Best Accounting Tips for your Business

Secrets of Best Accounting Practices for Small Business

Hire a Bookkeeper

The need for an accountant or bookkeeper grows as your business finances get more complicated.

Bookkeepers and accountants perform similar tasks but have a different set of skills.

Accountants provide consultation and analysis and are qualified to provide advice on your taxes.

These financial advisors can help you with any business decision about finances.

A bookkeeper’s main role is to keep you financially organized and record transactions.

Whichever you choose, verify the bookkeeper’s training and qualifications and that you choose a certified public accountant if you go that route.

The right bookkeeping system also makes it easier to file taxes so that you get the most deductions and pay less in South African taxes.

Tax regulations and laws change and are notoriously complicated. If not followed explicitly, you could end up paying more in fees and taxes.

A bookkeeper can help you track expenses and annual revenue and pull your monthly financial statements, such as your income statement, reports for your bank accounts, statements for your credit cards, and your balance sheet.

An accountant or bookkeeper can prove an invaluable resource and make financial management much easier.

Determine Which Accounting Method to Use

There are two standard accounting methods you can use for your finances – accrual and cash basis accounting.

Both methods have their own advantages and disadvantages, so it’s important to understand how they work in order to determine which one is best for your business.

Cash-Basis Accounting

Cash-basis accounting is the simplest method and records transactions only when cash actually changes hands.

This means that revenue is recorded when it is received and expenses are recorded when they are paid.

Advantages

Easy to understand and implement.

Gives an accurate representation of cash flow.

Requires less record keeping compared to accrual accounting.

Disadvantages

Does not provide an accurate picture of a business’s financial health.

May result in incorrect reporting of income and expenses, especially when transactions are recorded at varying times.

Not suitable for businesses that extend credit to their customers or take on debt.

Accrual Accounting

Accrual accounting records transactions when they occur, regardless of whether cash has been exchanged.

This means that revenue is recognized when it is earned and expenses are recognized when they are incurred.


Advantages

Provides a more accurate representation of a business’s financial health.

Allows for better tracking of revenues and expenses over time.

Required by law for businesses that exceed a certain threshold.

Disadvantages

Can be more complex and time-consuming to implement and maintain.

May not accurately reflect cash flow, as revenue can be recognized before payment is received.

Requires careful tracking of accounts payable and accounts receivable.

Deciding the Best Accounting Method

When deciding which accounting method to use, you should consider your business’s size, industry, and financial goals.

If you are a small business with simple transactions and want an easy way to track cash flow, then cash-basis accounting may be a better option.

However, if you have a larger business with more complex transactions and want a more accurate picture of your financial health, then accrual accounting may be the way to go.

Start a Budget

One of the best accounting practices for any business is to start a budget.

The smartest business owners create a budget each year.

To budget efficiently, you must proactively address challenges in your budgeting process and manage your money well.

No business or company can operate without enough money coming in each month and year.

The key accounts to pay attention to are inventory management, expenses or debt payments, and monthly cash inflows.

If you do nothing else, make sure you manage these accounts so you can determine how much money you need to bring in to cover your expenses and make profits.

It’s also helpful to understand sales of your product income.

Keep Your Personal and Business Finances Separate

That way, you can separate your personal accounts from your business expenses and income.

Separating your accounts also proves to tax authorities that you have a legitimate business rather than a hobby.

Separate banking allows for proper business financial accounting without mixing up personal and business expenses and revenue.

It simplifies things and clearly shows what you earn and spend in your business.


Following these best accounting practices will make the whole accounting process less complicated.

Update Your Chart of Accounts

The accounting process starts with updating your chart of accounts, which lists and describes all your accounts.

The key is creating meaningful account categories for more accurate financial records.

When you set these up, you want to define accounts that align with financial reactions, such as expenses, revenue, assets, equity, etc.

You also want to review and optimize your chart of accounts regularly to keep track of how much you spend on customer acquisition, your break-even point, and ROI.

Even if you’re a solopreneur, a good record keeping is encouraged do you can stay up to date with your taxes.

Regularly Download Your Banking Transactions and Reconcile Your Financial Statements

To make managing your finances easier, download your business transactions (bank statements) and reconcile financial and bank statements regularly.

The longer you wait, the more financial errors and discrepancies go unchecked.

Things like unauthorized withdrawals and disbursements can take a huge toll on your finances.

Pay Your Taxes on time.

Self-employment taxes add up over time, so I recommend paying your taxes provisionally or throughout the year.

If you don’t, you’ll have a large payment to make when you file your tax returns. Plus you’ll end up owing a penalty too.

Paying provisional tax eases the tax burden a little.

Also, keep accurate tax records of all the payments you make so your accountant won’t get any surprises.

Some of the tasks in reconciling accounts includes: checking for errors, and reviewing your income and outgoing money to verify if you are on track to achieve your weekly, monthly, and yearly financial goals.


Evaluate Your Financial Data Monthly to Stay on Track

This includes a monthly report, to understand your key financial performance indicators (KPIs) and the primary drivers of income in your business.

Your accountant can do this for you, as an accurate analysis requires several techniques, including trend and cash flow analysis and financial forecasting based on historical data.

Track Contractor or Employee Time to Understand Profitability

If you have independent contractors or employees, have them track their work time with a tool.

This will show you where employees may need more support and see how much employee time and project-related expenses cost you.

Sometimes, employees are simply inefficient, and other times, they may struggle with specific tasks.

If your project or job costs are high, you can find ways to reduce expenses, such as finding less expensive tools, promoting more of your offers or services, or finding other solutions to reduce costs.

Keep Accurate Records

Most importantly, to have a successful business, keep thorough records.

Your record-keeping practices can make or break you.


It can also help during tax time if you get audited.

A tax audit is no joke, and not having detailed finance records can make this a nightmare.

It can cost you a lot of money if you need to hire an accountant, not to mention the incredible amount of time you will waste going through financial statements, bank records, tax write-offs, and other documents.

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

“Accounting greatness is not just about what you calculate; it’s about the financial stories you unfold.”

– Christopher Miller

Happy New Tax Year 🎉

What does a new tax year mean?

Well, it can mean multiple things.

1. Are you an employer and responsible for employees tax deductions as a results of PAYE, UIF, SDL and other taxes?
– February is the end of individual tax year. The ITR12 tax periods range from March to February the following year. This sum up the 12 months individual tax contribution to the state. You must have all your monthly EMP201 declarations complete, as well as the employer reconciliation done i.e. EMP501
If you also contribute the employee UIF via SARS please ensure that all your employees are equally listed under the company at the UIF. The company must obtain the unique UIF reference number. As you pay both your PAYE and UIF via SARS, note that every 6 months SARS send the UIF monies to them. It is important that after obtaining the PAYE no. you get it linked to that of UIF. If these procedures are not followed accordingly you will have the declarations only reflecting on the SARS portal and not on the UIF, thus you will experience some difficulties with employees claims, etc.

Please make sure that you have paid all the funds to relevant institutions as well. You should not be deducting monies from the employees yet you are not paying them. If you make your payments late you will also be charged late submissions penalties and interests. These additional fees also accumulate monthly. It is important that you close off your month on time and accurately.

The individual tax season opening and closing dates are always announced by the receiver of revenue. As an employer please make sure that you have provided your employees with the Tax certificates, also known as IRP5s

2. Do you run a company and the business financial year end is February?

What is the Financial year end?
It is the last day of a company’s accounting period. The accounting period is the time frame used to complete a business’s accounting cycle.

In simple terms, it is the month that you would have chosen when you register your company that you will account for the company taxes to the receiver of revenue. Which means it can be any month period in the year, not only February even though many businesses have Feb as their year end. If you are still not sure about your company financial year end, please check your company registration certificate – CK.

– If you have an active / operating business you need to make sure that you have prepared your Annual Financial Statements and ready for the submission. In the case of tax submissions the Income Statement and Balance Sheet are the important reports to submit. Only after the submission of the AFS you will know how much tax is payable. Few factors plays an important role in determining the tax value the company must pay. Information such as the company size i.e. the revenue, nature of business, etc. SARS looks at the net profit and decide the figure from there. The Net profit is called the taxable income.

While some companies may have a different financial year end, the administration and procedures remains the same across all companies.

It is important to note that in a case where the business was not trading you are still required to submit the nil returns. This is to communicate with the commissioner that though your company is still a legal entity it did not have any economic activities. If you do not submit, the return will remain outstanding. Failure to submit will have payable penalties added on your company.

3. Are you a sole proprietor or employee receiving an additional Income?
– some individuals are full-time employed by company X but that does not stop them to earn an extra income. It could be by selling products, affiliation with network marketing companies, offering skills, rental income, etc. This is the beauty of our democracy. It might be important that you disclose these commercial activities to your employer’s. Check your company policy and regulations with regards to this.

Though it is not illegal to have an extra economical activities in your spare time, do remember to comply. Every income need to be declared with the receiver of revenue. Additional incomes are treated differently as you are not contributing towards your taxes on a monthly basis in a form of a PAYE. Additional calculations must take place. You need to capture all the earnings derived from additional activities, less your expenses. You clearly need to indicate the figure correctly. You might have made a profit or a loss, either way you still need to declare. That is the right thing to do. The calculation will be treated as your “secondary IRP5” the primary being that of your employer.

It is your responsibility as a citizen of the country to make sure you understand the state ‘s expectations and comply. Non compliance is an offence and “I did not know” is not a valid excuse.

Be in the know and cover your back!


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 hardest thing in the world to understand is the income tax.

– Albert Einstein

Small Daily Actions that helps increase your productivity


I wanted to take a break from sharing finance content today and rather share a bit of what helps me to be productive. I gather the tips may help other business owners/ even professionals too.

1. Don’t Make It Too Complicated

Making money is not complicated.
Almost anyone can do it. Sadly, so many people make it complicated, including myself
Even though it’s nice having awesome technology to help you get things done, it’s not required. Just use what you have.
You don’t need special landing page software, or to worry about complicated algorithms to be successful. Neither worry about having all the resources in place for you to be productive.
Focus and spend much time on what matters. As they say – focus on what pays the bill or influence your earnings.

2. Do Your Money-Making Activities First

Your business cannot exist if you don’t earn money.
Therefore, make a list of activities you do in your business that can directly be credited with earning something.
Making offers is the fastest way to make money. Always selling your products / services will always attract potential clients. That’s the only way to get customers. If you serve them well and happy with your offerings they will then recommend your work to others. Free marketing right there.

3. Keeping Up with Your Data

The other daily activity that is important to do is to keep up with your data.

If you have an administrator that help with capturing the daily activities, and based on something you can measure – make sure you are measuring.

If you don’t track and measure, you’re only working on assumption, and that’s not going to work long term.

4. Always Be Marketing

You’ve probably heard this before, but you should spend more time marketing than doing anything else in your business.

Of course, thankfully, you can outsource a lot of tasks to help you with your marketing and visibility.

But there isn’t a day that goes by where you shouldn’t be getting out there.

That may consist of publishing a new article, a blog, expanding on your online presence or even using your old traditional marketing methods. As long as the word is out there.

5. Schedule Everything

To ensure that you do the things you need to do to grow your business and get smarter about marketing, it’s a good idea to use your calendar to schedule everything you are going to do.

That way, when you go to work, you simply open your calendar and get started on those tasks.

To do list is extremely important. Draft, mark all your completed tasks. This is how you hold yourself accountable.

Consistency is the key to success.

Specific habits help you develop consistent action which helps you grow your business, your income, and your bottom line.

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.

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 goal is a dream with a deadline.

– Napoleon Hill

Steps on how to Organize Your Business Finances


Starting your own business is overwhelming to say the least. There’s always something new to learn and a mile-long to-do list that you’ll probably never finish. 

Even though it can feel really intimidating, ignoring your business finances isn’t an option. If you want to avoid getting in trouble with the tax institutions / government, and possibly paying big interest or fines, you’ve got to organize your business finances

9 Steps to Organize Your Business Finances

1. Separate Your Personal and Business Finances

Most business entities, (Pty) Ltd, are required to separate their business and personal finances. If you’re a sole proprietor, it’s not required but it is a good idea to get into the habit as soon as possible.

Keeping your finances separate actually makes your life much easier when it comes to documentation and taxes. Please open a business bank account for your business.

You are able to set aside money for taxes, my paycheck, big purchases like website hosting, or anything else I want to save for in advance.

2. Create a Business Budget

Having a budget, for yourself or your business, helps you make a plan, stop overspending, and achieve your goals. After all, you started a business to make money not to spend it.

Keep a list of all your recurring expenses like software or memberships, subscriptions, you pay for each month or year. This will help you become more aware of what you’re spending to run your business. It also helps you keep track of when you’re going to be billed again in case you want to cancel or upgrade.

There are wonderful softwares that comes on handy in this regards however you could also use a spreadsheet to track your expenses.

3. Set Up Finance Software or a Spreadsheet

All of your financial transactions should be recorded in the same place. Most people use software for this like QuickBooks, FreshBooks, or Wave. You can also use a spreadsheet, especially if you are just starting out. 

Get the Business Finance Tracker Google Sheet!

4. Track Your Income

Anytime you collect money from a client, affiliate program, digital sale, or other income stream you need to make sure that transaction is recorded. If you don’t have a record of it, you won’t be able to prove it for your taxes.

5. Track Your Expenses

Record every purchase as soon as possible including the date, description, amount, and expense category. Organizing your expenses by category as you go will save you time during tax season.

Some of the most common expense categories for online businesses are:
Ads + Marketing, Charity, Contractors,
Education, Gifts, Insurance, Internet,
license + Permit, Meals, Office Supplies,
Professional Fees, Software, Telephone,
Travel, utilities, Website, etc.

6. Save for and Pay Your Taxes

Set aside 20-30% of your taxable income each month in order to cover your tax payments. You may want to talk with an accountant to determine the exact amount you’ll need to pay.

Don’t forget that you may need to pay business income taxes every 6 months, payroll taxes on a monthly basis, labour and other and local or industrial governing taxes.

7. Stay Organized with Apps

Even though most financial records for online businesses will be digital, there are times when you might need to keep track of something outside of your computer. When you need to digitize something, try an app!

Apps are great for tracking things like meal receipts and mileage driven for business purposes.

8. Reconcile, Review, and Archive

At the end of each month, check your numbers. Make sure that all of your income and expenses have been recorded accurately and completely.

Review your income and expenses to see how you did for the month. Don’t beat yourself if it wasn’t what you hoped it would be. Just resolve to do better next month.

Also, take a look through your expenses. Were they worth the money you spent on them? Did you really need to spend that money? Keep this in mind as you make decisions for your business in the future.

Export files from your payment processors or other software and archive them. Check your paygate platforms or any other program you’re using for financial transactions. Update the file name to something searchable like “Google Sheet Transactions [Month Year]” and save them in a folder in Google Drive.

9. Set Up Recurring Tasks on Your Calendar

Monthly Reconciliation – During the first week of the month, you need to reconcile, review, and archive your transactions for the previous month.

Quarterly Estimated Taxes – create one task for each due date in a single year. Then set each of those 4 due dates to recur yearly.

Annual Taxes – Create 1 task to prepare your taxes in advance and one task as a reminder for the due date.

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.

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

“Beware of little expenses. A small leak will sink a great ship.”

– Benjamin Franklin

34

Benefits of Bookkeeping for Small Business Owners


1. Improved Financial Management
Bookkeeping can help you improve your financial management!
When you track your financial transactions, you’ll be able to create accurate financial statements.

That means you’ll finally have a good handle on your income, expenses, and cash flow.

With bookkeeping, you can finally gain control over your finances and make informed decisions that will lead to long-term success.

When you start a business, there is so much to keep up with, and many business owners do let the bookkeeping fall by the wayside. But, once you finally take the time to organize your financial records, it will completely change the game.

For example, once you start by accurately tracking your income and expenses, you will realize that your operating costs were too high compared to your revenue. With that knowledge, you are able to make some tweaks that will ultimately makes you much more profit.

2. Better Decision Making

Make informed, data-driven decisions. Especially when it comes to your business.

One most part is checking your financial reports. They can help you:

identify areas of financial strength and weakness

make informed investment decisions

prepare for tax season

And having access to that data means you’ll be able to make smart, strategic decisions that will help take your business to the next level.

You’ll gain a better understanding of where your money is going.

And you’ll be able to spot trends. Like income streams that you should lean in to because they are working so well. Or business expenses you should cut back on.

That’s why I’m such an advocate for bookkeeping. It will give you the information you need to make better decisions and ensure that your business always runs at its best.

3. Easier Tax Preparation

Taxes, taxes, taxes. No one likes them, but we all have to deal with them.

But when you stay on top of your bookkeeping tasks, tax preparation is a breeze.

With bookkeeping, you’ll have access to financial reporting showing how much your business has earned and spent. This is a lifesaver when it comes time to file your tax return.

No more digging through shoeboxes filled with receipts! And no more last-minute filing. You’ll have all your records organized and ready to go when it’s time to file your income taxes.

Plus, it’s easier to ensure you don’t miss out on any tax deductions when you’re organized.

And you can stay on top of your quarterly estimated tax payments.

So, make sure you take advantage of this awesome benefit!

4. Increased Business Efficiency

Time is the most valuable resource especially as an entrepreneur/ business owner? And let’s face it, we can always use more of it.

That’s another way that bookkeeping comes in to save the day. It helps us streamline our financial processes, reduce errors, and improve our overall workflow.

Think about it. When you have accurate records, you can make the informed decisions we talked about earlier – and make them faster.

You won’t have to waste valuable time sorting through stacks of paperwork or trying to figure out where your money went. Instead, you can focus on growing your business and doing what you love.

So, if you want to work smarter, not harder, making sure that your bookkeeping is handled is the way to go. It will help you keep things organized and save precious time and resources.

Since I’m all about efficiency, this is one of the main reasons bookkeeping is a must-do in any business.

5. Improved Cash Flow Management

As a small business owner, I’m sure you know that keeping a close eye on your cash flow is essential to running a successful business.

But when you have accurate information about your expenses and income, it’s much easier to manage cash flow.

Which is why bookkeeping can be such a lifesaver! 

It helps you more accurately predict future cash flow and plan for the long-term stability of your business.

Bookkeeping can help you:

– make sure that payments are made on time

– identify any areas where you’re overspending

– and create a plan to manage cash reserves

You’ll be able to take back control of your business finances and focus on growth!

6. Better Planning and Budgeting

I know that a lot of people think that planning and business budgeting are a headache.

But I do understand that it can feel overwhelming to create a budget, keep track of expenses, and figure out how to allocate resources effectively. However, it doesn’t have to be that way if you stay on top of your books.

After you implement a bookkeeping process:

– you can create realistic budgets

– track progress toward your financial goals

– make informed projections for the future.

It’s like having a crystal ball that tells you what your future money situation will look like.

When you have a clear plan, you’ll feel empowered to make informed financial decisions that will help you grow your business.

You’ll know exactly how much money you have to work with, where it’s going, and where you need to cut back. And that leads to peace of mind.

7. Easy Access to Data

One of the best things about bookkeeping is how easy it can make accessing your financial data.

By organizing your accounting records and generating financial reports with just a few clicks, you can quickly get an overview of your business’s financial health.

You’ll always have the information you need at your fingertips.

No more guesswork. No more wasting time sifting through piles of paper. Just clear, concise data whenever you need it.

Whether you decide to tackle this yourself or hire a service, I think you’ll agree that keeping up with your books is super important.

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.

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

In the balance of life, accounting is the equilibrium that keeps everything in check

Dear Business Owner – Happy New year 🎊 – Bookkeeping Processes

What is your plan to change or improve how you do things in your business as far as compliance is concerned?

The mistake that many business owners make is only focusing on the yearly records but the truth is those are a build up from daily transactions to weekly, monthly, quarterly then yearly.

I have decided to compile this specific blog to elaborate clearly the process of recording our transactions and keep records towards the yearly built up.

1. Daily
– Deal with emails and queries
Attend to customer queries timeously is very important so that their problems are sorted in real time. N.B. Your job is to solve your customer problems.
– Check your bank account
– Clear all receipts, file them and any paperwork digitally
– Prepare and send customer invoices
– Record your time worked or those of your employees
The reason for this is to control your performance, and also to make sure that employees are not being over paid for the hours not worked for as that will eat on the business profit.
– Record your mileage
If you are receiving travel allowance from the business, Keep track of all the business kilometres by keeping a log book and update it on a daily basis. Your travel log must indicate the start km and end km on a daily. Separate business and private km.

2. Weekly
– Bank your cash
In my teachings I always encourage that you do not use the cash received from customers until it is banked. That way it assures clarity on the correct declared income of the business.
– Process supplier invoices and pay them
Do not ruin the great working relationship that you have built with your suppliers by not paying them on time. Please keep records of the receipts, statements and the recon.
– Credit Control: Send customer invoices and reminders
Issue invoices to your your customers and follow up on the payments to ensure that you are paid on time. The unpaid invoices have a tendency of blocking the cashflow. It is extremely important to make sure that monies owed to the business are paid on time. For effective run of the business.
– Track your business expenses
No business operate effectively without incurring expenses. It is a norm. But they need to be captured and controlled so that they do not create a loss to the business unnecessary.
– Track your business Income
Equally it is important to set your sales target daily thus monthly. That’s how you grow the business.
– Update and reconcile the petty cash
Set aside the lump sum of money for those miscellaneous expenses. And clearly record the transactions to be able to reconcile the petty cash at the end of each period as you use the cash. Every cent in the business must be accounted for!

3. Monthly
– Reconcile Bank and all accounts
– Produce profit and loss statement and compare it versus last month and versus the budget
A profit and loss report is the one that reflects the financial performance of the business. We must compare that against the budget that was set apart to run the business. This is a control measure and you will be able to track those miscellaneous expenses on time.
– Calculate and save money for your taxes
Calculating the projected taxes you get an opportunity to put those funds aside so that when the tax season approaches the money is available to be paid to the taxman.
– Pay yourself
A business owner need to earn a salary from the business as he is equally an employee in the business. It is imperative that they do this so they can cater for their individual expenses. A clear discipline must exist between the owner and the business.
– Perform stock take
Get used to be making a frequent exercise of stock taking. To minimize shrinkage and losses in the business.

4. Quarterly
– Perform and review profit and loss statement for a quarter
As a provisional tax payer (Business) you are obligated to file your taxes twice a year. That is Provisional tax and the Income Tax which means every six months.
– Process VAT Payments
If you are registered for VAT please make sure that you are complying with the legislative tax laws in place. Every two months you must file the VAT returns so that you are compliant at all times.

5. Yearly
– Perform Profit and loss statement for the year and check it versus the budget.
– Prepare the Tax returns
– Close your books for the year
– Prepare annual self assessment tax return/ annual accounts

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.

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

And now we welcome the new year. Full of things that have never been.

  • Unknown

Basic Bookkeeping Principles for a Small Business

We just had our last webinar with our sister company Bookkeeping Academy (Pty) Ltd under the topic Basic Bookkeeping principles for a small business…
This blog post is a detailed summary of the discussion we had with the attendants.

What is bookkeeping and why is it important?

Bookkeeping is the process of recording your company’s financial transactions into organized accounts on a daily basis. It can also refer to the different recording techniques businesses can use. Bookkeeping is an essential part of your accounting process for a few reasons. When you keep transaction records updated, you can generate accurate financial reports that help measure business performance. Detailed records will also be handy in the event of a tax audit.

Methods of bookkeeping

Before you begin bookkeeping, your business must decide what method you are going to follow. When choosing, consider the volume of daily transactions your business has and the amount of revenue you earn. If you are a small business, a complex bookkeeping method designed for enterprises may cause unnecessary complications. Conversely, less robust methods of bookkeeping will not suffice for large corporations.

With this in mind, let’s break these methods down so you can find the right one for your business.

Single-entry bookkeeping

Single-entry bookkeeping is a straightforward method where one entry is made for each transaction in your books. These transactions are usually maintained in a cash book to track incoming revenue and outgoing expenses. You do not need formal accounting training for the single-entry system. The single-entry method will suit small private companies and sole proprietorships that do not buy or sell on credit, own little to no physical assets, and hold small amounts of inventory.

Double-entry bookkeeping

Double-entry bookkeeping is more robust. It follows the principle that every transaction affects at least two accounts, and they are recorded as debits and credits. For example, if you make a sale for R10, your cash account will be debited for R10 and your sales account will be credited by the same amount. In the double-entry system, the total credits must always equal the total debits. When this happens, your books are “balanced.”

Using the double-entry method for bookkeeping makes more sense if your business is large, public, or buys and sells on credit. Enterprises often choose the double-entry system because it leaves less room for error. In a way, it ‘double-checks’ your books because each transaction is recorded as two matching but offsetting accounts.

Cash-based or accrual-based

The next step is choosing between a cash or accrual basis for your bookkeeping. This decision will depend on when your business recognizes its revenue and expenses.

In cash-based, you recognize revenue when you receive cash into your business. Expenses are recognized when they are paid for. In other words, any time cash enters or exits your accounts, they are recognized in the books. This means that purchases or sales made on credit will not go into your books until the cash exchanges.

In the accrual method, revenue is recognized when it is earned. Similarly, expenses are recorded when they are incurred, usually along with corresponding revenues. The actual cash does not have to enter or exit for the transaction to be recorded. You can mark your sales and purchases made on credit right away.

Both a cash and accrual basis can work with single- or double-entry bookkeeping. In general however, the single-entry method is the foundation for cash-based bookkeeping. Transactions are recorded as single entries which are either cash coming in or going out. The accrual basis works better with the double-entry system.

How to record entries in bookkeeping

Generating financial statements like balance sheets, income statements, and cash flow statements helps you understand where your business stands and gauge its performance. For these reports to portray your business accurately, you must have properly documented records of your transactions. Keeping these records as current as possible is also helpful when reconciling your accounts.

Recording transactions begins with source documents like purchase and sales orders, bills, invoices, and cash register tapes. Once you gather these documents, you can record the transactions using journals, ledgers, and the trial balance. If you are a very small company, you may only need a cash register. The information can then be consolidated and turned into financial statements.

Cash registers

A cash register is an electronic machine that is used to calculate and register transactions. Usually, cash registers are used to record cash flow in stores. The cashier collects the cash for a sale and returns a balance amount to the customer. Both the collected cash and balance returned are recorded in the register as single-entry cash accounts. Cash registers also store transaction receipts, so you can easily record them in your sales journal.

Cash registers are commonly found in businesses of all sizes. However, they aren’t usually the primary method of recording transactions because they use the single-entry, cash-based system of bookkeeping. This makes them convenient for very small businesses but too simplistic for enterprises.

The journal

The journal is called the book of original entry. It is the place where a business chronologically records its transactions for the first time. A journal can be either physical (in the form of a book or diary), or digital (stored as spreadsheets, or data in accounting software). It specifies the date of each transaction, the accounts credited or debited, and the amount involved. While the journal is not usually checked for balance at the end of the fiscal year, each journal entry affects the ledger. As we’ll learn, it is imperative that the ledger is balanced, so keeping an accurate journal is a good habit to keep. This form is useful for double-entry bookkeeping.

The ledger

A ledger is a book or a compilation of accounts. It is also called the book of second entry. After you enter transactions in a journal, they are classified into separate accounts and then transferred into the ledger. These records are transcribed by accounts in the order: assets, liabilities, equity, income, and expenses. Like the journal, the ledger can also be physical or electronic spreadsheets.

A ledger contains a chart of accounts, which is a list of all the names and number of accounts in the ledger. The chart usually occurs in the same order of accounts as the transcribed records.

Unlike the journal, ledgers are investigated by auditors, so they must always be balanced at the end of the fiscal year. If the total debits are more than the total credits, it’s called a debit balance. If the total credits outweigh the total debits, there is a credit balance. The ledger is important in double-entry bookkeeping where each transaction changes at least two sub-ledger accounts.

Trial balance

The trial balance is produced from the compiled and summarized ledger entries. The trial balance is like a test to see if your books are balanced. It lists the accounts exactly in the following order: assets, liabilities, equity, income, and expenses with the ending account balance.

An accountant usually generates the trial balance to see where your business stands and how well your books are balanced. This can then be cross-checked against ledgers and journals. Imbalances between debits and credits are easy to spot on the trial balance. It is not always error-free, though. Any miscalculated or wrongly-transcribed journal entry in the ledger can cause an incorrect trial balance. It is best to look out for errors early, and correct them on the ledger instead of waiting for the trial balance at the end of the fiscal year.

Financial statements

The next, and probably the most important, step in bookkeeping is to generate financial statements. These statements are prepared by consolidating information from the entries you have recorded on a day-to-day basis. They provide insight into your company’s performance over time, revealing the areas you need to improve on. The three major financial reports that every business must know and understand are the cash flow statement, balance sheet, and income statement.

The cash flow statement

The cash flow statement is exactly what its name suggests. It is a financial report that tracks incoming and outgoing cash in your business. It allows you (and investors) to understand how well your company handles debt and expenses. By summarizing this data, you can see if you are making enough cash to run a sustainable, profitable business.

The balance sheet

The balance sheet reports a business’ assets, liabilities, and shareholder’s equity at a given point in time. In simple words, it tells you what your business owns, owes, and the amount invested by shareholders. However, the balance sheet is only a snapshot of a business’ financial position for a particular date. It must be compared with balance sheets of other periods as well. The balance sheet allows you to understand the liquidity and financial structure of your business through analytics like current ratio, asset turnover ratio, inventory turnover ratio, and debt-to-equity ratio.

The income statement

The income statement, also called the profit and loss statement, focuses on the revenue gained and expenses incurred by a business over time. There are two parts in a typical income statement. The upper half lists operating income while the lower half lists expenditures. The statement tracks these over a period, such as the last quarter of the fiscal year. It shows how the net revenue of your business is converted into net earnings which result in either profit or loss. The income statement does not focus on receipts or cash details.

Bank reconciliation

Bank reconciliation is the process of finding congruence between the transactions in your bank account and the transactions in your bookkeeping records. Reconciling your bank accounts is an imperative step in bookkeeping because, after everything else is logged, it is the last step to finding discrepancies in your books. Bank reconciliation helps you ensure that there is nothing amiss when it comes to your money.

Why is it mandatory?

Bank reconciliation is a must because it:

Provides the exact financial situation of your company

Tracks cash flow accurately

Helps detect fraud or bank errors

Stay on top of your bookkeeping

Proper bookkeeping drives your company to success. It is a foundational accounting process, and developing strategies to improve core areas of your business would be nearly impossible without it. Yet as important as bookkeeping is, implementing the wrong system for your company can cause challenges. Some companies can still use manual methods with physical diaries and paper journals. However, with the understanding that as a small business your core function is to build and grow your business thus focus on it’s operations. Outsourcing your bookkeeping can save you time so you can focus on what matters most – growing the business!

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.

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

Accounting greatness is not just about what you calculate; it’s about the financial stories you unfold

– Christopher

UNDERSTANDING ASSET MANAGEMENT

What are asset management objectives?

An asset management objective lists a company’s goals for allocating its assets. The primary objectives are maximizing return and ensuring that liabilities are not too high in relation to the value of assets an organization owns.
If there is a difference between two asset management strategies-one with lower returns but higher risk; the other with higher return but more risk-then it is usually best to choose the goal that has lower returns, because this will have less of a negative impact on liabilities than higher-return strategy would have.


What are the functions of financial management?

In order to turn a profit, every company needs to have a plan for generating income and spending that money. Without proper planning, it’s easy to go bust- even if you have the most profitable business idea in history. Proper financial management involves thinking responsibly about these five areas of finance:

– Fixed Assets

– Financial Resources

– Cash Flow

– Capital Budgeting

– Risk Management (balanced)

– Lending Decisions (with collateral)

Every type of decision made by your organization will likely affect at least one of these different areas; it is up to the company’s leaders to be informed so they can make sound decisions.

What are the objectives of financial management?

Financial management is an area of business that includes monitoring and managing all sorts of financial matters for a company. The scope can include everything from funds utilization to decision-making on investments to the management or disposal of excess cash flow, and more.

Additionally, firms use accounting techniques like budgeting and cost containment in regards to their own flows of cash. These ensure their day-to-day operations continue running smoothly while staying profitable in the long run.

A good professional – regardless if they’re working as an accountant or developer – should have strong managerial skills when it comes to finance as well as expertise with numbers! Every company needs someone devoted exclusively towards these duties.

What are the types of management reports?

The balance sheet is a snapshot of a company’s assets, liabilities, and equity at a specific point in time.
The cash flow statement goes one step further to detail from where the cash came and went during that period.
Finally, the income statement itemizes revenue or fees received along with expenses incurred for the same period. These reports are typically prepared once per quarter by many types of organizations including for-profit companies, non-profit organizations like hospitals and schools, government agencies like school districts or other municipalities such as cities or counties.

A management reporting package also often includes measurements that quantify performance beyond financial outcomes but may include key drivers behind financial results such as customer satisfaction alongside employee engagement metrics to provide more complete insights into organizational readiness for future success.

What does balance sheet management mean?
A business balance sheet provides a snapshot of the financial health and solvency of that company. It will show assets, liabilities and owners’ equity, but also breaks those down into certain categories. The column headings are: Assets (including cash), Liabilities (including long term liabilities) and Owners Equity.

Long-term assets are property such as buildings or machinery that the business owns outright for more than one year. Intangible assets could include items like patents or trademarks – something intangible to all intents and purposes but which has value because it may offer an opportunity for future income generation. Long-term liabilities would be debts which cannot be repaid within a duration of one year; these need not only include the big-ticket debts, but also less obvious annual expenses such as rent or lease payments.

What is a balance sheet?
A balance sheet is an accounting statement that shows what a person owns, owes, and how much they own as compared to what they owe. The top numbers show assets and the bottom line shows liabilities and equity.

What is the scope and nature of financial management?
The scope and nature of financial management is wide and varied. Fundamentally, it involves the raising of funds for an organization to invest in its purpose because finances give organizations access to needed resources through the financing mix, without which they may not be able to fulfill their missions. Financial managers are responsible for assessing needs, interpreting data, generating plans, implementing those plans through projects managed by project leaders, evaluating success based on pre-determined measures of success such as timeframes or benchmarks and initiating corrective action when necessary. A core principle behind all these activities is that increased efficiencies will produce profits that can be reinvested back into the organization’s work so that it fulfills its mission more effectively in the future.

Assets are things such as cash in hand or investments that have value. Liabilities refer to obligations which must be met in order to maintain organizational solvency- these are things like wages on payrolls or any outstanding loans extended by a company’s creditors . Equity is the value of assets minus the value of liabilities.

3) Customers To Pay Cash Flow– This is relevant when you have inventory coming due where payments come due on credit payable terms to suppliers and vendors.


What is Supply Chain Management?
Supply Chain Management is the chain of activities that link a company’s suppliers, their goods and services, and its customers. The Supply Chain Management process starts with raw materials liberation which can be either sources of inputs used to produce a product or manufacturing equipment. Organizations from many industries must coordinate by focusing on every part of the supply chain to satisfy customer demands such as price optimization, inventory management as well as ensuring quality products from start to finish.

What is cash management?
Cash management is the coordination and control of an organization’s cash inflows, outflows, investments and debts in order to satisfy its short-term obligations.

What is meant by strategic financial planning?
Strategic financial planning is the process of developing a specific goal for an individual and then assessing his or her current resources in order to figure out how to get from point A to point B. It means asking what you want, figuring out what your financial goals are, and then figuring out how to get there. The three major parts of this process would be financial resources (what you have now), the strategic planning process (how much you need today given your future goals), and the specific goal (your perfect life). Understanding these three things will help guide you through this maze so that at the end, regardless of where on the map we started, we’ll have developed a clear plan for getting exactly where we want to go.

Cash management is often used by corporations to systematically measure just how close they are to meeting their short term debt as well as measuring more long-term positions that can include financial stability.

A cash flow statement usually involves different classifications for each type of money flowing into or out of an organization or venture. A source may be something like “customers” while a classification may be “sales”. This information then helps people study what has happened with any given amount of collected funds both before – and after – they were spent on items such as operations, fixed assets , cash payments or anything else.

Why is cash flow so important for any business?
Cash flow is everything to a business. It determines whether or not you can maintain your business, pay the bills, pay yourself, and satisfy customers. There are three types of cash flows:

What makes a healthy balance sheet?
A healthy balance sheet has a low debt to equity ratio, positive net worth, positive cash flows, and total assets are greater than total liabilities. The figures below illustrate the math for this statement.

In order to calculate a company’s net worth it is necessary first to identify the difference between its assets and its liabilities by taking its inventory of who owes it money as well as all the other wealth at their disposal such as accounts receivable or income in advance. You then subtract these debts from the available funds to see if there is an overall negative or a positive residual value of current assets remaining once you have paid off all creditors involved in your business dealings. If there is enough capital left over after settling your bills and obligations then congratulations!

What is management accounting?
Management accounting is the process of providing financial intelligence to managers so that they can make better decisions by understanding how their business operates.

Management accounting enables companies to analyse how effectively they are functioning as well as forecast future results. Management accounts provide information about, for instance costs of products or services, product costing, rate of return, and cash flow. These two perspectives are fundamental for making strategic decisions in general and for planning investment strategies in particular. The strategic perspective focuses on the company’s environment and competitive position while the operational perspective concentrates on management’s control over its own organization including strategy formation and implementation processes.

Product costing uses cost-based information such as labour hours worked or material quantities used to determine total manufacturing cost at a product level taking product mix into account. This product costing information is then used to determine product pricing, product profitability or product contribution margin. It can also be used for product design decisions such as product mix (combining different product types in a product portfolio) and product development decisions such as product cost reduction measures based on the analysis of manufacturing costs at a product level.

What is the importance of financial management?
Financial management is important because it allows for a more precise decision-making that can lead to the efficiency of your company’s use of resources. Proper analysis and evaluation will allow you to gauge long term performance, which means that you’ll have the capacity for careful financial decisions such as the sources of capital, how much debt the company should incur, or whether a new project makes sense in this business climate. Exercising proper financial control comes down to understanding your cash flow and being able to analyse both short-term trends as well as long-term trends.

What is the cash flow system?
Cash flow is the process by which money moves within a business, including money coming in and going out. Cash is vital to every business because it provides an organization with important information regarding its current financial status, such as whether it has enough capital to finance its operations or if there’s a need for additional funds.

Operating cash flow represents the net change in cash on hand from one period of time to another. It includes any investment or financing activities that involve changes of ownership interest in the entity and it may be positive (resulting when more cash comes into the company than leaves) or negative (such as when expenditures exceed sales). Operating cash flows report how much “cash” an organization has at its disposal including coins and currency, accounts receivable and inventory (all assets that can be easily converted to cash). Operating cash flow also includes any business transactions that reduce or increase its current assets. For example, a business may take out a loan or issue additional shares of stock through an offering in the business sector as part of its business activities.

1) Business Cash Flow – This looks at the overall revenues and expenses of a company. After deducting expenses from revenue for each month this tells how much cash produced by the business in terms of profit or loss. The other two kinds are

2) Pay Your Bills Cash Flow – Enough cash must be freed up in order to go out into the world and buy everything that needs in order to function (cash on hand) and

A business’s cash position is also dependent on the status of customer accounts. If a business has the right inventory in stock, it makes more money. When a business has excess inventory, its cash flow slows down because of holding costs associated with having that inventory on hand: storage, insurance, obsolescence potential etc .

Cash flow is important for business because it determines business longevity, profitability and business survival. If you do not have cash flow within a business, then you risk the business going bankrupt and closing down.

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

Asset management CEOs globally are looking at their business models. They’re looking at costs, they’re looking at making their businesses more efficient, because they’re seeing revenues under pressure all over the world.

Martin Gilbert

http://www.matsobanemetja.blog

How To Do A Financial Health Check

1: Identify your financial goals

You are more likely to succeed in accomplishing a goal if your goals are specific, measurable, attainable, relevant, and time-specific. This means determining WHY you want to accomplish a goal, WHAT specifically you are trying to accomplish, WHEN you want to accomplish it by and HOW you will accomplish it.

For instance, if you are trying to pay off credit card debt, you need to ask yourself the following questions: What motivates you to do it? How much do you intend to pay off? By when? And how do you intend to succeed with making payments over the timeframe you’ve chosen?  Getting specific with your financial goals is the first step in performing a thorough financial check-up.

2: Understand where you currently stand financially

Understanding where you currently stand with your finances is basically you laying the path for where you are now and where you are trying to get to. It might involve kicking up a bunch of dust that will make you uncomfortable and perhaps even upset, but it’s something that must happen in order for you to move forward.

Determining your current debt, expenses, and income will help you understand what specific areas of your finances need the most attention and help you prioritize accordingly. Facing your finances and taking key steps can help you reach your financial goals.

3: Track your spending

This means taking a look at your daily transactions and expenses. Start by doing this exercise using a spending journal for 7 days and then extend it to 30 days to get a holistic view of exactly where your money is going.

Not only is this exercise eye-opening, but it also makes your finances top of mind. You’ll be thinking about how you spend your money and will be more aware of how much is leaving your bank account. Tracking your spending can also help you see where you can cut your budget. This exercise is an important part of your financial check-up.

4: Make adjustments, review your budget

Once you have an idea of where your money is going, you can make adjustments to your spending to ensure you are keeping your expenses below your income and leaving enough room to do things like pay down your debt and save for your goals. It’s important to review your budget regularly as part of your financial check-up.

Remember that budgeting takes practice, so don’t assume you’ll be perfect at budgeting on your first try. If you slip up, keep trying. It’s also a good idea to plan your budget for each month a couple of days before the month starts so you can lay things out properly in terms of what you expect to be paying for each particular month.

5: Review your savings and investments for the long-term

Next, you want to make sure you’re putting away some money in an emergency fund. This is money to buffer your finances in the event of any unplanned life circumstances (your car breaks down, you lose your job, etc.).

Set a goal to get to xxxx amount of money if you don’t already have a fund in place and then plan to grow your fund to 3 to 6 months of your basic living expenses. This way, if an emergency happens, you have this money to use instead of borrowing money or getting into debt.

It’s also very important to save for your mid and long terms goals, including your retirement. This means contributing to your employer-sponsored retirement programs, setting up your own RA, and having investments outside of your retirement plans. Diversifying your investments can help secure your financial future. Challenge yourself to max out your contributions by making 1% increments every month of every quarter until you can reach the allowed contribution limits each year.

6: Get properly insured

A crucial part of a financial check-up is reviewing your insurance policies to ensure you have enough coverage for the type of incidents that may incur. Having the right insurance policies is vital to protecting your assets. Not being properly insured can cause you expensive out-of-pocket costs that could have been prevented with the right insurance policy. Speak with your agent to be sure you understand what your insurance covers and doesn’t cover.

7: Check your credit report

When’s the last time you checked your credit report? Did you know you can pull your credit report free once a year? Your creditworthiness is used to determine your eligibility for things like cell phone contracts, renting an apartment, and being approved for loans. Having a good credit score and credit history can help you get lower interest rates, which results in you saving money! Checking your credit is an important part of a financial health check-up.

8: Review or create an estate plan

Reviewing your estate plan is a vital part of your financial health check-up. If you don’t have one in place then you need to create an estate plan to be sure your finances are in order. This plan can ensure that your wishes are carried out and that your family is financially cared for. Your estate plan will designate your beneficiaries to your assets. Without an estate plan, your assets will go into probate, which means the courts will decide how your assets will be distributed.

9: Get accountable

Now that you know exactly how to do a financial health check-up, the next thing you should consider is getting an accountability partner or partners. These are people that you share your goals with who are on the same journey as you or have accomplished something you are trying to achieve.

Their job is to keep you motivated and on track (and vice versa) when you don’t feel like it, or you aren’t having a great day, week, or month (because these things happen!) Putting your goals out there make you more likely to achieve them because other people know about them!

Regularly perform a financial check-up
Like your budget, you should do a regular financial health check-up. Set a reminder on your calendar to review your finances on specific dates. If something changes, such as your salary, a personal situation, or your debt increases, you will want to be sure to do a financial check-up. Staying on top of your money is essential to your financial wellbeing.

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

“Beware of little expenses. A small leak will sink a great ship.”

– Benjamin Franklin

http://www.matsobanemetja.blog

INDIVIDUAL INCOME TAX & SARS E-FILING MASTERCLASS

WHAT IS INCOME TAX

We just had a masterclass webinar on Individual Income Tax Returns hosted by our sister company Bookkeeping Academy – http://www.bookkeekingacademy.org

Income tax – is a tax governments impose on the income that
businesses and individuals generate

PAYE
– Individual income tax is deducted on the employee salaries by the employer
and pay the funds to SARS via the Pay As You Earn
– Employers are required to withhold these taxes each month and pay them
over to SARS on the taxpayer’s behalf. They do this by consulting the SARS
PAYE tables which have different tax rates for employees who are paid
weekly, fortnightly or monthly.
The PAYE calculated as a result is based on the employee’s earnings and includes basic salaries, bonuses, fringe benefits
and other allowances.

IRP5
– The IRP5 certificate is a summary of all the remuneration (including
allowances and benefits) provided to an employee by an employer during a
tax year. This will exclude amounts paid outside the payroll, for example, the
reimbursement of a pure non-travel business expense that is paid to the
employee via the general ledger.
– If an employee receives benefits such as travel allowance from their
employer,they need to keep a travel log book. It will have a detailed summary
of the mileage travelled. The log book includes the dates, start travel km in a day and end km after all the business travel on a daily basis.
– Failure to keep a travel log book may result in a liability towards SARS.

Fringe Benefits
– Fringe benefits are additions to compensation that companies give their
employees. Some fringe benefits are provided to all employees, while others may be offered to executives only.
– Some benefits may include a company car, paid time off, or gym membership.
Most fringe benefits are taxable at fair market value but some benefits, such as
health and life insurance, are nontaxable.

PROVIDENT FUND
– A provident fund is a government-managed retirement savings plan that helps employees prepare for retirement. Employees and their employers contribute to the plan.
– The provident fund is administered by investment companies / Financial institutions who act as the brokers and financial advisors.
– They need to be qualified to ensure compliance.

Receiving an Additional Income
– Individuals that are paying tax via the PAYE as a result of being fully
employed, but equally receive an additional income such as rental income, selling goods or services, etc must also declare separately so they can pay tax where applicable.
– You will be required to calculate the overall income received within every tax period against expenses incurred then get taxed on the profit – referred to as a taxable income.
– Failure to declare an additional income may result in penalties and heavy tax
liabilities to SARS.

TWO POTS SYSTEM
– While it is called the two-pot system, your future retirement savings are actually split into three “pots”.
Your savings will be allocated to savings, retirement and vested pots.
You can withdraw from your savings pot once every tax year as long as you have at least R2 000 to withdraw.
– The maximum amount to withdraw is R30 000,00

– Savings pot
One third of your contributions will be saved in a savings pot that you can access once in a tax year.


– Retirement Pot
Two-thirds of your contributions will be saved in a retirement pot that you cannot access until retirement.
The two-pot system, in fact, introduces three pots, because what you have saved when the new system comes in will be held in a third pot:

– Vested Pot
This pot will hold your savings in the fund made before 1 September 2024 plus fund return on this. You will
generally be able to do with the retirement savings in this pot what you could do with your retirement
savings before 1 September 2024. So, for example, you can still take it in cash if you resign, are
retrenched or dismissed from an employer-sponsored fund, but your savings in this pot in a retirement
annuity (RA) will generally not be available until age 55.

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 individual taxes efficiently under our specialty department Wedotax.

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 income tax time again, Citizens: time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta.

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