The Process of Accounts Receivable


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.”

Benjamin Franklin

Full Cycle Accounts Payable Defined

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.”

– Michael Carter

Financial Terms that every business owner should know and understand

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

“I never dreamed about success. I worked for it.”

– Estée Lauder

Small Business Taxes you must know about

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.

http://www.matsobanemetja.blog

LOOK 👀 WHAT YOU ARE MISSING OUT WHEN YOU DO NOT DO YOUR BOOKKEEPING

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.

The benefits of outsourcing Bookkeeping and Accounting functions in your business.

1. Cost Savings
– To succeed in business, accurate and timely financial records are vital. They can help you determine if the business is making money or losing it. Your financial records indicate if your business is financially sound or if adjustments need to be made. Outsourcing your bookkeeping can improve both the accuracy of your financial records and minimize expenses.

2. Access to skilled professionals
– Accountants/ bookkeepers work closely with other professionals such as the bankers, legal practitioners, etc). They are more likely to extend the help to their associates should the need arise. They are very much resourceful and this is beneficial to your business too!

3. Improved Cash flow
– It is always beneficial to know how well an organization manages it’s cash position. I normally refer to cashflow as the heartbeat of the business. The healthier the cashflow, the smoother the operations of the business.

4. Flexibility
– having to outsource your business bookkeeping / accounting function offers an incredible level of flexibility, making it an ideal business for those seeking a better work-life balance. As a business owner, you have enough time to focus on building and growing your entity because you will most focus on growing your clientele or customers. With the help of numbers Compiled by your bookkeeper/ accountant you are more likely to make informed decisions.

5. Free up time
– The retainer fee ensures that the hired service provider reserves time for the client in the future when there is a need for their services. Unlike a one-time contract, a retainer agreement is a long-term work-for-hire contract and thus can retain ongoing services. If your business core services are not Bookkeeping/ accounting – it will not make sense that you spend most of the business time on data capturing and preparing reports.

6. You’ll get expert advise
– It is important to understand that while accountants are invaluable when it comes to crunching numbers and tax compliance, they also assist with advisory services.
Their role is to guide you towards making informed decisions and to ensure you seek the right help when needed.

7. You’ll be compliant
– Compliance plays a big role in any business, especially the tax compliance status.
Compliance in the tax world means that taxpayers have met their legal obligations under the tax laws and includes ensuring that all the tax returns are submitted and tax liabilities are paid on time. This will also avoid getting charged penalties for the late submissions.

8. You’ll stay organised
– Regular Bookkeeping ensures that you are always up to date thus you will be ready for any opportunity that comes. The audit process tends to also run smooth should there be a need for one to be conducted.

9. Easier Tax preparation
– Good bookkeeping helps with tax planning because it provides accurate and organised financial records that are essential for calculating taxable income, identifying deductions, and ensuring compliance with tax laws. When you maintain proper bookkeeping, you have a clear and up-to-date view of your business’s financial transactions, including income and expenses.

Here’s the services included In the outsourced accounting model.

– Catch up bookkeeping
– Ongoing bookkeeping services
– Bookkeeping software
– Monthly Financial reporting
– Payroll software
– Running payroll
– Creation of a tax plan
– Paying in tax estimates according to the tax plan (huge concept here)
– Business advisory services

-Personal tax return
-Business tax return
-Personal and Business wealth coaching & guidance

These services are all predicated on a couple of meetings throughout the year, and then the accountant performing monthly bookkeeping, reporting, and updating a simple tax plan.

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

Behind every great business, there is a great bookkeeper.

EMPLOYER PAYROLL GUIDE

The main objective of a dedicated Payroll function in any organization is the satisfaction of people getting their paychecks on time, with the correct calculations.

What is the function of a payroll department?

Payroll professionals manage employees’ financial data and are typically responsible for processing paychecks and other payments, keeping time records, and handling any pay-related information for employees (like tax information, insurance deductions, or other factors that can affect an employee’s pay).

A payroll clerk’s duties include:

– Calculating pay for employees

– Using payroll software to manage employee pay and financial information

– Calculating taxes and deductions

– Producing and processing employee paychecks

– Tracking employee work time and keeping accurate records

– Initiating direct deposit payments

– Calculating unemployment or severance pay

– Verifying and resolving discrepancies in employee financial data or pay

– Keeping detailed digital or paper financial records to be reported

– Issuing pay statements and invoices

– Process, Reconciliation and distributing the financial documents and information such as EMP201, EMP501, IRP5, etc.

– Following financial reporting procedures and legal best practices as the payroll practices are guided by the department of labour.

What skills are required to be payroll clerk?

This is a highly specialized role, so there are specific skill sets that will be an asset to you in this field.

Math Skills: Although this is a highly administrative position, it also calls for very strong math skills. The payroll clerk is responsible for money going in and out to employees, so they really must be able to do financial math effectively and accurately.

Attention to Detail: Because of the emphasis on accuracy, a payroll clerk needs to be able to spot discrepancies or problems in financial documents or paychecks. Mistakes can have significant impacts on employees or the company, so an eagle eye is essential, whether the clerk is using advanced accounting software or good old-fashioned paper and calculators.

Problem Solving Skills: Part of the job is resolving issues that inevitably come up when money, math, and humans are involved. If there are discrepancies in amounts paid versus amounts owed, the clerk needs to be able to resolve the issue quickly and accurately.

What do you need to become a payroll clerk?

The baseline minimum combination is a high school degree and a stellar set of math skills, but many companies prefer their payroll clerk to have at least an associate’s degree in business, accounting, or finance.

What’s the outlook for payroll clerks?

Because these professionals have a strong and versatile set of skills and can work in any industry that has need of payroll processing, it’s a solid career choice in the financial services and administration field.

As a small business owner, please familiarize yourself with the labour laws in place. This will assist to stay out of trouble with the country’s labour law.

Requirements to register your employees for UIF, any individual that have worked for the business for more than 24 hours must be registered for UIF

At anytime the department of labour can decide to perform an audit in your business.

The below are what they will request from you as the employer :
– UIF registration number
– Proof of the Compensation Fund registration
– Copies of the employees contracts
– Copy Payslips.
– Time sheet

Registering with the Compensation Fund

According to the law ⚖️, an employer must insure his/her workers against occupational injuries or diseases contracted during the course of employment. CF is not insuring the employer’s business but, insuring the workers.

This is one of the utmost employers ‘s obligation.

Comply with the rules and regulations of the department of labour.

Matsobanemetja Business Consulting (Pty) Ltd – is an Accounting Firm that assist businesses and professionals will all their taxes need. We provide a full function.

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

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

Accounting is the art of turning chaos into clarity and confusion into financial wisdom.”

– Michael Carter

TAX BLOG: INCOME TAX AND VAT

1. Briefly explain the difference between Income Tax and Value Added Tax?
– Income tax is a direct tax levied by the governments (SARS – South African Revenue Services ) on businesses and individuals that conduct their operations inside their jurisdiction’s borders. It is a direct tax as a result of earnings/ Income.

– VAT – known as Value Added Tax. It is an indirect tax that is paid by everyone as consumers. It is charged at the goods and services. The South African rate is at 15%. Revenue is raised for the government by requiring certain traders (vendors), that carry on an enterprise to register for VAT.

2. In business, who is eligible to register for VAT ? And what are the requirements?
– There are two types of VAT registration i.e. Voluntary registration and Compulsory registration. Voluntary registration – the company must have made at least over 50k turnover per annum to qualify for the Vat registration.

Compulsory registration – the business must have made over 1 million per annum to register for the VAT.

The VAT (15%) charged by vendors on the supply of goods and services do not belong to the vendors / businesses but to the government. Thus if you have registered for VAT you are acting as an agency collecting the funds on behalf of SARS.

3. Are there any benefits you carry as a Vat registered vendor?
– Definitely not. There are no benefits because you will be acting as the collecting agency of the 15% amounts from the consumers on behalf of SARS.
The bit of enjoyment is that being a VAT registered vendor may afford you the  opportunity to trade with the state owned institutions and corporations out there. Some of the tenders would require working with the businesses that are VAT registered so that they would also like to reduce their tax liability.

N.B. Under no circumstances you should think that the Vat amounts you charge on your invoices will assist you with increasing the profit. When you work out your product or service pricing do not include the element of Vat. Vat should only be added after the invoice amount.

4. With regards to compliance, tax return submissions what are the few differences with regards to Income Tax and Vat?
– Income Tax is required to be filed every financial year end of the business. As the business is a provisional taxpayer you will be required to submit the returns twice a year. Mainly via the Provisional Tax (IRP6) and main Financial year end – Income Tax (ITR14).  Every 6 months. However with regards to the individual tax submissions, the tax season only opens once a year. For the individuals that are not provisional tax payers. The period range runs for 12 months that is from March to February of the following year.

VAT taxes are submitted every two months. You are required to calculate the VAT input against the VAT output which then the difference is paid over to SARS. They are very few times that you will receive a refund from SARS. It is structured in a manner that you will always be liable to pay. Hence you are the collecting agent.

5. What basic information do you need to be knowledgeable of as the business that is VAT registered?
– Prioritise knowing the compliance elements of this type of tax. Understanding that the paperwork/ supporting documents must always be on par with the rules and regulations of the receiver of revenue. Tax invoices must be prepared in an acceptable manner and as valid as per SARS. Otherwise, should an audit arise the invoice maybe rejected by SARS and they may add penalties to that effect. Period is also important in accounting. Make sure that your documents and transactions are dated, prepared with the utmost accuracy and timeously.

The transaction only happens when there Invoice is raised and the payment has been paid.

Careful not to declare VAT on the invoices that are unpaid.

You are only allowed to charge VAT when you are VAT registered and the VAT number has been issued. It is a criminal offence to charge VAT when you are not VAT registered.

Matsobanemetja Business Consulting (Pty) Ltd – is an Accounting Firm that assists businesses and professionals with all their taxes needs. We provide a full function.

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

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 PA@matsobanemetja.co.za

Tax Talk

“A person doesn’t know how much he has to be thankful for until he has to pay taxes on it.”

Anonymous

PREPARING FOR THE FINANCIAL YEAR END AS THE BUSINESS

Most businesses have already entered their new financial year end since the first of March. Their year end being February. The fiscal year is 12 months long.

I have compiled this blog to make things easier for your next financial year end. With summarised points below.

1. Bank Reconciliation
To really avoid the unnecessary discrepancy of your books you need to make sure that transactions are captured daily, timeously and with accuracy. That way you will ensure that the reconciliation is correct and reflects the true status of the business. We encourage that the reconciliation be made on a monthly basis not wait for the financial year end.

2. Reconciling expenses paid with personal money
Let it be known that the business can coexist with the business owner. Provided that there is a very strict discipline built between the two entities. The funds that are deposited into the business account by the owner to cater for the business expenses are classified as Capital.
The two accounts that are affected is the liabilities and the expense accounts. Thus the reports that will be affected here will be the balance sheet and the profit and loss statement. A qualified bookkeeper or accountant will assist in explaining to you as the business owner what effect these accounts and reports play in your business.

3. Categorization of the transactions
The misallocation or transactions will obviously create the imbalances of the reports. Some transactions are not deductable business expenses, so you must make sure that they are not included in the profit and loss instead of going to the balance sheet. This is important to avoid under-paying your income tax to the authorities. We all know by now that this will be called fraud if the authorities were to find out.

4. Reconciliations of the debtors and creditors accounts
In accounting we use an accrual system, which means we are allowed to carry over some accounts to the next financial year. This will be great as you will avoid capturing non-paid invoices as income. Creditors need to be captured as well because those are the business obligations.

5. Writing off the bad debt
As a business of any size it is crucial that the invoices are to be paid and on time. Cashflow is the heartbeat of every business. Equally so, note that the debts not paid over a long period of time will have to be written off. Which means the profit and loss account will be affected. You will understand that this is imperative as I have previously indicated that unpaid invoices should not be captured as income. As much as this is a loss but the advantage is that the figure written off will reduce your profit thus the taxable income.

6. Count your stock
Obviously based on the nature of the business you will be operating, especially the retail kind of business stock takes need to be performed frequently. This will help in the management of inventory. Occurrences such as shrinkage are as a result of theft, damages, etc.

7. Reconciling the business payroll taxes and sales taxes
The emphasis of capturing transactions on time is so that the reconciliation should also be made on time to avoid disputes being rejected or penalties being added on your account as a result of not fixing the errors not within the reasonable time.

8. Calculating the depreciation
Non-current assets as much as they have a long lifetime span they also lose value over time. The reduction of the value is called the depreciation. This will be allocated on the profit and loss statement which then reduces the business profit thus the taxable income.

You will realise that with the proper allocation of the transactions, as much as a loss may occur but there is also a consolation of a reduced tax. Who wouldn’t want to enjoy such advantages?

Matsobanemetja Business Consulting (Pty) Ltd has a great package of a retainer contract that will make your business finance life easy while you concentrate on building and growing your business.

Enquire with us by sending an email to enquiries@matsobanemetja.co.za

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 PA@matsobanemetja.co.za

The Accounting Firm

“A person doesn’t know how much he has to be thankful for until he has to pay taxes on it.”

Anonymous

Questions to ask before you hire a Bookkeeper or an Accountant.

A bookkeeper and/or an accountant can help you reach the next level in business. This means it’s really important to find someone who is willing and excited to help you grow and grow with you.

Finding someone you trust will allow you to focus on business strategies knowing the financial side is handled.

1. What makes them qualified? Are they associate members or registered with any of the governing body?
If you’re looking for someone to help with data entry, you don’t need a ton of educational qualifications. Questions about their attention to detail are very helpful. If you are looking for someone to help you understand the numbers and use those numbers to make major business decisions, you’ll want to ask about their degree and work history to ensure they have the right education to help you get where you want to go.

2. What is the scope of work?
Is this person here to help you with data entry only, or will they help you interpret the numbers as well? Which are you looking for?

3. How do they communicate best? You want to find someone who jives with your communication style.
If you live in your email and the person you hire is always calling you, this may cause some tension and frustration. Finances are an important part of business ownership so it’s likely that you’ll be regularly communicating with your bookkeeper. Ask if they can communicate in a communication style that works best for you.

4. Will they be the one you actually work with?
If you’re interviewing a firm/company, the person you speak to may not be the person who does the work or who you will be communicating with on an ongoing basis. Be sure to ask so that you can set your expectations from the beginning. If the person you’re speaking to isn’t the one who will be involved in your work, you can ask to speak to your potential account representative.

5. What can you expect for response times?
If you email your bookkeeper, it’s important to have an expectation set of when you will hear back. You want to work with someone that you can get ahold of when you need them. Accounting is not emergency surgery, so you don’t need to find someone who is going to be waiting by the phone for your call, but you do want someone who will be quick to get back to you and get your questions answered.

6. What can you expect for delivery times?
It’s often misunderstood in the accounting industry that “month-end” financials are ready by the last day of the month. To properly reconcile and review a month of information, bookkeepers and accountants generally need a week or two depending on the amount of work and the rest of their client load. Setting this expectation from the beginning is important (for both parties).

7. How will they protect your information?
Working with a bookkeeper is intimate. They have access to a lot of your financial information and it’s important to know that the security of that information is just as important to them as it is to you. Make sure they have a plan to keep your information secure.

8. How are services priced?
It’s important to understand if they charge a fixed or hourly rate. If it’s hourly, you may get invoices that are higher than you budgeted for. Ask how they track time and if you can set limits for each month to ensure you stay in your budget.

Overall, you want to be sure that you are hiring someone that you will work well with. Someone who understands your needs, can meet you at your level and will be available to answer questions as they come up.

What you don’t want is someone who is going to make a bigger mess than you started with.

Compiled by Ms. Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd

If you need a consultation with us with regards to your business, any type of business – please reach out to us on email PA@matsobanemetja.co.za

For more information: enquiries@matsobanemetja.co.za

The Accounting Firm


“The best accountants are not just number-crunchers; they’re financial storytellers.”

– Jessica Turner