Matsobanemetja Business Consulting Pty Ltd

Budgeting does not have to be a painstaking endeavor that makes you want to poke your eyeballs out. It actually can be fun. YES, I said budgeting can be fun! This budgeting for beginner’s guide will show you how easy it is and why you should make one.

A budget is simply a plan for your money. It’s seriously that simple.

A budget is what you make it. The budget itself is not an enemy.

If just the word budget makes you want run far far away – then call it something else!

Call it your money plan, treat yourself plan, profit plan, cashflow plan, dreams to reality plan – whatever resonates with you! Make it personal.

Having a budget doesn’t mean that you will be restricted and can’t have any fun.

It’s actually quite the opposite.

You get to have fun and not feel GUILTY!

You don’t have to call it a budget.

You don’t have to panic the next day thinking about how you are going to pay the credit card you just put all that fun on to!

The hardest part about making a budget is getting started. Once you have it done, it’s very simple month to month.

Budgeting for Beginners: A Step-by-Step Guide

So, now that we discussed why you need a budget, let’s get started on making one.

I highly recommend using pencil and paper for your first budget. There is something about writing it down that makes it feel more real. After you get the hang of it in a couple of months, then you can switch to a spreadsheet or an app.

But seriously, just write it down for now.

We are going to start with a general average month budget.

Step 1: Determine your income

This may seem like a no brainer but a lot of people don’t know how much money they actually make!

Pull up your bank account or pay slip and figure out how much each paycheck is. Jot down the amounts and make a total of all your income for the month.

Step 2: Determine your set expenses

This is the really hard part but the MOST important part. I want you to go through at least the last month or three if you really want to get accurate numbers and figure out how much your expenses are.

I want you to determine your set expenses, like rent/mortgage, power, water, TV, cell phone, insurance, car payment, credit cards, loans, and all other bills that come out every single month.

These bills really should be about the same every month. Make a list of all of these and their amounts. If you are not sure about a bill that may fluctuate, like your power bill, look at your averages, then estimate a little higher.

On your paper under your income box, write down your expenses.

Step 3: Discretionary spending

Then comes the even harder part. You need to figure out where all the rest of your money has been going.

This will be food, restaurants, gas, entertainment, impulse shopping, Amazon, clothes, ect.

This will be the eye-opening part. Look at the past couple of months and see where your money really has been going.

For example when I did this, we were spending R7 000.00 on food between groceries and eating out for a family of 4!

This will be where you can cut costs and start to save money! So it is very important to not skip this step.

In order to change your behavior, you have to face the facts. It’s hard and challenging and easier to ignore it and put your head in the sand.

BUT that won’t get you to where you want to be long-term.

So, let’s get busy and actually SEE where you money has been going.

Step 4: Determine your category amounts

Ok, you have your income and set bills and now you see where your money has been going. The next step is setting a reasonable amount for those categories. On your sheet, write them down:

Step 5: Determine how much is left

You should have your income and expenses laid out on paper. I want you to total your expenses on the sheet.

Then take your total income and subtract your total expenses.

At this point, you should have some left. We will use what is left over for our sinking funds and debt snowball.
You can utilise excel spreadsheet for this exercise.

Step 6: Sinking Funds

A sinking fund is simply saving for an expected expenses that doesn’t come up every month. You can save money for these items or pay for them with cash in that month depending on your budget.

When you can’t “cash-flow” it, then you need to save for it with a sinking fund.

Sinking fund examples: clothing, christmas, gifts, birthdays, house maintenance, vehicle maintenance,
property taxes, income taxes, vacation, medical expenses, general emergency savings, etc.

Depending on your personality and how you handle your money will determine the best way for you to save for sinking funds. They can be saved in cash envelopes, separate bank accounts, one bank account with a spreadsheet to track the amounts, or cash flowed.

I find I use a variety of these. I use cash envelopes, separate bank accounts, and cash flow expenses. For my personality, I like to focus on one big thing instead of several small things. SO, I tend to cash flow most small things month to month. I try to use the savings accounts for big expenses.

This will take some time to figure out which works best for you and your budget.

But for now, look at your budget and decide what sinking funds you want to save for on a month to month basis and which you can cash flow when they are due.

Step 7: Debt Snowball

At this point, you have all your bills, expenses, and sinking funds planned. You should have some money left over at this point. If you don’t, we will address that in a minute.

Now we are going to use what is left for your debt snowball. Using all of the money in the month for a category is called a zero-based budget.

What is a zero-based budget?

When using the debt snowball method, a zero-based budget is the best way to make sure that ALL of you money is working for you.

A zero-based budget is assigning every rand a job. So your cash balance should be zero.

The point of a zero-based budget is to make income minus the outgo equal zero. If you cover all your expenses during the month and have R1000 left over, you aren’t done with the budget yet. You must tell that 1000 bucks where to go. If you don’t, you lose the chance to make it work for you in the areas of getting out of debt, saving for an emergency, investing, paying off the house, or growing wealth. Tell your hands where to go.

Now you can and probably should leave a little bit of a buffer in your account and a miscellaneous category for your budget. Just in case you have something come up that you forgot or a mistake somewhere. It happens to all of us!

And by a little buffer, I don’t mean 500. I mean more like 100 or less.

But how can I budget when I am broke?

Even if you make R250,000 a year or R350,000 a year, you must have a plan for it. A budget is simply a plan for your money. If you don’t make a plan, then your money will disappear.

It doesn’t matter if you make a lot or a little, your money will not work for you, if you don’t tell it where to go.

When you are on a tight budget or a low income, it is especially important to do a budget. You don’t have as much leeway in your spending and a small mistake or emergency could be devastating.

How can a budget help me?

Well, most people find that after doing their first budget, they feel like they got a RAISE! I certainly felt this way as well. It’s a very eye-opening experience when you see the numbers on paper. It’s very likely that you have more money than you realize.

The issue most people have is that they don’t know where the money is going, so it feels like there is never enough.

When you start paying attention to every cent, it quits flying out the window and you can use more of it.

What is a debt snowball?

A debt snowball is where you take all extra money and apply it to your smallest debt first. You make minimum payments on everything but your debt with the smallest balance.

Then when the smallest balance is paid off, you move that payment and extra to the next smallest. You do this until the last debt.

You can use a debt snowball calculator to see the best way to do this.

FREE Budget Checklist

Step-by-step checklist to make your budget and manage your money! 

How can I budget with an irregular income?

If you have irregular income, your budget will basically look the same. The difference will be in how you pay your bills.

With an irregular income, I want you to estimate your average monthly income and use that for your budget. Some months may be more or less, but let’s start with a base line average and go from there.

You still have to list out your expenses and sinking funds and estimate your debt snowball.

The difference is that I want you to list your expenses in order of importance.

Food, shelter, and transportation, being at the top of the list. Those get paid first.

Then through the month as money comes in, you pay the next thing on the list.

Your debt snowball will have to wait until everything is paid and saved then start applying what comes in to the snowball.

Be sure to check things off on the budget as they get paid, so you don’t accidentally pay something twice.

How to budget when you get paid bi-weekly or weekly?

The monthly budget is good to see where all your money should go for the whole month.

I have been trying doing only a monthly budget this year, and honestly I find it hard to stick to. I have always done a budget for each paycheck, so this works better for me.

What if I make a low income?

Just like I explained at the beginning, you still need a budget. It may not look like the amounts that I have given as examples but just put your numbers into the budget.

You still need a budget on a low income and you still need to manage your money. Don’t wait until you have a big income to learn how to budget. If you cannot take care of the rands, how are you going to take care of the thousands?

If you have a low income it will be important to start looking for ways to cut costs and expenses.

How do I stick to the budget?

Sticking to a budget at first can be hard. Just remember that it takes 90 days to instill new habits and sticking to the budget will take some time to get used to.

No one is perfect with sticking to the budget, not even me. But don’t use that as an excuse to disregard the budget all together.

My biggest tips for sticking to the budget is when something comes up that messes up the budget, don’t give up. Just because you made an impulse purchase for unplanned item, don’t throw the budget out the window and be discouraged!

It’s easy to say “well I’ve already screwed up the budget, what does it matter now?”. It does matter, a small mistake is better than several hundred rands.

Other tips for sticking to the budget:

Make visuals of your goals- keep them around for when you are tempted. Put them at your computer, in your wallet, and at work.

Make sure you are your spouse are on the same page- make sure everyone is working toward the same goals

Have an accountability partner- if you don’t have a spouse or they aren’t on board, tell a trusted friend what you are doing and why and lean on them for support.

Get used to the comments- when you are making a lifestyle change, get ready for comments from friends and family about your choices. Not everyone will be supportive of your decisions. When you can’t do something or go out for lunch everyday, there will be comments. Don’t let it bother you and explain “it’s not in the budget”.

Leave money for fun- you won’t be able to stick to the budget if it’s so tight you can’t do anything fun at all. Now I don’t mean parties and concerts every weekend but budget in some fun money. This will help keep you motivated and stick to it.

How can I budget and save money?

Budgeting and saving money go hand and hand. Once you start budgeting, you will naturally start saving money.

Once you do a zero-based budget, it will be easy to save money. You just put it down as a line item.

You can also find ways to cut expenses and make money. Make a list of ways to make some extra money in the month.

Can you work some overtime, join network marketing sales, or sell some other things. Even if you don’t think you have anything worth selling, you will be surprised how quickly it makes a difference to your finances.

In conclusion:

A budget is the starting point for managing your money, finances, and future. Just get out there and do it.

It can be intimidating at first, but it gets easier every month.

Having a written budget is the first step in living your dreams.

With a budget and focus can help you get there. It helps you stop wondering where your money went and gets it doing what you want it to do!

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 budget is telling your money where to go instead of wondering where it went”

– Dave Ramsey

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A budget is not a limit, it’s a declaration of priorities

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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.”

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

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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.

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

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

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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.

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 most unhappy customers are your greatest source of learning.”

– Bill Gates

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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 🤎

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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.

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

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

– Peter Drucker.

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