Matsobanemetja Business Consulting Pty Ltd

Payroll Tips every small business owner need

THE IMPORTANCE OF PAYROLL MANAGEMENT FOR SMALL BUSINESS

In today’s fast-paced and competitive business world, the importance of payroll management can’t be overstated.

A reliable payroll system is more than just issuing paychecks—it’s about ensuring accuracy, building trust, staying compliant with laws, and most importantly, keeping your team satisfied and productive.

When your employees are paid fairly and on time, they feel valued.

And when they feel valued, they perform better, stay longer, and contribute to a more positive work environment.

Employee satisfaction is the key to organizational success.

In this article, we will learn about the importance of payroll management, the crucial role it plays in business, employee wages, and what you can do to streamline your processes for growth and legal compliance.

We will cover essentials, common challenges, methods for managing payroll.

The Payroll Management Process (6 Best Practices)

1. Collect Employee Data

2. Track Work Hours and Leave

3. Calculate Gross and Net Pay

4. Issue Pay (Direct Deposit or Check)

5. File Payroll Taxes & Reports

6. Maintain Records and Compliance

5 Key Benefits of Effective Payroll Management

– Employee Satisfaction

– Time and Cost Savings

– Data Security

– Simplified Compliance

– Strategic Insights

5 Common Payroll Management Challenges (and Solutions)

Too Much Manual Work

Keeping Up With Changing Regulations

Data Errors and Compliance Missteps

Managing Employee Records

FAQs about Payroll Management

Why is keeping payroll so important?

Compliance with government regulations:

Employee satisfaction:

Financial stability of the company:

What’s the difference between payroll and HR?

Can small business owners handle payroll alone?

What are three important objectives of a payroll process?

Here are the three important objectives of a payroll process.

What is the most important part of payroll?

What records do I need to keep for payroll?

At the bare minimum, you need to keep the following documents:

How can I avoid payroll errors?

What features should I look for in payroll management
software?

WHAT IS PAYROLL MANAGEMENT?

Employee payroll management is the entire process of compensating employees for their labor.

This involves calculating earnings, withholding taxes, and paycheck distribution.

It also includes administering benefits, ensuring regulatory compliance, and keeping accurate record keeping.

A well-managed payroll system reduces the risk of errors and ensures that employees receive what they’re owed—accurately and on time.

WHY PAYROLL MANAGEMENT IS CRUCIAL FOR SMALL BUSINESSES

Proper payroll management and payroll operations are important for at least 4 big reasons:

TIMELY PAYMENTS IMPROVE EMPLOYEE SATISFACTION

Imagine the scene: It’s payday, and your full-time employees get paid on time, every time, with clear, accurate pay stubs.

The result?

Happy, engaged employees who trust your business and are motivated to do their best work.

Neglect payroll, and you’ll quickly see the opposite.

Late or inaccurate pay causes confusion, lowers employee morale, and may drive your best people away.

A streamlined payroll process ensures timely payments and demonstrates professionalism.

This significantly improves employee satisfaction and motivation.

LEGAL COMPLIANCE AND RISK MANAGEMENT

Payroll isn’t just about numbers; it’s also about compliance and avoiding costly legal issues.

Federal and state laws require you to pay employees on time and withhold the right taxes.

Failing to do so exposes your business to penalties, back taxes, and reputational harm.

Compliance also means keeping accurate records, reporting through institutions sushi as SARS – South African Revenue Services, UIF – Unemployment Insurance Funds, COIDA – Compensation for Occupational Injuries and Diseases Act, and being ready if regulators come calling.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

The importance of payroll management here is clear: it protects your business while ensuring your team is compensated lawfully and fairly.

By the way, your business is not legally protected if you are missing these legal documents.

BUDGET MANAGEMENT AND FINANCIAL HEALTH

For most small businesses, payroll is the largest ongoing expense.

Accurate payroll management helps you forecast labor costs, avoid cash flow surprises, and stick to your budget.

Missteps in this area can mean underestimating expenses or, worse, missing payroll entirely.

COMPANY REPUTATION & EMPLOYEE RETENTION

Think of payroll accuracy as the silent ambassador of your employer brand.

If word gets out that you struggle to pay on time or make mistakes with wages, you’ll have a tough time attracting top talent.

Consistent, transparent payroll sets you apart as a reliable employer and keeps current team members loyal.

Retention is built on high employee and job satisfaction.

Part of this satisfaction comes from reliable payroll systems, which decrease turnover.

Employees are less likely to leave an organization if they feel valued and compensated fairly.

A good payroll management system helps organizations retain talent, thus saving the time and money needed to recruit and train new employees.

THE PAYROLL MANAGEMENT PROCESS (6 BEST PRACTICES)

Payroll management is a cycle of tasks that keep your employees paid and your business protected.

Here’s what goes into a solid payroll process:

1. COLLECT EMPLOYEE DATA

You need to keep detailed, up-to-date records for each employee, including:

Legal name and address

Tax file number

Start date, pay rate, and pay frequency

Tax withholding and deduction preferences

Bank account details

2. TRACK WORK HOURS AND LEAVE

If you employ hourly or shift workers, use reliable time tracking systems (e.g., time clocks, scheduling apps) to record:

Hours worked (including overtime)

Sick days and vacation time

Breaks and shift swaps

3. CALCULATE GROSS AND NET PAY

This is where accuracy matters most. For each pay period:

Calculate gross wages (hours worked x rate)

Deduct taxes (payroll taxes applicable)

Subtract benefits and voluntary deductions (health insurance, retirement)

Arrive at net (take-home) pay

4. ISSUE PAY (DIRECT DEPOSIT OR CHECK)

Get paychecks or direct deposits out on time. Reliable payroll software makes this process easier and error-free, and many employees appreciate payday notifications.

5. FILE PAYROLL TAXES & REPORTS

Every pay cycle, you must calculate, withhold, and remit payroll taxes.

Ensure that EMP201 and EMP501 are completed and submitted according – N.B. PAYE

Check the legal requirements and tax obligations of where your business is located to ensure compliance.

6. MAINTAIN RECORDS AND COMPLIANCE

Keep documentation on everything—from timesheets and pay stubs to tax filings and leave requests.

This isn’t just best practice; it’s required by law.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“Accuracy is the soul of payroll.”

Bookkeeping, Accounting, Payroll, Tax.

Upcoming Blog Topic: THE ROLE OF TECHNOLOGY IN ACCURATE PAYROLL PROCESSING

Visit our website | matsobanemetja.co.za

Business Ethics | What it means to operate your business in an ethical manner

__________________________

Generating an income is always something we concentrate on when we are running our businesses. But that’s not the only thing that makes the business grows. Like an entity, a business flourish because it was afforded the accessories to be able to function. Some of these accessories are soft skills that can be easily overlooked by many.

Today I would like to talk about ethics.
Implementing best practices tailored to the specific needs of the business goes a long way.
Growing a business is not merely about compliance; it is about building a sustainable, responsible business that can lead by example in the global marketplace.

What is business ethics?
Business ethics refers to the moral principles and values that guide how a company and its employees behave, dictating honesty, fairness, and respect in all business practices. It involves making decisions that are not just legal, but also morally right, considering the impact on stakeholders like customers, employees, and the community.

Key principles include accountability, integrity, transparency, and respect for others.
Key aspects of business ethics

Moral principles:
It is the application of good manners and moral principles to business situations, helping to resolve ethical dilemmas.

Stakeholder consideration:
Businesses are expected to consider the impact of their decisions on various stakeholders, including customers, employees, suppliers, shareholders, and the communities in which they operate.

Honesty and fairness:
Ethical companies act with integrity by being honest with customers and stakeholders, treating employees fairly, and engaging in transparent operations.

Corporate social responsibility:
This includes a company’s commitment to corporate social responsibility, environmental concerns, and treating its employees well, such as providing fair wages and a safe working environment.

Leadership and integrity:
Ethical leadership is crucial for embedding these values into the company culture. It sets the tone for employees and can lead to greater stability, trust, and a better reputation.

Legal compliance:
Operating within the boundaries of laws and regulations.

Why business ethics are important

Builds trust:
Ethical behavior builds trust with customers, employees, and investors, which is crucial for loyalty and long-term relationships.

Enhances reputation:
A commitment to ethics creates a positive public image and a strong brand reputation.

Attracts talent:
Ethical companies can attract and retain employees who value a fair and principled work environment.

Ensures legal compliance:
Ethical practices help a company stay within the law, avoiding legal penalties and reputational damage.

Drives profitability:
A strong ethical culture can lead to a more successful and profitable business in the long run.

Examples of ethical and unethical behavior

Ethical:
A company that pays fair wages, provides a safe workplace, has transparent pricing, and engages in community volunteer programs.

Unethical:
A company that misleads customers with false advertising, engages in price-fixing, or ignores environmental regulations.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

A man without ethics is a wild beast loosed upon this world.

Dikeledi Seoloane – CEO link-tree 🤎https://linktr.ee/DikelediS

How to create systems in your business so you can focus on the core operational issues

Creating Business Systems

Today I’m going to tell you how you can use systems in your business so you can show up to your desk to get work done, have clarity, no stress, navigate easily to meet the deadlines.
There are so many layers to being unorganized it can be really hard to know where to get started. I am breaking down how to create systems in your business into two major categories. The first is to identify and the second is to execute. The goal for this post is for you to be able to know what system you need to put into place so you can have more time to the pressing business demands.

The things that are on your mind and distract you are so much bigger than they need to be and can be systemized.

So let’s look at the first part of this which is identify and it has three steps inside of it.

Identify

Follow these steps to identify which areas inside your business need systems.

You need to know how many hours you are working each week. If you do not know you need to clock yourself for a week. This includes any time spent on your phone. Write down a really honest number.

Write down how many hours you actually need to do your job.

Identify what is causing you the most stress. What is it that is keeping you from working? Maybe it’s your phone but if you’re not sure start time tracking. I do that whenever I feel like I’m being unproductive in my work block. I know you know what is stressing you out. Start paying attention to those tasks that you are resentful of. There may be 5-50 of these things but that’s ok, just start with the biggest thing. Once you tackle the biggest thing it will give you the most amount of return on the back end so you can then start chipping away on the smaller things.

Those are the three parts to identifying where you need systems in your business, let’s move onto the second phase of this.

Execute

As I go through execute, I’m going to be using the example of client work being your biggest frustration. If yours is something else like emails or phone calls it will still all be the same process.

First establish your ideal workflow for this major pain point. Establish what you really want this system to look like either on paper or an electronic system / software. This help to get your thoughts organised.

As soon as a client contacts you what do you want that to look like? Lay out all the steps exactly how you want it. Here are some good questions to ask yourself:

– What in your current process needs to be tossed?

– What are you doing right now that is not working?

– What has to stay and is working really well?

– What can be outsourced? I got creative with this. My first “hire” was with an intern.

– What can be automated? Just remember time is money.

When you get these things figured out there is going to be some work to do. You will have to establish the spreadsheet or whatever it is. You are going to build the system and it will take work. Alright onto step number two.

Now that you have all your steps put them in the order you want them to go in. Then outline what happens in each one of those steps. Is there a contract that needs to be signed and where is that held?

Then put this information into some type of workflow. This can be a spreadsheet. There is no right or wrong way to do any of these things it’s just about getting these processes into one spot so it is repeatable and you do not have to think about it anymore.

I know you are already overwhelmed but this is not about magic making and unicorns. It’s going to be awkward for a little while and it’s going to take a lot of work. These are the things you need to do so you can get your things done in a lesser amount of time so you can get back to loving on your family well. The point is not to just hustle harder so you’re chronically overwhelmed and exhausted.

The third step is to transition. You’re going to have every new person that comes in go through this but you are also going to have old people that will slowly transition. There will be a period of time where it feels like you have created more work for yourself but in the end, you will gain freedom mentally from your business. You will gain back hours of time when you are prepared and mentally not thinking through all these little things.

If you are just dealing with a problem like emails you do not need a whole workflow but you do need a process. What’s your ideal flow for managing your emails? Maybe you show up at 9 am and 3 pm and check your inbox for 5 minutes. Maybe one card you open up inside your workflow that tells you exactly what to do. I don’t know what your process will be but figure out what would be ideal for your business.

Working hard must yield results thus being organised is also vital to this effect. Plan, execute, achieve. Do not confuse building systems to a “to do list”
Systems are a guideline to perform a specific function at work / in the business. If you are in a service kind of business or product base and any type of business for that matter systems assist in executing the job at hand.
The good thing about having systems is equivalent to having a culture. It is extended from one employee to another. Can easily referred to organisational culture.

A to-do list is a list of tasks, goals, or activities that need to be completed, often organized by priority and deadlines. It serves as a planning tool to increase productivity and organization by helping you track what needs to be done, set priorities, and break down large projects into smaller, more manageable steps.

A to do list and systems – both have one thing in common i.e. they both enhance productivity!

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“We shape our buildings; thereafter they shape us,”

– Winston Churchill.

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Some – 8 | Often Forgotten Small Business Tax Write-Offs

It is said that when you are a non-finance person, the only bookkeeping / record keeping that you recognize is only capturing the income 

It is a common perception that bookkeeping primarily involves tracking income, but in reality, it encompasses a comprehensive range of financial activities essential for a complete and accurate picture of a business’s financial health.

Dealing with taxes and the legal aspect of running a small business can be a nightmare.

As an entrepreneur or small business, you know that taxes can be pretty harsh. Make sure you’re taking advantage of everything you’re able to.

8 Often Forgotten Small Business or Entrepreneur Tax Write-Offs:

1 | Plants Hire

In accounting, “plant hire” refers to the rental of machinery and equipment for a specific period, treating the hire cost as an operating expense rather than a capital investment. This is common in industries like construction and agriculture, where businesses pay a fee to use equipment for projects without the large upfront cost of buying it. The accounting treatment depends on whether your company is the hirer or the provider of the equipment.

2 | GIFTS TO CLIENTS
I know a lot of businesses in their nature they use the business funds to purchase gifts as a token of appreciation for long-term / returning clients. Just to thank them for the continuous supports. This is also a marketing technique. It could be welcome bags or thank you bags with goodies, so this would be a perfect example.
A marketing tool because when clients feel appreciated they stay with the business, they go as far as recommending your services or products to their associates / network. With that said – the customer service must be equally be good. Freebies should not be a substitute or compromising the quality of the service rendered.

3 | SOFTWARE

Most small business owners know to deduct their expenses for accountants and legal advice, but sometimes it can be easy to forget the smaller software necessary to run your business. This could be anything such as invoicing software, anti-virus software or Evernote.

4 | INSURANCE PREMIUMS

There are many different insurance premiums that might affect your business. If you work from home, you can also include your home owners insurance or renters insurance.

Don’t forget to deduct your own medical premiums, as well.

5 | RESEARCH/ TRAINING TRIPS

Writing off travel for business can be tricky, but there are times when you should. If your trip was related to furthering your business, even if it’s writing an ebook, you may be able to deduct it.

You may still be able to deduct certain parts of your trip, like 50% of a client/prospect meal and travel to see a particular client.

6 | TOOLS OF THE TRADE

Some tools of the trade are easy to identify, like a new laptop.

But say you’re a food blogger who makes money from developing recipes and posting them online or compiling them into an ebook. In that case, you should consider deducting props, cook books, utensils, and potentially even the food.

Speak with your accountant on the exact rules that would apply to your situation.

7 | REPAIRS AND Renovations / Maintenance

If you work out of a home office, you may be able to deduct a percentage of the cost for the repair or renovation, even if it wasn’t directly related to your office. Speak to your accountant to make sure you follow IRS guidelines.

8 | PROCESSING FEES

Don’t forget to deduct all those fees incurred from Paypal! Did you know you can also deduct the interest accrued if you use a credit card specifically for your business purchases? Or the fees associated with having a business checking account? Pay gates, etc.

If you’ve already done your taxes for the year, I recommend pinning this infographic for next year.

In summary, it’s important to track every little thing associated with your business throughout the year, even if you’re not sure you’ll be able to write it off.

What was/is the most confusing tax write-off question you’ve dealt with since starting your business?

It’s easy to book a consultation with us. You can take advantage of our free 15 minutes virtual consultation

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“Your most unhappy customers are your greatest source of learning.”

– Bill Gates

How To Understand Your Business Cash Flow

When you chose to start a business get to grips with How to Understand your Cash Flow. You might have thought that your idea was a direct route to success. It might well be, but one part of a business is cash flow and you cannot ignore it!

Cash in, cash out, it can all become overwhelming. Furthermore, you might have big plans to grow your business but to get there, you need control of your money.

Don’t dive in and hope for the best. Take a breath, take a step back and consider the bigger picture by managing your cash flow better. However, if cash flow is something new to you, what is it and what does it mean?

How do you begin and take that next step in understanding your cash flow.

Start with a Cash Flow Template

You don’t have to venture out into the world of cash flow all alone. This is because you can use a cash flow template to get you started. This prestructured document will enable you to understand cash flows and set your business on the right path with minimal input from you!
Capture the money coming in and the money going out. Make it less complicated and easy to understand.

How to Manage Cash Flow

Keep on top of bookkeeping

Bookkeeping underpins the success of your business. When you ensure you keep on top of your accounts, you will have a greater overview of your business. From here, you can take those next steps to growing your business.

Create cash flow statements

Paperwork might drag you down but none comes more important than your cash flow statement. This enables you to carry out cash flow reviews and analyse your cash flow. You’ll then have the ability to understand how your decisions impact the health of your business.

See how your money moves

Money is the golden ticket to business success. Therefore, seeing how it moves through your business is vital. When you understand more about this, you can gain greater control and take your business to the next level.

Increase cash flow

The aim is to have more money coming in than out. So, if you use your credit card frequently, it’s a sign that you need to increase cash flow.

Cut back on spending

It can seem too easy to spend, spend and spend some more. Your business can seem like an endless pot of cash but it will end if you don’t get on top of things.

Speed up invoice payments

Your cash flow depends on the money you receive. Through the use of a cash flow template, you can see what needs to come in. Therefore, you’ll have the ability to decide whether you want to speed up invoice payments. As a result, this will give you more money in your pocket.

Make cash flow analysis routine

Cash flow is ongoing and never stops. Furthermore, taking your eye off your cash flow could lead to disaster. However, you are in control and it’s your business, so you’ve more reasons than ever to make sure you make it part of your routine to monitor cash flow. As a result, you’ll find that your finances become a lot healthier.

Conclusion

Cash flow forecasting is an important step for all businesses, no matter how big or small. By understanding your finances and having a clear plan of action, you can make informed decisions about the future of your company. I hope this article will help to demystify cash flow forecasting and show you that it’s not as difficult as you might think.
If you’re ready to take control of your business finances, sign up for our retainer contract today – we offer a monthly reasonable fee so you can stay on top of your finances.

And if you have any questions, don’t hesitate to get in touch – we’re always happy to help.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

Cash flow is the heartbeat of the business.

– Dikeledi Seoloane

How to read and understand your business Balance Sheet

Accounting Balance Sheet Guide

An accounting balance sheet is a financial report providing a quick view of a company’s financial condition.

It is a summary of assets, liabilities and equity.

Understanding the benefits of this report are an advantage for business owners when making money decisions.

This report is important for establishing:

– the sources of funds the business uses (equity and liabilities) and

– what the funds have been used on (assets)

Why Is It Called A Balance Sheet?

In technical terms, a balance sheet is a detailed presentation of the Accounting Equation made up of debits and credits.

This report gets its name because it needs to balance according to the accounting equation.

What Balance Sheet Items Are On This Report?

Under each main heading are the total values of each type of:

assets = cash, equipment and property owned by the business (current and non current – see below)

liabilities = debts owed by the business (current and non current – see below)

equity = the owner’s financial interest in the business

Current Assets
These are assets that can be turned into cash within 12 months, such as accounts receivable or the cash that is in your bank account or stock that can be sold.

Current Liabilities
Are liabilities that can be paid off within 12 months, such as accounts payable or short-term loans.

Non-current Assets

These are assets owned and used by the business, such as a building or vehicle, that will not be sold any time soon and will last for many years.

Non-current Liabilities
These are things like long term loans that will take years to pay off.

Working Capital
If we take current liabilities away from current assets we get the working capital which is an important measure of the short term solvency of a business.

If the business is unable to meet its short term commitments then it is likely to fail because it has too much debt and too little source of money to pay the debt.

Short term commitments are things like upcoming bills for items purchased on account (accounts payable), and tax payments including sales tax, payroll tax and income tax, and wages.

What A Balance Sheet Tells The Business Owner

The balance sheet will indicate the following information about a business:

– How much money is in the bank accounts or the petty cash box

– The value of buildings, equipment, vehicles or websites that the business owns

– The value of stock items that are in your stock room waiting to be sold

– How much money the debtors owe to the business – this is customers who have purchased items or services from your business on account – buy now, pay later

– How much is owed by the business to creditors – this is vendors from whom items or services have been purchased on account – buy now, pay later

– How much money is owed on your Credit Cards

– How much money is due towards various tax obligations

– How much is left to repay on loans

– The amount paid to you in advance by a customer for goods and services

– How much money you personally put into the business

How much money you took out of the business for personal expenses

What Is The Benefit Of An Accounting Balance Sheet?

This report is a summary of a bunch of other reports.

If the business owner just wants a quick snapshot of everything without rifling through different reports, then the Balance Sheet is the place to look.

Some of the reports that are summarized in total on the accounting balance sheet are:-

– The accounts receivable report

– The accounts payable report

– The bank statement report

– The petty cash report

– The loan report

– The inventory report

– The profit and loss report

How Is Equity Calculated?

When taking all liabilities away from all assets we can establish the owner’s financial interest (equity) in the business.

Related to this is another report called the Statement of Movements in Equity, which shows how the owner’s financial interest in the business is changing through the year.

It is made up of :-

– the funds introduced by the owner – their personal money that they have deposited or injected into the business

– the profit or loss result from the income statement

– the funds withdrawn by the owner for personal use

How Does The Balance Sheet Differ From An Income Statement?

Unlike a profit and loss report (income statement), which details the totals of the income and expenses from a time range like May 1 to May 31, the accounting balance sheet presents the accumulated values of the assets, liabilities and equity at a moment of time such as May 31.

These values have accumulated (or built up) since the date the business started, whether five years ago or one year ago and show the result of all the business activities throughout that time.

These totals will continue to build up in accumulation through the life-time of a business and so they are called permanent accounts.

In contrast, the accounts on the profit and loss report are cleared out to zero once a year so they are called temporary accounts. They do accumulate the totals of income and expense accounts, but only for one year.

When Should A Balance Sheet Be Prepared?

Every Month

Accounting balance sheets can be prepared by the business every month after the bank account has been reconciled.

Then the business owner can check it every month and see how business is looking.

Once A Year

A final balance sheet is prepared at the end of a financial year after the final profit and loss report has been prepared for tax purposes.

I recommend this be done by a professional bookkeeper or qualified accountant who will ensure the financial reports are in agreement with generally accepted accounting practices (GAAP) and with tax legislation.

They can also make the necessary adjustments to do so.

The professional bookkeeper or accountant will either:

pass on these adjustments (known as end of year alignment journals) to the business to update the bookkeeping system if it is a desktop version of software, so the business can get it in alignment with the final balance sheet of the year, or

will make the adjustments themselves if the business bookkeeping software is online and they have access to it

This ensures the information in the bookkeeping system continues on accurately from year to year as the business goes on with trading activities which affect the assets, liabilities and equity.

How Detailed Can Balance Sheets Be?

Large businesses and corporations tend to naturally have more complicated balance sheets and might only display the information as a summary under summary headings.

Small businesses tend to have simple, less complicated reports and can display more detail on the report.

The balance sheet for either big or small business can be as detailed or as summarised as the business requires.

It could simply show a total for each heading (assets, liabilities and equity), or it can show a listing of each item that makes up the headings.

What Other Names Can Accounting Balance Sheets Be Called?

Another name for an accounting balance sheet is the statement of financial position.

Or just Balance Sheet.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

A balance sheet play a vital role in the external parties deciding either to invest, loan, fund or have any monetary relationship with you or your business. It is the deciding factor.

– Dikeledi Seoloane 🤎

The Accounting Firm_Matsobanemetja_Onboarding Download

The Accounting Firm Onboarding Process

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Things I wish I knew before starting a business

When I started my business back in 2014, I knew in my heart it would be a challenging task. There are so many obstacles to starting a business that no one tells you. There are thousands of courses, business classes, etc. but I believe entrepreneurship isn’t taught, it’s all based on experiences. I was one of those people who thought I could just get up and start a business. After a few months, I had a reality check that money wasn’t going to just come to me, just because I started a business.

After reading several books and articles I realized that I had to dig deeper and figure out what was important to me.

Starting a business is a roller coaster, you have extremely high moments, and then you have your lows. If you keep pushing through and focus on the light at the end of the tunnel, you will succeed. As they say, Rome wasn’t built in a day, so your dream will take time to transition into something great, and that’s okay. Enjoy the process, enjoy the journey, and be creative trust me it’s worth it.

I have compiled seven things I wish I knew before starting a business.

Surround yourself with Positive and Successful People

When starting your business, make sure you tell your goals and dreams to people who are positive and want to see you succeed. Sometimes we get so excited about our ideas and end up spilling the tea to someone who doesn’t have our best interest at heart. These people can tear down your dreams, which makes you second guess yourself and you end up losing interest in something great.

If you don’t have someone positive or successful in your immediate circle, ask around for a mentor, look online, check out YouTube videos, online self help articles. In all, find people you can trust and help you get where you need to go.

Sell Feelings, Profits will come later

One classic gem I live by is to “SELL FEELINGS” when you have a business, you need to make your potential customer feel something. If you look around, one of the biggest industries is the fitness industry. Why? Because they make people feel good about themselves without actually getting their goals upfront. They sell you on challenging yourself to get the perfect body, but at the end of the day, it’s up to you to put in the work. In all, it makes you feel good, knowing if you purchase this 12-week program, you will look and feel better about yourself at the end. So what do people do? They buy upfront, no questions asked.

Make your clients feel something, and you will be selling your products and services like hotcakes. Yes, there is more to it, but keep in the back of your mind, ” SELL FEELINGS.”

Don’t Be Afraid to Say “NO”

I can’t stress this enough; knowing your worth and value is what helps you say “NO.” When I first started my business, I would say “YES” to any job that came my way. I needed the money, and I wanted to build a portfolio, but after a few months of saying “YES,” I was burnt out. Why am I saying yes to everything? It isn’t getting me to my goals any faster. I highly encourage you to learn the art of saying NO. I promise you will feel empowered, and people will recognize your value. People take advantage of a person who says YES but will respect a person who can say NO.

Learn from your mistakes

When you start your business, you are going to be making a lot of mistakes. Trust me, I made so many dumb decisions and spent unnecessary money. Know that making mistakes isn’t a bad thing unless you make the same mistake twice. If you screw up or overspend, take it in, evaluate the situation, and move on. Making mistakes builds character, in which you will need to become a strong entrepreneur.

I’ve actually come to terms with the fact that we are all human and everyone makes mistakes. We can’t be perfect all the time, in fact being so perfect is boring. Mess up and learn!

Accounting is Extremely Important

So let’s say you started your business and you’re finally making money. Don’t just put the money in your personal account, start a business account, or have a separate account with your new earnings. Account for every cent you make so you can see how far you’ve come. I make sure I account for all of my business earnings at the end of each month. Keeping track of your earnings on a monthly basis makes life easier, once tax season comes. Be smart with your money and invest your money back into your business. Trust me, the small victories are so worth it.

Build Relationships

Building relationships within your business is so meaningful. I learned this from one of the previous employers I freelanced for. Try to network wherever you go, you would be amazed at the places I’ve found my clients. Also, never lose sight of your clients, if you stay loyal to them, they will stay loyal to you. Lastly, building relationships with vendors within your industry is extremely resourceful. I have a huge community of people in my network. I’ve built trust and a relationship with each and every one of them and in return, they help me grow my business every day.

Everyday is not the same

In all honesty, this is the cool part of starting a business. Unlike the 9-5 lifestyle, you get to make your schedule, which is a plus. BUT with that being said, you have to be your own motivator. Creating a plan helps you stay focused so you can keep persevering. When you have a business, no day is the same; you will have amazing days and days you were you wonder what you got yourself into. It’s all worth it because you get to call the shots.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“The best way to predict your future is to create it”

– Peter Drucker.

Personal Financial Literacy Guide To Finance 101

Have you heard of the term personal financial literacy? It just means knowing how to manage your money.

That means you can pay your bills, save money, and have all your financial obligations taken care of. You also learn why to invest and how to invest smartly for your retirement.

Now is the time to self-educate yourself and grow your knowledge of being financially independent. That starts with money management basics and allowing yourself to develop into a more mature spender.

Below you’re going to learn about personal financial literacy including how to invest and save more by leveraging your resources (age, money, talent, and good habits) to build a nest egg.

What Is Personal Financial Literacy And Why Is It Important?
– means that you are learning the basic skills for managing money. These are the money management skills that are going to stay with you throughout your life.

Unfortunately, not everyone is going to learn about personal finance. Financial education isn’t taught in many high schools and colleges.

Many people leave school and find that they don’t know how to do the basics of budgeting or money management. By not learning the money skills they need, people often run into credit card debt, high student loans, and other problems.

When you first start to think about personal finance, it can be overwhelming. You have to keep track of money coming and going, tons of due dates, fees, and other charges.

Traits Of Someone Who Is Financially Literate

Having a personal understanding of financial literacy makes it easier for you to succeed as an adult. By understanding how credit works, you’re better able to budget and prevent yourself from falling into debt.

If you don’t have the cash from something right now, learning delayed gratification is a skill that will take you far. Many aren’t capable of putting off their immediate demands to gain things in the long-term.

Having financial stability most likely means that you budget and save. You protect your savings and only spend wisely when you must. Big purchases are well-thought-out, and you make sure that the value is good.

You understand that debt is what prevents you from building wealth. Many believe there is good debt and bad debt but I’ve found that overall, debt keeps you in the cycle of living paycheck to paycheck.

This also means paying close attention to your overall portfolio (savings, earnings, and investments). Someone with an understanding of personal finance realizes that they don’t know everything and will ask for help when life throws you a curveball.

Personal finance is a broad topic, but financial literacy means that you’re not going to let your money (or what you don’t have) stop you from working hard, being happy, and building your dreams from scratch while focusing on retirement.

What Are The Basics Of Financial Literacy?

The basics of personal financial literacy include managing your money and budgeting. You’ve got to handle your finances appropriately, which drives the saving and spending decisions you make each day.

Personal finance professionals advise that people know the basics of managing their savings accounts, and paying bills on time. To manage your money most effectively, pay attention to how you spend and what you spend the most money on. Also, it’s imperative that you don’t live beyond your means.

Understanding Bank Accounts

Developing the ability to make your own financial decisions starts with you opening a checking account. Have your paycheck direct-deposited into it so that the money is secure, and you never have to worry about it being late.

Bank accounts are convenient and give you many benefits. Debit cards and checks are two of these. Both proof that you paid your bills, giving you a record of each transaction.

It’s wise to open a savings account at the same time as your checking account. That way, you can allocate some of that money to savings.

You don’t need to worry about leaving your savings at a bank as long as they’re insured. CODI (Corporation for Deposit Insurance) is going to insure funds of over R100 000 per depositor, per bank so you never need to worry about the bank going under and losing all your savings.

Debit accounts can also help you set up some automatic payments for your monthly bills. That way, you don’t need to have cash with you or accidentally forget the bill’s due date.

Setting up a second savings account only for an emergency fund is smart. This is money you’re saving in the event of a financial emergency such as a job loss or unexpected house repair. It’s recommended to build your emergency fund savings up to 3-6 months of your household expenses.

It’s often better to use two separate accounts so you can keep savings separate from checking. This removes the temptation to spend your savings. It’s easier to overspend without realizing it.

Remember, the goal is not to get into debt by living beyond your means. You don’t ever want to have to use payday loans or take out high interest financing.

With technological advancements, you can now use a mobile app to get updates from your bank, making it easier to see what funds you have available.

Budgeting

A building block for personal finance plans is to budget your expenses every month. While it is easy to learn, it’s also hard to do if you’ve never done it before.

To budget successfully, you’ve got to put away all of the qualms you have about what you think you spend and focus on what you actually do.

It’s analytical and often requires you to change up your spending habits. However, this allows you to control the money instead of it controlling you. Here are reasons to motivate you to budget that I’ve found inspiring.

A successful budget defines:

Ways to lower the monthly bills

Following your monthly spending plan

Handling accrued debt

Pay-off options for your debt, such as the debt avalanche or snowball methods

Distinguishing between long-, short-, and mid-term goals

What your family needs

So, how do you get started with your budget? I think it’s best to just jump in. You’ve got to see how and where you spend money, identify the financial holes, and work toward correcting them.

Here are some steps:

Track your monthly expenses. You can find many mobile apps or use a budgeting notebook, or digital financial planner and record every time that you spend money. It doesn’t matter how large or small the transaction was; all must be recorded.

Identify the expenses you have, both fixed and variable. A fixed expense is one that comes out each month, including car payments, rent, electricity, water, and more. Variable expenses can include things like groceries, haircuts, pet supplies, and entertainment.

Add everything up. Record everything for three months, add it all up (the totals), and divide by three. This is what you’re spending every month on average. Also, focus on sinking fund categories here.

Study variable expenses. Most people overspend on the variable category. Maybe it’s time to set a specific amount that you can spend on dining out and other entertainment options.

N.B. Do not Sabotage Your Budget?

Consider your savings account. Every piece of financial literature out there tells you to pay yourself first. This means that each paycheck should have a portion removed and added to the savings account. Most people consider 20 percent of their check is going to go to savings. Then, 50 percent should be toward fixed expenses, and 30 percent can go to variable ones.

Cut what needs to be cut. When you can, reduce the amount you spend and increase what you can save. That is the best way for you to have the money needed to make the most appropriate financial decisions.

5 Main Components Of Personal Financial Literacy

There are five components to understand for financial literacy:

Budgeting

Saving/Investing

Borrowing

Interest Rates

Financial Safety/Identity Theft

The main three include earning, saving, and borrowing. If you do nothing else, learning the basics of these three will put you on a much better financial track than you were before.

By understanding how each component works, you’ll be able to avoid the common pitfalls so many others don’t avoid such as debt, credit fraud, and high interest rates.

Debit Or Credit?

Plastic is a way of life for many people.

While there are tools to help you build your credit score, it can often be dangerous and makes it easy to justify living beyond your means.

It’s best to have one debit card and nothing else if you don’t feel that you can refrain from carrying a balance on your credit. If you do have a credit card, it should only be used for significant purchases.

Always make sure you pay your credit card bill off at the next billing cycle. This is going to help you stay out of debt and protect your scores. Most financial experts believe that is the best method.

Of course, to build a credit history, you’ve got to have a credit card or personal loan. A credit can help you learn about your spending habits but so can a debit card.

A debit card is designed to use money from your bank account. It isn’t loaned to you and doesn’t get paid back which prevents you from overspending.

One issue with credit is that these cards often have high interest rates. Therefore, it’s essential that whatever you put on the card can be paid off when the next bill is due. Otherwise, you rack up a lot of money to pay back and are paying more on the interest than the principal.

Debt

Debt may be a part of your life now, but it doesn’t have to keep you from being financially literate. Lesson #1 is to make sure you don’t carry credit debt.

Students are likely to have a student loan or two to pay off. Try to pay those off as quickly as you can once you graduate or look into ways to go to college for free.

With time, you’re going to have a mortgage and sometimes a car loan. Some consider these good reasons to get into debt.

When you establish a credit history, your financial track record may get you better rates and terms for these loans. The issue is that to get to that point, you would have to have a credit payment that you make on time each month so that it establishes that.

Owning A Business

While owning a business isn’t necessary for financial literacy, many people jump into business without knowing how to run one properly.

Business financial needs are going to be very different from personal finance. Contrary to what many people say, debt is not required for getting started.

If you don’t have the startup money needed, you shouldn’t start the business yet. You’ll end up financially stressed which will cause you to make business decision based out of desperation rather than the long-term implications.

What most people don’t realize is that their business debt is actually their personal debt. If the business goes under, the debt falls on their shoulders.

Use financial smarts and ensure that you’re not overspending. Cutting costs for your business will actually benefit you. This means you’ve got more money coming in, which means it can be reinvested in the company and outside it.

Retirement

Now is also the time to think about your retirement. Regardless of your age, your financial obligation doesn’t stop when you can’t work anymore.

Consider moving part of your savings to a retirement fund. This is going to ensure that you protect your investments and have enough to live off when you’re older.

Though you may not be thinking of retirement right now, it’s never too early to start. Between then and now, you might get married, start/raise a family, go back to school, send your kids to school, and so much more.

Make sure that you’re focused on your portfolio and check it every three to five years to make sure that you’re on track for your goals. Meeting with a financial planner is another great way to make sure you’re on track.

Where Can I Learn Financial Literacy?

You can learn a lot about personal financial literacy on your own through self teaching. You may not realize it but you’ve been learning about it in bits and pieces your entire life.

Take the income you make, save as much as you can, cut expenses where possible, and live frually. It’s not always going to be easy, but even if you have a few short months, you’ll adjust and do better the next month.

This is a financially free way to live life so that you can save for retirement and keep out of debt. Your financial future and that for your family depends on what you do now.

Of course, financial literacy is becoming so essential that many classes are available online. Some high schools and colleges now offer it. Now might be time to take a course or do more research on what you can do to protect your money and have a substantial nest egg on which to live.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“Try to save something while your salary is small; it’s impossible to save after you begin to earn more.”

– Jack Benny

Accounting Questions For SMMEs Financial Success

Accounting is essential for any business, regardless of size or industry. It provides companies with the financial information they need to make informed

#1: Should Business Owners Have Separate Bank Accounts for Business and Personal Transactions?

It’s always best practice to have separate accounts for business and personal transactions, as it helps with tax simplification. SARS, too, recommends that business owners have different bank accounts.

Benefits of Separating Personal and Business Finances

From a risk management perspective:
If your personal and business finances are mixed, and something happens to your business, such as a lawsuit or bankruptcy, your personal assets could be at risk. A separate business account can help protect your assets from business liabilities.

From an accounting perspective:
Tracking your business finances separately makes it much easier to prepare your taxes, track your cash flow, and make informed business decisions.

From a finance perspective:
Having separate business credit cards and accounts makes it easier to see how much money is coming in and going out of your business making cash flow management a breeze.

From a tax perspective:
Some business expenses are tax deductible, but only if paid with a business account. A separate business account lets you easily track deductible expenses and save money on taxes.

From a professional perspective:
Having a separate business account makes your business look more professional and established. This also increases the credibility of your business. When you have a separate account, it shows that you are serious about your business and that you are taking steps to manage your finances properly.

#2: All You Need to Know About Accounting: Common Accounting Terms

1. What Is the Difference Between Cash and Accrual Basis Accounting?

The cash basis of accounting records revenues when cash is received and expenses when cash is paid out. This method is simple to understand and use. But it can be inaccurate as it does not account for revenue or expenses that have been incurred but not yet received or paid.

The accrual basis of accounting records revenues when they are earned and expenses when resources are used. This method is more accurate than the cash basis because it accounts for all transactions, regardless of when cash is received or paid.

2. What Is a Balance Sheet?

A balance sheet is a financial statement that shows, at a point in time, how much you have versus how much you owe. In other words, the term balance sheet refers to a financial statement that reports a company’s assets, liabilities, and shareholder equity at a specific point in time. Balance sheets provide the basis for computing rates of return for investors and evaluating a company’s capital structure.

Further, a positive balance sheet means you have more money than you owe. A negative balance sheet means you owe more money than you have, which is a cause for concern and a sign to take massive action. In this way, balance sheets are extremely useful to you as a business owner.

3. What are Credit Card Reconciliations?

Credit card reconciliation is the accounting process of comparing financial transactions and activities to their supporting documentation. It ensures that values on two sets of records are correct and in agreement.

Accountants will often ask you if you have done a reconciliation. This is just a fancy way of saying “matching.”

For instance, you would match the transactions in your business credit card statements to a third party, like a bank. This process is called credit card reconciliation, and it ensures data integrity.

Data integrity is essential for business management and tax compliance. Accurate data is essential for making informed decisions about your business, such as tracking sales, expenses, and inventory levels. This basic accounting information can help you identify trends, set goals, and make sure your business is on track.

SARS also requires businesses to keep accurate records of their financial transactions. If SARS audits you, you will need to provide proof of your data integrity. This means that you need to have a system in place to track and maintain your data in a secure and reliable way.

#3 How Should Businesses Record and Report Their Business Transactions?

As an business owner, you can summarise your business transactions in books called journals or ledgers.

A journal is a book used to record each business transaction shown on your supporting documentation.

A ledger is a book that records all the totals from all your journals. It’s further organized into different accounts.

Off late, electronic software like accounting tools, point of sale software, expense management systems, and other financial software have been used to track business transactions. The rules that apply to hard copies, like journals and ledgers, also apply to electronic tools.

Pro-tip: It’s highly recommended you consider using an expense management software to record and report business transactions, as the software does all the heavy lifting while ensuring you stay tax compliant and ahead of the game with real-time visibility into business transactions across the board.

#4 What Are Some Mistakes Entities Can Avoid While Filing Business Taxes?

Business owners need to change their mindset about taxes.
Most think of it as a chore they need to get out of the way as quickly as possible. But this mindset often leads to mistakes when filing and paying taxes.

Instead, business owners should view taxes as an opportunity to save money and protect their businesses. By taking the time to understand the tax code and plan, business owners can reduce their tax liability and avoid penalties.

4 common mistakes businesses can avoid when filing and paying business taxes

Underpaying Estimated Taxes:
A business owner must make an estimated tax payment if they expect to owe R1,000 or more in tax when they file their returns. If, by chance, they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.

Depositing Employment Taxes:
Business owners with employees must deposit all employment taxes electronically through the SARS and the business bank account. Ensure that you deposit taxes correctly and on time to avoid a penalty.

Filing Late:
Businesses must file their tax returns on time, just like individuals. Failure to do so may cause penalties. Taxpayers should also know all tax requirements for their business with the filing deadlines.

Not Separating Business and Personal Expenses: While using one credit card for personal and business expenses is tempting, it can be a major mistake for sole proprietors. This is mainly because tracking and categorizing expenses can be challenging, leading to errors when claiming tax deductions. Also, if your business gets pulled up by the SARS for an audit, they may question any expenses not categorized as business-related.

#5: Would You Recommend Hiring a Professional for Small Business Bookkeeping?

Hiring a professional accountant or bookkeeper can help your business save time and money, stay compliant with tax laws, and reduce risk. Being experts in accounting, tax, and financial planning, they can provide your business with valuable advice and services. They can also represent you if SARS has questions or if you’re about to be audited.

If your budget allows, it’s always best to hire a professional. They’ll keep your records for you so that you can focus on growing your business and using your financial reports to make strategic decisions.

#6: What Are the Best Ways to Store Your Financial Records?

As a small business owner, it is essential to store your financial records in a safe and secure manner. This is especially important for tax, as you may need to access your records to support your tax deductions and claims.

The best way to store your financial records is by securely making and saving digital copies of essential documents on the cloud. It also helps to put hard copies of the most crucial documents in a safe or deposit box.

Factors to consider when choosing a storage method for your financial records

The amount of paperwork you have: If you have a lot of paperwork, you may need a robust storage solution, such as a DocIT or a cloud-based storage system.

The frequency with which you access your records: If you need to access your records frequently, store them in a location that is easy to get to, such as a filing cabinet in your home office or workspace.

The level of security you need: If you have sensitive financial information, you will need to choose a storage method that is secure, and that protects your information from unauthorized access.

#7: Why Good Record Keeping Is Important For Your Business?

Helps monitor business progress:
Records show if your business is improving, all the items you’re selling, and areas you’d need to change. Good records can ensure your company sustains in the long run.

Preparing financial statements:
Good records can help you easily prepare accurate financial statements like your income statements, profit and loss statements, and balance sheets.

Identify sources of your revenue:
As a business, you will receive money from multiple sources. Good records can help you identify all your sources of revenue. This basic accounting information can also help you separate personal receipts from business expenses.

Keeping track of deductible expenses:
If recorded, it is easy to keep track of your deductible expenses when you prepare to file your taxes.

Preparing your business tax returns:
To prepare for your tax returns, your records must support income, expenses, and the tax credits you report to the IRS.

Support other items reported on your tax returns:
SARS can, at any point, request an official inspection of your business records. Hence it becomes crucial to ensure that they’re available. A good record keeping system will only speed up this process in case you ever get audited.

#8: How Often Should Businesses Do Bookkeeping?

I recommend doing your bookkeeping daily preferably as it happens

This keeps the number of transactions down, helps you get quicker at using the software, and you can more easily remember items and transactions and have receipts handy.

What happens when you do your bookkeeping monthly?

We do have some clients who only work on the bookkeeping monthly, but then they need to dedicate an entire morning or more because of the volume and the time it takes to remind themselves of the steps to get the work done.

What happens when you do your bookkeeping quarterly?

Some clients even go as far as to do their bookkeeping quarterly, but here I see mistakes. The volume is overwhelming; you may become frustrated and look for shortcuts or make guesses. This is your hard-earned money. Treat it with respect and due care.

Hence, I recommend doing your bookkeeping daily.

#09: How to identify and investigate unusual or suspicious transactions

Unusual transactions can be an early sign of fraud, money laundering, or other illegal activity. You can protect your business from financial losses and legal liabilities by investigating unusual transactions.

Examples of unusual transactions

– Large cash withdrawals or deposits

– Payments from unknown or suspicious persons

– Transactions that do not match your business’s standard operating procedures

– Transactions that are made outside of your regular business hours

Take the time to look into transactions that seem unusual or don’t make sense to you. I recommend doing this at the time and not setting issues aside to attend to later.

#10: How to Review Your Bookkeeping Reports

Bookkeeping is only as useful as the reports we create. They provide you with a snapshot of your business’s financial health. By reviewing these reports regularly, you can identify any potential problems, such as fraudulent transactions or cash flow issues.

Each week I recommend you review your income and expenses against your budgeted expectations, your goals, and then your cash. These reports will show you how your business is doing and whether you need to implement any immediate changes or alter long-term plans.

Doing the work on bookkeeping is not enough. Your role as a business owner is to review the results of the bookkeeping system and then make strategic business choices to move your business toward your goal. If you struggle here, reach out to an accounting professional to help you read and understand your reports.

#11: How Can Businesses Lower Their Tax Liability?

Tax law says that any expenses are deductible for your business if they are “ordinary and necessary” for your business. This definition is extremely broad, so rather than guessing what is and isn’t deductible, I’d always recommend keeping track of every rands and then working with a tax advisor to decide which expenses are, in fact, appropriate for you to deduct.

If you have not kept good records, your tax advisor cannot help you maximize your deductions. No records, no deduction.

Tax planning is also critical. Taxes are calculated on a cash basis, so whatever income you receive and expenses you incur during the tax year affect your taxable income. Working with a tax advisor to strategize and plan for taxes will save you thousands. Taxes are definitely not something that only needs your attention once a year.

To truly maximize your deductions and minimize your taxes, tax planning is the answer.

#12: What Are the Common Tax Mistakes Businesses Make and How Can They Be Avoided?

1. Not Hiring a Tax Advisor

Many small business owners try to save money by not hiring a tax advisor and turning to Google or friends or colleagues for tax advice. Taxes are very specific to your business and your situation.

Google and your friends and families may have some knowledge, but it is often generalized and inappropriate for you and your situation.

Get the advice of a professional to maximize your tax deductions and ensure you comply with the law.

2. Not asking enough small business accounting questions

Accounting is difficult but not impossible to learn for business owners. An easy way to get the hang of it would be to prepare questions for accountants or finance professionals to help them get you up to speed.

As professionals, we are responsible for answering your questions and explaining how your taxes are calculated so that you are clear on every line of detail before you sign and submit your taxes.

I often receive calls from business owners who say they received Annual Financial Statements notice and do not know what it is about because their tax preparer just told them to sign and did not explain any details. That is not ok. This is your business and your tax filing. Take responsibility for what you are signing, and keep asking questions until you understand.

#13: What Can Trigger an SARS Audit, and How Can Business owners Avoid It?

Audits are usually triggered by:

– Unusual income or expense items

– Misreporting of income and expenses

– Deductions that are disproportionate to your income

– Repeated claims of business losses year on year

– Misrepresentation of employees

Now, while there’s no guaranteed way to avoid an audit, there are certain precautions you can take to ensure your business doesn’t raise any red flags.

10 Ways Businesses Can Avoid a Tax Audit

– Be transparent about reported expenses. Categorize them.

– Provide all details for every expense reported.

– Always file your taxes on time. This will create a history of compliance.

– Avoid amending your returns. Double-check to see that each entry is correct before you submit!

– Avoid mathematical errors.

– Report exact errors. Do not round off values.

– Do not leave empty fields on your tax returns. Fill out every answer.

– Always sign your tax return.

Each year, the IRS changes its audit focus based on areas of concern they noticed from prior years.

I always recommend that taxpayers focus on taking every deduction to which they are entitled, keeping good records, and not worrying about the risk of audit. If you have good records and have stayed within the law, then you have nothing to worry about.

Audits today are mostly by mail, so you will receive a letter in the mail asking for more basic accounting information. No one is coming to drag you out during the night or call you and demand immediate payment or pull cash from your bank account. None of these happen without you receiving many, many notices. So don’t avoid SARS correspondences / mails. Most of the time, the issues are easily resolved with a letter.

Conclusion

Accounting is a vital tool for businesses of all sizes. By answering accounting problems and answers, businesses can better understand their finances and take steps to improve their financial health.

In addition to the essential questions for accountants, businesses should regularly review their financial statements and accounting processes to ensure that they are accurate and up-to-date. They should also consult with a qualified accountant to get help with complex accounting issues.

By asking relevant small business accounting questions and taking steps to improve your financial health, businesses can set themselves up for success in 2025 and beyond.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

Matsobanemetja Business Consulting (Pty) Ltd is your accounting partner that you can entrust with the bookkeping function, right up to financial reporting. We helps you keep accurate records of your business finances.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“Your reputation is more important than your paycheck, and your integrity is worth more than your career.”

— Ryan Freitas.

The use of a petty cash in business and the reconciliation thereof

What is a petty cash?
Petty cash is a small fund of actual money kept on hand to pay for minor, day-to-day expenses that are not cost-effective to process through formal channels by using a company card.
Common uses include purchasing office supplies, postage, refreshments for meetings, and making small employee reimbursements for things like travel or parking.

Why Use Petty Cash?

Convenience: It eliminates the need to use company cards for every small purchase. No need to withdraw cash everytime you need and this eliminates the high costs of bank charges.

Speed: It allows for quick and immediate purchases when needed.

Cost-Effectiveness: For small expenses, the time and effort involved in a formal payment process is often impractical or more expensive than the item itself.

Common Examples of Petty Cash Usage

Office Supplies: Buying stationery, pens, notepads, or other small office necessities.

Refreshments: Purchasing coffee, tea, or snacks for staff or clients.

Postage: Mailing documents or paying for stamps.

Small Travel/Errands: Paying for local taxi fares or parking when an employee runs a quick errand.

Employee Reimbursements: Reimbursing staff for small out-of-pocket expenses.

Other Small Purchases: Flowers for an employee’s birthday or paying for minor repairs.

How It Works

Establish the fund:

A specific amount of money is withdrawn from the bank.

Custodian:

A designated person, the custodian, is responsible for the fund’s security and management. This can be the secretary in the business, personal assistant or accounts clerk / admin individual in the business.

Disbursement:

When a purchase is made, the employee receives the item and provides a receipt or voucher. That gets captured in the company books for records.

Reconciliation:

The fund is periodically replenished to its original amount. This ensures that the balance is always restored to a set level and that all transactions are accounted for.

Reconciling the petty cash is extremely important so that we are able to allocate each expense according to its correct classification.

I the end the reports and line items need to be accurate and indicate the correct status of the business.
For example you cannot withdraw a total of R5000.00 from the business account and allocate it as petty cash on the company profit and loss.

The R5000 needs to be broken down into the funds usage. Because, some of the funds may have been used for cleaning, paying for plumbing, miscellaneous unclassified expenses. As the business owner you need to know how much you are spending on each line expense per period. Otherwise how are you going to plan and control your budget?

This practice ensures that all petty cash remains available for operational needs without any misuse or loss.

Proper management not only simplifies the financial process but also reduces the risk of misappropriation or fraud. It promotes financial discipline and accountability, making it an indispensable component of effective financial management in both small businesses and larger organizations.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.

We have well trained and qualified staff that manages the aspect of both business and individual taxes.

We are the fast growing accounting service-providing agency in South Africa and across the globe.

If you need a consultation with us with regards to your business, any type of business – please reach out to us by email hello@matsobanemetja.blog

Matsobanemetja Business Consulting (Pty) Ltd offers a wide range of bookkeeping and accounting services, tailored to your business needs at an affordable price.

You may please inquire with us by sending an email to enquiries@matsobanemetja.co.za

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

– Robert Kiyosaki

One way to encourage compliance is to keep the rules as clear and simple as possible. Overly complicated tax systems are associated with high tax evasion.