Business to business service company that provides exceptional quality to its clients and maintains accurate & professional Bookkeeping, Accounting, Taxes, Consulting Services, Business Coaching & more.
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.
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
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.
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.”
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:
– VestedPot 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.
In the pursuit of operating our businesses we also build relationships that are professional and beneficial to our entities. This includes having to offer your goods or services on credit to your customers / clients. In a form of the “Get it now and pay later” system.
Bear in mind that this is the income of the business thus it is bound to play a big effect on our cashflow hence stricter rules and clear processes need to be put in place, regulated and adhered to.
Accounts receivable states to the money owed to a business by its customers for goods or services that have been sold on credit. It is an important part of a business’s financial procedures as it represents the amount of money that is due to the company.
Accounts receivable management involves tracking and collecting payments from customers, managing credit terms and collections policies, and reconciling accounts to ensure that all payments are properly recorded and accounted for. This process can be time-consuming and resource-intensive for businesses, which is why many choose to outsource their accounts receivable services to third-party providers.
Process of Account Receivable Services
The process of accounts receivable services involves several steps, which can vary depending on the specific needs of the business. Here is an overall summary of the process:
1. Invoice generation: The process begins with the creation of an invoice, which includes the details of the goods or services provided, the payment terms, and the due date.
2. Invoice delivery: The invoice is then sent to the customer via email, or another appropriate method. Some businesses may also provide customers with online portals where they can view and pay their invoices.
3. Payment processing: Once the customer receives the invoice, they will typically make a payment according to the terms of the invoice. The accounts receivable services provider will process the payment and apply it to the right customer account.
4. Collections: If the customer does not pay on time, the accounts receivable services provider will begin the collections process. This may involve sending reminders and follow-up messages to the customer and negotiating payment plans or settlements.
5. Reporting: The accounts receivable services provider will generate regular reports on the status of accounts receivable, including ageing reports, payment histories, and customer account balances. These reports help businesses in making informed decisions about credit policies and collections strategies.
6. Customer Service: The accounts receivable services provider will provide customer service support to handle inquiries and disputes related to accounts receivable. They will maintain positive relationships with customers while ensuring timely payments.
In conclusion, a proper reconciliation needs to be prepared to outline all the outstanding monies. To clarify the status of the accounts and also to make sure that you keep a professional business relationship with your customers. We also need to have an age analysis for our debtors.
Matsobanemetja Business Consulting (Pty) Ltd provides accounts payable outsourcing services for the businesses.
If you are looking to outsource the accounts payable process service to any expert agency then you need to consider the steps they follow during the accounts payable process.
We have well trained and qualified staff that manages these aspects efficiently. We are the fast growing accounting service-providing agency in South Africa and across the globe.
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
If you need a consultation with us with regards to your business, any type of business – please reach out to us on 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.”
Accounting is one of the important parts of any business so is accounts payable. It is one of the critical components of accounting. A proper accounting payable process service ensures a healthy financial position of the organization and provides a better environment for growth.
Proper accounts payable helps build a better reputation for the organization.
The full cycle here considers creating and paying for all the orders in a proper stepwise process. Here, all the invoices of the organizations are processed speedily in a proper step-wise way and ensure that the payments are given before duration.
What are the general steps in the full cycle of the accounts payable process?
1. Purchase orders
A purchase order (PO) is the first step in the process that starts the purchase process. It is sent to the supplying vendor which can be either physical or digital in nature.
PO must consist of some general information like order date, description of the item, quantity, price, etc. It is important to note that PO is different from the invoice.
2. Receiving report
Once you receive the goods or services for the order given, a receiving report is given. The main information in this document includes the number of goods, list of received items, shipping details, the date of the received order, etc. Here, you can also provide different other details.
3. Vendor Invoice
After the vendor fulfills the desired requirement of the company, they need to send an official document for the payments. This document is called an Invoice which contains information like the amount that company owes to the vendor, taxes, freight or shipping charges, payment due date, etc. The accounts team needs to confirm the Invoice received and pave the way to process it further.
4. Matching all the documents
At this stage, all three documents namely – Purchase Order, Receiving the report, and vendor Invoice need to be matched. This is generally called a three-way matching to ensure that there is no error that can lead to financial loss.
In case of any discrepancies, the account payable department must get it rectified properly. Once the Invoice is proper, it is then moved forward.
5. Review & process payments
This is the last step, where a final review of the Invoice is done and approval from the concerned authority is taken before payments. The organization then finally processes the payments.
Conclusion
These are some general steps in the accounts payable process service followed in most profit organizations. Obviously, this process is not as simple as it seems when most organization experiences problems.
So, they consider accounts payable outsourcing service option where experts can work on it. This helps them to achieve better efficiency in the accounts payable process with proper payments.
The reconciliation of the accounts payable need to be done accurately so you do not pay for the stock that it is not received in full or the damages thereof.
The invoicing party needs to either pass a credit note for the damaged stock or credit the initial invoice in full and re-invoice with the correct stock delivered.
Failure to not reconcile properly will create a loss in funds for the business.
Matsobanemetja Business Consulting (Pty) Ltd provides accounts payable outsourcing services for the businesses.
If you are looking to outsource the accounts payable process service to any expert agency then you need to consider the steps they follow during the accounts payable process.
We have well trained and qualified staff that manages these aspects efficiently. We are the fast growing accounting service-providing agency in South Africa and across the globe.
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
If you need a consultation with us with regards to your business, any type of business – please reach out to us on 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 is the art of turning chaos into clarity and confusion into financial wisdom.”
As a business owner there are a few financial terms you need to know in order to understand your finances. I am going to break them down and explain them in plain English. Because jargon is no fun at all, and really, they aren’t difficult to understand.
1. Gross Income
Gross income is the amount of money you bring into your business in any given time frame (usually in a month, quarter or a year). It’s all the money you bring in, whether it’s for services, products, affiliate income, or anything else you can think of! It’s the money you bring in before the deductions of expenses and taxes.
Gross income is also sometimes called “Revenue”.
2. Net Income
Net income is what you’re left with from your gross income after you take out business expenses. This is the number you really want to focus on when you’re figuring out sales goals for your business.
It is also called a taxable income – the amount of a person’s or company’s income—minus exemptions and deductions—that can be taxed.
3. Expenses
The day-to-day costs of running a business. Anything from bank charges fees and facebook ads to the cost of traveling to a business conference.
That is, any costs incurred as a result of a company’s attempted or successful revenue production
4. Receivables
A “receivable” is money that you’re owed. That invoice you sent to a client that she hasn’t paid yet? That’s a receivable.
So, while not quite as good as money actually in your bank, receivables are a good thing.
Simply terms, receivables = debtors.
5. Liabilities
While receivables are funds that people owe you, a liability is money that you owe other people.
In plain English? Liability = debt.
6. Owner’s Drawings
An owner’s drawing business money to their personal account.This can be the equivalent of a salary, or it can be as simple as lunch paid for with your company credit card.
This is important as it builds up a proper discipline between the company and its owner.
For example if you accidentally use your business debit card for a personal purchase, you’d tag it as an owner’s draw), but for the most part, an owner’s draw is you reaping the benefit of your business, and giving yourself a paycheck.
7. Owner’s equity
The portion of a company’s assets that an owner can claim; it’s what’s left after subtracting a company’s liabilities from its assets. Owner’s equity is listed on a company’s balance sheet. Affects the balance section of the Annual reports.
All these above-mentioned jargons play a big role when it comes to any business. They will always get mentioned especially when compiling and reding7the company’s annual reports.
8. Owner’s borrowings
If the owner/shareholder withdraws money from the business, which is not marked as salary or dividend, it will be recorded as a shareholder loan as “due from shareholder.” This is the amount the shareholder has borrowed from the company and must repay.
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
If you need a consultation with us with regards to your business, any type of business – please reach out to us on 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
1. Income Tax – Income tax is the tax you pay on any money your business earns. Each year, you need to lodge a tax return to tell the South African Receiver of Revenue ( SARS) how much money your business has made and how much tax you are expected to pay.
This will be determined by the expenses incurred while operating the business. If you’ve made a profit you will probably have to pay some tax. It’s best to put money aside throughout the year to help pay for your tax.
It is the reason why we encourage that you prepare the management account so you can be able to estimate the tax payable each month.
2. Sole Proprietor Tax (Self Employment Tax) – a sole proprietor is considered an individual, and their taxable income is calculated by subtracting allowable deductions from their total income, which includes income from their trade. They account for their taxes under their individual tax numbers. They are also categorised as provisional tax payers. They basically use their profession, skills or experience to earn an income.
3. Payroll Tax (Employees’ tax) – Employees’ tax is a system where an employer deducts employees’ tax called Pay As You Earn (PAYE) from the earnings of employees and pays it over to SARS on a monthly basis. This tax functions as a tax credit which is then set off against the final income tax liability by that employee. This happens on an annual basis. The employer will prepare a tax certificate for the employee ( IRP5) for them to confirm the estimated tax deducted over the 12 months if it is correct or not.
4. Value Added Tax – is a consumption tax that is levied on the value added at each stage of a product’s production and distribution. Unlike Income tax you do not automatically qualify to charge / pay VAT as a business. There are certain criteria your business should meet in order to register for VAT. We have what we call voluntary registration and compulsory registration. If the business makes a turnover of up to 50 thousands plus per year you then qualify for a voluntary registration. The compulsory registration occurs when your business turnover is over a million per year.
5. Excise Tax – It increases the retail value of excisable goods to discourage consumption. This logic is applied to products that have a harmful effect on the health of South African people, or the local environment. For this reason, excise is often referred to by its nickname, sin-tax.
The revenue generated by these duties and levies amount to approximately ten per cent of the total revenue received by SARS.
Develop a Tax Strategy Paying taxes is a civic duty. Due to all of the varieties of local, state and federal taxes, you might want to develop a long-term tax strategy.
Now that you know which small business taxes are most important, look for credits, deductions and corporate structures that can help you reduce your tax liability.
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
If you need a consultation with us with regards to your business, any type of business – please reach out to us on 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 things in life are free, but sooner or later the government will find a way to tax them.
What to include in your small business tax deductions plus: Checklist! —————————————-
When you start a small business, you might not have everything figured out. You might have to wait for the money to come in to buy the extras that can improve your business.
It would be best if you were keeping an eye on all your transactions.
It is said that non-finance people when they think of record keeping, they only think of only the Income 🙂 Of course it is a joke! Please just make sure that all the transactions are considered when you do your record keeping. The income, the expenses – which means the overall cashflow, as well as the movements of goods and services. It can hurt you once tax season comes around, and you’re a jumbled mess.
If you are using an accounting software, please make sure that it links to any bank accounts you might have used for your small business so to avoid omitting some transactions. Categorization must be correct so that the tax deductions are also done correctly for you.
The golden rule is to please separate your personal affairs or finances from that of the business.
Regular record keeping also lets you do a mock tax write-up to see how much you might need to contribute to your taxes. That way you will be able to save up for your future taxes. Small businesses contribute twice for the taxes during the year whether they make enough money or not.
There are a few expenses that small business owners get confused about regarding their tax deductions.
1. Utilities/bills
Just like any rental expense, a portion of the utilities and bills, like wi-fi and telephone bill, can be included in your small business tax deductions.
Suppose you regularly use your utilities and bills as part of your small business. In that case, you can put them towards your tax deductions. Like a typical office workspace, you can include water, electricity, trash, phone bills, and the internet as part of an overhead expense. Expenses are recorded on the Profit and Loss section of your annual reports. which means your profit, which is called the taxable income by SARS would have taken the expenses into account prior the final figure.
2. Software
As a businessperson you make use of different software programs to keep your small business running. Like Adobe Creative Suite, some are vital, while others, like website hosting, help drive customers to the business website and indirectly affect your cash in the business.
You may overlook such type of expenses, but they are big considering how many programs are vital to managing a small business.
3. Vehicles
Vehicles are a bit of a grey area for small business tax deductions. Not only can you contribute a portion of your vehicle’s cost if you use it for work. You can also include gas, polls, maintenance, insurance, and mileage.
Suppose you’re a creative business owner that needs to go places, like a wedding photographer. In that case, you should claim your car as a portion of your tax-deductible.
4. Travel
Not only is your vehicle a part of your small business tax deductions, but other traveling expenses might qualify too. If you are traveling more than 100 miles a day for business, you can also claim lodging, flights, and meals.
Vehicles will have you track your mileage as well. Still, if you have any expenses that cause you to travel extensively for work, you can claim them as part of your tax deductions. Don’t go overboard and pay for a first-class ticket and extravagant meals towards the deduction. Still, you can put some of your expenses towards your taxes.
5. Contractors / Sub-contractors
Some businesses depend on few contractors to help them guide and develop your small business. Every time you have consulted with them; their fees have will contribute into the small business tax-deductible. You can also include these expenses when you hire subcontractors regularly for your business as well.
Usually, paying someone can be a hefty expense, so it’s no surprise that hiring help can pay off in the end.
6. Education
Education can be tricky when it comes to small business tax deductions. Learning more about being a small business owner is a significant endeavour, like purchasing business books, training skills and development programs and other materials for building a story brand. You can include all these to contribute to your tax deductions.
Ensure that your educational tax deductions apply to the industry that your small business is involved in.
7. Office supplies
Please include all your office supplies in your list of your expenses for the tax deduction purposes.
You can include anything that helps you run your business
8. Office furniture
To claim a portion of your home, you should have a space of your own to claim as your office space, even if it’s just a desk and a chair.
Even if you have more than a desk and chair, you’re able to claim your office furniture as a tax deduction. Business owners can also include the computer monitor in their home furniture because it helps you run your small business.
9. Staff Refreshments and Meals
You might have a meal, or a Starbucks run to meet with a client or a contractor. Don’t fret. These can go towards your small business tax deductions.
Don’t meet at the most elegant venue near you, but an inexpensive meal can be used and claimed as a business expense. Even if you are hosting a party, you can deduct the cost of the food you buy for your tax deductions.
You might not consider your expenses to be extraneous to run your small business, but everything counts when getting your taxes done right. Keeping track of your expenses with an accounting software or hiring a bookkeeper or accountant to keep track of anything, is well worth the investment to know you are doing everything you can to do things right.
As a small business owner, it’s helpful to know you have a lot of options to contribute to your tax deductions for your small business. Knowing your options can help make your tax deductions seem more plentiful than when you started your business.
Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd – Registered Accountant and Certified Tax Practitioner.
If you need a consultation with us with regards to your business, any type of business – please reach out to us on 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
Consistency and Accuracy
Bookkeeping requires maintaining the best possible consistency and accuracy of financial records.
Matsobanemetja Business Consulting Pty Ltd 