Johannesburg - It's the time of year many small businesses dread and are ill-prepared for: tax time.
According to the Companies and Intellectual Property Registration Office (Cipro), the organisation experienced record levels of annual return lodgements leading up to the cut-off date of February 21.
Its acting CEO Lungile Dukwana said 14 581 South African businesses had filed returns by means of electronic lodgements on the final day.
The average amount of electronic lodgements on any normal day is between 6 000 and 7 000, so this displayed a more than a 100% increase.
However, many South African small business owners have not been as diligent in maintaining their records for Cipro and the South African Revenue Service, and are now pulling an assortment of papers out of filing cabinets to try and cobble together returns.
Tamsin Bradford, a support manager at Softline Pastel, notes: "What surprises me about this sluggish approach to accounts management is the fact that timeous record-keeping allows both business owners and managers to stay informed on the current state of their business.
"In today's competitive knowledge-based economy, a detailed understanding of one's accounts can provide valuable information to support the decision-making process. The ability to analyse the state of a business and understand its strengths and challenges can provide that much-needed competitive edge."
Bradford gives the following pointers to entrepreneurs:
• Work to a system and do one job at a time, finishing it completely before moving on to the next.
• Back up all your files; it's important to keep a record of all transactions before you make any adjustments. It's a good idea to keep that back-up offsite to minimise any potential loss of data from fire, theft or even human error.
• Print out your most important reports like trial balance, balance sheet, income statement, detailed ledger and all age analysis reports before and after the running year-end to ensure that the process has been successful. It's also useful to keep these reports as supporting evidence for the auditor.
• Work through all account balances to ensure that they are correct – you can also write off bad debts as you go. This is where having a system is so important; work alphabetically or from smallest to largest account to ensure that none are missed or duplicated.
• Do a stock take to ensure that the theoretical count (stock count on the system) is the same as the physical count (the manual process of counting the stock items on hand). Should there be discrepancies, you need to make the necessary adjustments to reflect the quantities as you capture them
"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," says small business lender Business Partners in its SME (small and medium enterprise) Toolkit.
It added: "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' cash flow and enable you to run a tight ship.
"Failure to pay your taxes is not only illegal, but it can lead to the closure of your business. Is that really worth it? "
- Fin24