understand each of these roles in order to accurately identify tasks and assist properly. The accountant can then deliver reports and analysis that target these specific needs within the company, in order to assist all internal customers in reaching their business goals.
4. Communicate effectively with all role players
Communication plays a vital role in management accountant, and professional accountants working within the management sphere need to be able to effectively listen, process information and report back to managers at all times. In the accounting world, jargon is used on a regular basis. For most businesses who do not work within financial industries however, many of these terms are not understood. Being able to effectively communicate concepts and strategies is crucial, so that all parties are able to understand the accounting processes at all times.
5. Strategic, performance and risk management
A final essential practice within management accounting is the ability to develop and implement strategic, performance and risk management approaches within the company. As this type of accounting is forward-thinking rather than historical and partners with management areas, professional accountants working with management need to be able to understand the importance of these approaches in order to best serve the needs of companies.
Get it wrong and you could face massive penalties! …of up to 200%. By LAW, taxpayers (Companies and Individuals) are required to keep certain tax records for 5 years, however SARS urges us – as consultants, to keep records for 7 years. If you don’t know which documents and records SARS requires you to keep, then you will find yourself facing penalties. A single item of which you don’t have proof will cause the SARS to doubt the validity of all your other deductions claimed or disclosures of income received. This could lead to additional assessments and additional tax of up to 200%.
The words tax, tax man, Receiver and SARS are known to strike fear into the hearts of many an entrepreneur. This is not only because it implies that you have to part with your money, but because the tax process can be a daunting one. A good place to start when getting your taxes in order is by keeping accurate records. You may choose your own system of record keeping that suits the purpose and nature of your business, but your records must always establish your income and expenses. You need to keep permanent books of account as well as any other information to support these records, such as invoices, cheque stubs, paid accounts, and bank statements. The Income Tax Act and the Value-Added Tax Act specify certain records that you are required to keep. These records include:
Recent changes to the Act now include any data created by means of a computer, including data in the electronic form in which it was originally created or in which it is stored for back-up purposes. As a business-owner, it’s crucial that you keep records that will help you to prepare complete and accurate tax returns. It’s up to you to choose an accounting or bookkeeping system suited to your business and that complies with regulations.
If your company’s financial administration is in arrears or it’s just not your area of expertise, it’s probably better to get a professional tax consultant to get you up to date and to make sure all your taxes are paid up. It’s worth spending the extra money.
Your financial records.
To put it simply, your financial records reflect your company’s income, expenses, financial position and cash flow. Together with these records, you must also keep all other documentation (such as receipts, invoices, cancelled cheques, deposit slips, etc.) that support the entries in your records and tax returns. These “supporting documents” are very important, so file them in a logical order and store them in a safe place.
You’ll need the following records:
Those showing the assets, liabilities, undrawn profits, revaluation of fixed assets and various loans A register of fixed assets Detailed daily records of cash receipts and payments reflecting the nature of transactions and names of the parties involved (except for cash sales) Detailed records of credit purchases (goods and services) and sales reflecting the nature of transactions and the names of the parties involved
Statements of annual stocktaking and supporting vouchers
NB: If you’re operating both your personal and business banking from the same account, it’s best to open a separate account for your business, to enable proper record-keeping and tax filing. Keeping accurate and up to date records are essential for keeping track of money coming in and money going out of your business. At tax time, they are also important to: Identify nature of receipt – to show whether anything you received of a revenue nature or capital nature Avoid omitting deductible expenses – by recording your expenses as soon as they are incurred, you won’t forget to include them in your tax return
Establish amounts paid out as salaries or wages – Under normal circumstances amounts paid to employees for services rendered are taxable in the hands of the employees. In these cases employees’ tax must be deducted from salaries or wages by the person paying such salaries or wages. Explain items reported – If your income tax return is examined by SARS, you may be asked to explain certain items, which will be simple if you’ve kept complete records and their supporting documents.
Get a professional
A company is required by law to appoint an auditor/independent reviewer, if it is owner managed (New Companies Act), who will audit and sign an audit report relating to its financial statements. A CC must appoint an accounting officer. Normally, the auditor or accounting officer will help to determine the taxable income and the amount of tax to be paid. In the end, it’s also a lot easier for a professional to do it.
Keeping all your documents
You are required to keep your books and records, as SARS can ask to examine them at any time, should something not add up or seem suspicious. Retention periods in terms of the Companies Act and the Close Corporation Act are:
For Closed Corporations (CCs)
DOCUMENT – RETENTION PERIOD
1. Founding statement (form CK1) – Indefinite
2. Amended founding statement (forms CK2 and CK2A) – Indefinite
3. Minute book as well as resolutions passed at meetings – Indefinite
4. Annual financial statements including annual accounts and the accounting officer’s report – 15 years
5. Accounting records, including supporting schedules to accounting records and ancillary accounting records – 15 years
6. The microfilm image of any original record reproduced directly by the camera – the “camera master” – Indefinite
For Companies
DOCUMENT – RETENTION PERIOD
1. Certificate of incorporation – Indefinite
2. Certificate of change of name (if any) – Indefinite
3. Memorandum and articles of association/Memorandum of Incorporation (New Companies Act) – Indefinite
4. Certificate to commence business (if any) – Indefinite
5. Minute book, CM25, CM26 and resolutions passed at general/class meetings – Indefinite
6. Proxy forms – 3 years
7. Proxy forms used at Court convened meetings 3 years – 3 years
8. Register of allotments after a person ceased to be a member (section 111) – 15 years
9. Registration of members – 15 years
10. Index of members – 15 years
11. Registers of mortgages, debentures and fixed assets – 15 years
12. Register of directors’ shareholdings – 15 years
13. Register of directors and certain officers – 15 years
14. Directors attendance register – 15 years
15. Branch register – 15 years
16. Annual financial statements including annual accounts, Directors’ report and an Auditors’ report – 15 years
17. Books of account recording information required by the Act – 15 years
18. Supporting schedules to books of account and ancillary books of account – 15 years
Record keeping for Income Tax or Capital Gains Tax purposes
As a taxpayer, you are required to keep records such as ledgers, cash books, data in electronic form, all supporting documents and any records relating to capital gains or capital losses for a period of five years from the date on which the tax assessment for that year was received by SARS. However, if objections and appeals have been lodged against assessments, you should keep all relevant records and information until the objection or appeal has been finalised, even if it takes longer than five years to sort out.
Appoint a Representative Taxpayer
Every Company/Close Corporation which conducts business or has an office in South Africa must, within one month of commencing operations or buying an office, for the purposes of section 101 of the Income Tax Act, appoint a representative as the Public Officer of the Company/CC. The name of the representative and his position must be given for approval to the SARS office for the district in which the Company/Close Corporation has its registered office.
The representative must be a responsible officer of the Company/Close Corporation (for example, director, manager, senior member, secretary, etc.) and such position must constantly be kept filled by the Company/Close Corporation. Accurate and up to date record-keeping is not only about making life easier when you file your taxes. It can also protect your business’s cash flow and enable to run a tight ship. Failure to pay your taxes is not only illegal, but it can lead to the closure of your business.
Get PATC to help with your record keeping, contact us today.
Small businesses that wish to register their business will benefit hugely from business tax services, which assist in all areas of business tax, including registration of Small Business Corporation. Your accountant or business tax services consultant will be able to register on your behalf, and assist with all requirements that may be needed. Companies that meet all of the following requirements will be able to qualify as a Small Business Corporation:
Small Business Corporation Benefits
Business tax services offer the most effective way to register as a Small Business Corporation. The benefits that can be enjoyed from a tax point of view include the following:
To register as a Small Business Corporation, contact PATC today for further business tax services advice relating to small business taxes.
A subsistence allowance is where an employer may pay an employee a daily allowance for accommodation and meals during a period while the employee is out of town on business. The subsistence allowance to be included in taxable income of an employee is calculated as follows:
The Act prescribes standard amounts which an employee is automatically entitled to deduct. If an employee wishes to claim more than these standard amounts, he/she must keep all relevant documentation as proof of expenses actually incurred. The deduction may never exceed the allowance received.
The deductible expenses are based on the standard amounts as per the Act or on actual expenses incurred. The portion of the allowance which was not spent is included in gross income.
For the purposes of determining the taxable portion of the allowance, the employee has the option to use the following as the portion expended for business purposes:
The amounts in respect of travelling abroad will only apply in respect of continuous periods spent outside the republic not exceeding six weeks.
An employer must pay a subsistence allowance to an employee over and above the normal remuneration payable to the employee and cannot reduce the cash portion an employee’s salary with a subsistence allowance.
Contacts us if you have any questions about how a subsistence allowance is calculated or applied.
