What do we do after registering our Companies?
A business starts with an idea. Then you gather equipments and resources such as Capital or Material needed to start trading , but before trading , we are required to register this business idea. We register with CIPC ( Companies and Intellectual Property
Commission ) formerly known as CIPRO.
Why do we register a business idea?
In simple form,we operate this businesses in a country that has Business Laws under the Companies Act of the country. Once a business is registered , it means it has all the legal
entities allocated to it for recognition, identity , development and for protection. Think of it like this: When a child is born, they need an identity in the form of names, parents, ID numbers ,etc. The same applies with companies.
So now that the business is registered ,what is the next step?Trading right? Yes. But do we only focus on trading and never mind the other factors included in running the biz? Definitely not!
As we are now bounded by the law we need to follow suit.
Below are just the basics that I prefer and encourage each and
every Business Owner to know and understand after registering their companies
1. Ever heard of the South African Revenue Services (SARS) and what it stands for?
This is the institution not to ignore as a Business Owner as well as a responsible citizen. I mentioned the words “LEGAL ENTITIES” on the above paragraph. Once your company is registered , you receive the documentation that details the legal entities of the company.One of this legal entity is the FINANCIAL YEAR END.The financial
year end means a month you have chosen when you register your company that you will submit your ANNUAL RETURNS to the receiver of the revenue.
For example, if you have chosen February ,this means, every year in that month you are expected to file your TAXES. What does it mean to file your taxes? You have been trading,making profit,incurring expenses, etc.so now you must prepare your Company ‘s Financial Statements according to the transactions you have recorded
during the year.This financial Statements include the following :
The Balance Sheets which determines the business position and
The Income Statements which determines the business performance.
Once this is worked out , you then submit these reports and SARS will determine how much you must pay as your tax contribution. Please note: The Tax amount will be calculated as per your Taxable amount as per the provided Calculations on your Financials, and the percentage varies from nature of the business, etc and changes every year. Currently (2016) Small Business contribute 25% of their taxable amount towards taxes.
Whether you are trading or not, you must file .If you are not trading , you must also submit, but in that case, you will file zero instead.
When you don’t file ,that means you are not in good books of the law and you will be referred to as Non-Compliant .Being non-compliant is a disadvantage as you will not be receiving the compulsory
documentation ,such as TAX CLEARANCE CERTIFICATES,etc.
2. The next one I want to highlight is CIPC, see the full name above. With this type of tax you are also expected to file annually to the institution .The difference with them is that they expect you to
file on the anniversary of the business ,meaning every registration date of the company you must file. However, their standard fee is R100.00 per year for small companies that make less than R10 million per annum.A penalty of R50.00 is charged for late submissions.The reason for your company to comply is to inform
the Commissioner that your business is still active and they still have the correct business details on their database. Failure to do so ,other than penalties added on every year, your company may be DEREGISTERED. When a company is deregistered, it means it
is no longer valid. Thus, as a Business owner you really need
to make sure that this is in order to avoid the stress of reinstating or starting registering the company from scratch.
I have witnessed many Business owners lose opportunities and watch deals passes by because they are not in good books with the law.It is frustrating and a regrettable thing to go through.You do not
need to be an expert in these fields, but you just need to understand the basics ,or you can have an Advisor,a very good Accountant or a Bookkeeper to guide you ,especially in this field.
There are many Compliance stages in Business. I just chosen the two as they are basic and compulsory for every business. Know the nature of your business, familiarise yourself with all it’s compliance or licences required to run the business, by so doing you will be placing your business ready for opportunities and beyond.
Every business must strive for growth, in fact that is the main principle and goal of the business. Therefore non-compliance tend to block your Business for development and progress.
Compiled by Miss Dee. Do you have queries? Need advices / Tips?
Contact us www.matsobanemetja.co.za
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Matsobanemetja Business Consulting Pty Ltd 