Common Bookkeeping Mistakes that Small Businesses Make and ways to avoid them.

Making small bookkeeping mistakes that are costly or even damaging to your business is an unwelcome possibility. However, understanding common errors and how to avoid them can help you stay on top of your books and make sure your business stays afloat.

Overlooking Deadlines

Overlooking deadlines is a common mistake that small businesses make in bookkeeping. This mistake can be costly as it could result in late fees, penalties, and even legal issues. Small business owners must prioritize their finances and stay on top of important deadlines to avoid these negative outcomes.

One way to avoid missing deadlines is by keeping track of all the tasks that need to be done and when they are due. Creating a schedule or using accounting software, with built-in reminders can help ensure that nothing falls through the cracks. Additionally, delegating tasks to team members or hiring a professional bookkeeper can take some of the pressure off and ensure that someone is responsible for meeting deadlines.

Ultimately, overlooking deadlines can have serious consequences for small businesses. By making organization a priority and utilizing available resources, small business owners can avoid this costly mistake and keep their financial records up-to-date.

Not Separating Business & Personal Accounts

One of the biggest bookkeeping mistakes small businesses make is not separating business and personal accounts. The line between personal and business expenses can get easily blurred when using a single account. This can cause confusion during tax season, leading to incorrect deductions or overpaying taxes.

Not only does mixing accounts complicate your bookkeeping process, but it also puts you at risk for legal issues. If you’re ever audited, they’ll want to see clearly separated accounts. Mixing personal and business expenses raises red flags and increases your chances of being selected for an audit.

To avoid these potential problems, it’s important to open separate bank accounts for your personal and business finances. If your business isn’t incorporated, you don’t need a business bank account but a separate personal account that you use for business is extremely beneficial.

Keep detailed records of all transactions made on each account so that you can track your spending accurately throughout the year. By doing so, you’ll be able to stay organized come tax time and reduce the likelihood of any costly errors or legal issues down the road.

Poor Record Keeping Practices

Poor record-keeping practices can be detrimental to any small business. It can lead to financial losses, missed tax deductions, and even legal issues. One of the most common mistakes made by small businesses is not keeping track of their expenses properly. This can lead to overpaying taxes and missing out on potential deductions.

Another poor record-keeping practice is failing to separate personal and business finances. This can make it difficult to accurately calculate profits, losses, and expenses for tax purposes. It can also put personal assets at risk in case of a lawsuit or bankruptcy.

Finally, relying solely on paper records can be a major mistake for small businesses in the digital age. Digital records are much easier to manage and organize, reducing the likelihood of errors or lost information. Failure to adopt digital record-keeping practices could put small businesses at a significant disadvantage compared to competitors who have embraced this technology.

Not Tracking Expenses Accurately

One of the biggest bookkeeping mistakes made by small businesses is not tracking expenses accurately. This can lead to a number of problems down the line, including missed deductions and incorrect financial statements. It’s important for small business owners to develop a system for tracking expenses that work best for their needs.

One way to track expenses accurately is by using accounting software or apps. They can help automate the process of recording transactions and categorizing them correctly. Alternatively, keeping careful records in an Excel spreadsheet or even on paper can also be effective.

By accurately tracking expenses, small business owners can gain insights into their spending habits and make more informed decisions about future investments. Additionally, they’ll have all the information they need at tax time to take advantage of all eligible deductions and avoid any potential issues with the South African Revenue Services
“Creativity is great, but not in accounting.”

Not Managing Accounts Receivable

One of the biggest bookkeeping mistakes that small businesses make is not properly managing their accounts receivable. This can lead to serious cash flow problems and ultimately, business failure. Failing to follow up on unpaid invoices in a timely manner can result in lost revenue, and customers who regularly pay late can cause significant stress for business owners.

To avoid these issues, it’s important for small businesses to have clear policies and procedures in place regarding invoicing and payment collection. This includes setting payment terms upfront, sending invoices promptly after services are rendered or products are delivered, following up with reminders as necessary, and potentially even offering incentives for early payment. Utilizing accounting software to track receivables can also help ensure nothing falls through the cracks.

Ultimately, effective management of accounts receivable is crucial for any small business looking to maintain a healthy cash flow and avoid financial troubles down the line. By staying on top of invoicing and collections processes, entrepreneurs can better focus on growing their businesses without worrying about unpaid bills piling up.

Not Managing Accounts Payable

Not managing accounts payable is one of the biggest bookkeeping mistakes small businesses make. Failing to properly manage accounts payable can lead to serious financial problems for a business, as it can result in missed payments, late fees, and even damage to the company’s credit rating. It’s important for small business owners to stay on top of their bills and make sure that all payments are made on time.

One way to avoid this mistake is by implementing an efficient system for managing accounts payable. This could include setting up reminders for bill due dates, creating a schedule for when bills need to be paid, and keeping track of all invoices and receipts. Another important step is to regularly review the accounts payable ledger to ensure that everything is up-to-date and there are no outstanding bills or errors in the system.

Small businesses should also consider automating their accounts payable process. This can be done through accounting software or other tools designed specifically for managing finances. Automation can help save time and reduce errors in the billing process, making it easier for business owners to stay on top of their finances and avoid costly mistakes down the line.

Not Monitoring Cash Flow

Not monitoring cash flow is one of the biggest bookkeeping mistakes small businesses make. Managing cash flow effectively is crucial for business success, yet many entrepreneurs fail to keep track of their finances properly. This can lead to serious problems down the line, such as an inability to pay bills on time or a lack of funds for future investments.

One reason why small businesses do not monitor their cash flow is that they find it challenging to track expenses and income regularly. However, failing to do so means that they are unable to identify potential issues early on and take corrective action before it’s too late. Another mistake that small businesses make is not having a budget in place for managing expenses and revenue. Without a budget, there’s no way to determine how much money should be allocated toward certain areas of the business or how much revenue needs to be generated each month.

Not monitoring cash flow can be detrimental to any business – big or small. Small businesses need to understand that keeping track of finances regularly isn’t just important but necessary if they want their companies to thrive in today’s competitive market. By setting up a solid accounting system and sticking with it consistently, entrepreneurs can ensure better financial health for their ventures while avoiding costly mistakes along the way.

Not Understanding Tax Requirements

Not understanding tax requirements can lead to legal and financial problems for small businesses.Charging the correct amount of taxes on sales, and not remitting taxes collected on time. The SARS imposes penalties and interest charges for late or incorrect filings, which can add up quickly.

To avoid these mistakes, small business owners should educate themselves about their tax obligations. They can consult with a tax professional or use online resources provided by SARS. It’s important to keep accurate records of all transactions and receipts in case of an audit. In addition, setting aside funds each month for taxes owed can prevent cash flow issues when it’s time to remit payments to SARS. By taking these steps, small business owners can avoid the stress and financial burden that comes with non-compliance with tax laws in South Africa.

Avoid Common Errors

One of the most common errors that small businesses make in bookkeeping is failing to keep proper records. It’s important to keep track of all financial transactions in order to ensure accuracy and prevent errors down the line. This includes keeping receipts, invoices, and bank statements organized and up-to-date.

Another mistake that small business owners often make is confusing personal and business expenses. It’s important to keep these two categories separate in order to accurately account for tax deductions and avoid any legal issues. This means having a designated business bank account and credit card, as well as only using personal funds for truly personal expenses.

Lastly, failing to reconcile accounts regularly can lead to significant errors in bookkeeping. Reconciling involves comparing your records with those of your banks or credit cards, ensuring that they match up correctly. By reconciling on a regular basis (monthly is recommended), you can catch any discrepancies early on and avoid costly mistakes down the line.

Compiled by Ms. Dikeledi Seoloane – Accountant, Tax Practitioner and Owner at Matsobanemetja Business Consulting – The Accounting Firm

If you need assistance with bookkeeping for your small business, please email us enquiries@matsobanemetja.co.za

http://www.matsobanemetja.co.za

Making good judgements when one has complete data, facts and knowledge is not leadership – it’s Bookkeeping

Dee Hock

PAYROLL TECHNICALITIES FROM AN EMPLOYER AND EMPLOYEE PERSPECTIVE

I am writing this blog at the right time where many employers are already in the middle of preparing their monthly payroll run.

The objective of the blog is to breakdown the distinctive features of payroll from an employer and employee perspective.

1. EMPLOYEE – as an employee you do not worry much about the calculations, preparations and monthly submissions. The only activity is the expectations of a payslip, IRP5 with info already populated on the documents. Payslips are issued every month on or before your payday. IRP5 is issued to you by your employer every 12 months. They stipulate your gross earnings, deductions, company contributions and the net amount that transferred in your bank account as a salary.

Deductions such as PAYE, UIF, Medical aid, Provident fund, reflect on the payslip. PAYE – is your tax contributions deducted as per your salary earnings. If you have worked for a company for more than 24 hours, your employer should have registered you for UIF under the company. The contributions, 1% of your salary will be deducted from your salary and be paid to the unemployed insurance fund on a monthly basis. And the employer equally contributes an additional 1 % towards the UIF contributions.
All these should reflect on the payment remittance/ payslip.

2. EMPLOYER – quite a few things are expected from an employer as far as complying with the legislative labour laws are concerned. First, make sure that the company is registered for the statutory taxes, at least UIF and PAYE so that the entity can account for all the employees deducted monies as well as the company contributions. The procedure is performed on a monthly basis.
With regards to the PAYE – your company monthly submissions are processed via EMP201. This is a payment declaration in which the employer declares the total payment together with the allocations for PAYE, SDL, UIF and/or ETI. You file the declarations via the eFiling portal, once submitted the system will generate the payment reference which you will use on your online banking as the reference. That way SARS will be able to allocate the payments accordingly.

Another aspect with regards to the PAYE is the declaration called EMP501 -is a report of all employees ‘earnings, which must be submitted to SARS. Employers are required to reconcile the payroll taxes liabilities (PAYE, SDL and UIF) declared monthly on the Employer declarations (EMP201). The reconciliations must be submitted twice during a financial year: every six months period.

The EMP501 enables the employer to also generate the IRP5 for the employees so that they can use it for their own submissions when the individual tax season opens.

To read more on the above please visit the sars website http://www.sars.gov.za

Compiled by Ms. Dikeledi Seoloane – Accountant, Tax Practitioner and Owner at Matsobanemetja Business Consulting – The Accounting Firm

http://www.matsobanemetja.co.za

DO I HAVE TO PREPARE THE FINANCIAL STATEMENTS AS A SMALL BUSINESS?

We are always asked this question by small business owners when they need us to generate the SARS Tax Compliance Pins. And the answer is simply YES. I would like try to simplify the reason why that is the case.

The most basic requirement of compliance is that you must submit the Tax Annual returns. What is SARS Annual returns?

•The company tax return is a legally binding declaration to identify all income received or accrued and all income taxable in the hands of the company. The ITR14 (SARS form uploaded on the e-Filing profile) must be completed and submitted within 12 months after the financial year end.

• What exactly do we submit to SARS? We submit the Annual Financial Statements. How do we prepare the AFS? Though i will not be able to explain in details how to prepare the AFS on this blog I however would like to emphasize the information required to prepare the annual reports.

• A business is a transaction. Business is the practice of making one’s living or making money by producing or buying and selling products (such as goods and services).

• Thus we need to capture all these daily transactions as they occur.
The process of capturing the transactions is called Bookkeeping.
Hence, data capturing is extremely important in our businesses. Because without the information we will not be able to prepare the annual reports.

• The process sequence like this: Bookkeeping, Report Preparations then Tax. See how all these connect to one another? You will realise that we need source documents to capture transactions. Documents such as Invoices, Bank statements, some businesses have software or applications they use or even spreadsheets. The documents are given to a tax preparer or an accountant so that they can put together the annual reports.

• What are Annual Financial Statements? They are formal records of the financial activities and position of a business or person at financial year-end.

• An annual financial statement contains a list of the company’s assets and liabilities. That section is called the balance sheet. Assets can be anything ranging from cash and cash equivalents to property and intellectual properties, such as patents. Liabilities can for example be equity, the company’s debt or accounts receivable. Thereby, a balance sheet provides a snapshot of a company’s value.

• The income statement is a different part. Therein, a company’s annual income and expenses are listed in order to determine, whether a company has produced a profit or a deficit. Invoices are also taken into account here.

• Balance Sheet – informs the person reading it the Financial position of the business. Whereas the Income Statement informs about the business performance of the business. The final outcome of the income statement is the net profit, which is used to base the tax to pay. Thus referred taxable income.

• Once you register a company you need to understand that you are expected to file the tax returns every financial year end. That is the utmost obligation from your end. This is irrespective of whether the business is operating or not. If the business is doormat – you declare nil returns. Failure to do so will render your company non-compliant. And this will affect your Tax Compliance Status.

Compiled by Ms. Dikeledi Seoloane – Accountant, Tax Practitioner and Owner at Matsobanemetja Business Consulting – The Accounting Firm

http://www.matsobanemetja.co.za

PERSONALITY TRAITS THAT YOU NEED, TO RUN A SUCCESSFUL BUSINESS

Every job has a specific personal trait that one must have, to be able to abide by the job standard or requirements. For example, to be an accountant or bookkeeper you need to be able to keep a secret. You are going to work with confidential information thus you shouldn’t find it easy to disclose some information to just anyone.

On this blog I just want to discuss those general personal traits that every business owner must have.

1. Self Motivation – once you decide to start a business please note that the honours lies in you whether you plan to build a successful business or not. You need to get up every morning and report for work like any other employee. Develop a working routine that you follow through on a daily basis. The key is understanding that what you put in will always be equal to the outcome. Thus less work means less income.

2. Be organised – assist yourself by writing down the plan of action for the day so that you do not get overwhelmed by the duties at hand. The last thing you need is to be too busy but unproductive. If you put in the work, the results must be visible. For the jobs that are not under your portfolio feel free to outsource them. This will also help you to focus on running the business as opposed to the minimal operations that are not the core of the business.

3. Ability to schedule and plan – you need to understand the nature of the business. For e.g. an accounting firm is a deadline driven kind of business. We need to make sure our clients work is up to date all the time. This means we need to prepare the interim reports on a monthly basis so that our function is not compromised. Any other business, you must have a turnaround time. The ordering process must be clear to your customers, and they should be able to know when your deliverable will be made.

4. Persistence – running your business does not mean that you choose to work only when you feel like it. You must put in the work everyday. You are most likely required to be creative too. Put in the work!

5. Self-promotion – if you do not talk about your business nobody else will. Advertise your services or products to your potential customers, build awareness, do some research and ask around. There is a quote I like on marketing that says “Doing business without advertising is like winking at a girl in the dark” ☺️

Many people are not born with these personality traits but they are skills that can be learned and mastered over time thus you have no excuse.

Compiled by Ms. Dikeledi Seoloane – Accountant, Tax Practitioner and Owner at Matsobanemetja Business Consulting – The Accounting Firm

http://www.matsobanemetja.co.za

YEAR END CHECKLIST FOR BUSINESS OWNERS

This is the last blog entry for the year and I just thought it would be befitting enough for every business owner to do a bit of “stocktake” with regards to their business standing.

I have realised that many business owners do not really know their businesses legal entities and how and when to maintain them. I would like to challenge you to do this little assignment.

1. Take out your company registration documents – CK . What I would like you to observe is specifically 2 things – registration date of the business and the Financial year end of the business. As much as I would like you to know all the important details on the certificate by heart but I would like us to focus on these 2 for now. I regard the business registration documents as the identity book of the company – it is because of the importance of it, it bit just a paper but a legal document.

2. Anniversary of the business – please make sure you note by heart the exact month your business was registered. The reason is that you are required to file CIPC annual returns every year in the same month so that the business can be kept active on the CIPC database and not be deregistered / removed by the commissioner. This is despite the fact that the business is operating or not. You can read further of this basic business compliance with the CIPC by logging into their website https://www.cipc.co.za

3. Financial year end – on your company registration document please note again the month indicated as the Financial year end of the business. Because you are required every year in the same month to file your SARS annual returns. Financial year end means the month you chose when you register your business that you will declare your earnings and losses to the receiver of revenue. This is also despite whether the business is operating or not. If the company is not operating yet, you are still required to file nil returns. Do not fold your arms and say my business is not operating. The consequences are that you might be penalized for the non-submission. Penalties can range from 250.00 per month.

The above-mentioned are extremely important to every business owner. Even if you have professionals that are taking care of your business – the principle is that by all means please know them by heart.

4. The last item I would like to tackle is taking count of the assets you have acquired in the business for the year. Simplifying the meaning of the word assets – anything that provides monetary benefit in the business currently and in the future. Thus we use assets to generate an income. For example if you are running a catering business – the chairs, table cloths, and all other equipments used for rendering the services are regarded as assets. You use them over and over again to render services to your many different clients. Assets are equally and extremely important in every business thus make sure you grow them every year because that’s how your business grow.
Your business can hardly go under when you have the greatest assets in running your business. Acquire as much as you can and maintain them.

Our next blog will definitely be in the new year – 2023
I wish that you would start positively in your business and feed on more information that will assist in running your business very successfully.

Compiled by Ms. Dikeledi Seoloane. Accountant, Tax Practitioner and Owner at Matsobanemetja Business Consulting – http://www.matsobanemetja.co.za

BUSINESS OWNER BANK STATEMENT REVIEW

Dear Business Owners

The end of the year gives us an opportunity to do some introspection.

If you have not been doing things the right way, as far as record keeping is concerned – please aim to do things differently in the new year. Your business depends on it.

I just thought while we are a bit settled, may I please ask you to perform this little exercise.

✍️ Pull out your November business bank statement with the transactions dated 01 November to 30 November 2022.


✍️ Start by recording all the monies received as a results of sales – categorize them as ‘Sales’ or ‘Income’


✍️ Then record the monies that went out of the bank account as a results of business operations. Purchases of raw materials, Payments of operational expenses such as wages and salaries, paying electricity, rent, telephone and internet, etc.


✍️ Total sum both the Income and the expenses, respectively.


✍️ Are there any other expenses that were catered for but had nothing to do with the business? Record them separately and the total sum in the end.


✍️ With your calculator enter the Sales / Income figure and less (minus) the costs of raw materials and expenses. And see how much you are left with.
For e.g. Sales = R10 000,00 – R6 000.00 (which is the total of both the raw materials and operational expenses) thus your total answer is R4 000.00

This means your profit for the month was R4 000,00

You may ask, what do we do with the personal expenses that were covered by the business?

The answer is Pay back the money to the business account. It was not supposed to be used in that way in the first place. Failure to pay back will result in writing off as a wasteful expenditure. You can just imagine the negative image this will create 🥺

Hence you might not see the business profit.

The objective of this exercise is the following:
✅ To indicate to you the importance of record keeping
✅ The importance of separating personal funds from business or rather the importantance of earning a salary from the business
✅ Check if you are running a profitable business
✅ Learning to budget and certain decisions you can draw by just looking at your figures. For e.g. you might realise how much you can save by bulk buying.
✅ You may also be able to check if your pricing for the products or services are correct.
✅ Controlling your expenses
✅ Having monthly sales targets

**there are many other decisions that can be drawn by just looking at your business figures and overall business performance.

Make sense? Try this exercise with only your one month bank statement and see if it will not assist

This is how things need to be done on a monthly basis!

Y2023 we are talking growth in our businesses. Manifest it 🤑 We are fetching the Bag 💰 for real!

http://www.matsobanemetja.co.za

Compiled by Ms. Dikeledi Seoloane – Accountant, Tax Practitioner, Owner at Matsobanemetja Business Consulting – The Accounting Firm | matsobanemetja_bc

BUILD AND GROW YOUR BUSINESS BY UNDERSTANDING TAXABLE DEDUCTIONS

There is a famous quote that says – a non financial person when a transaction happens they only recognise one entry. As an accountant that works with various small to medium businesses i tend to agree. Doing so with no judgement of course 😉

Though the most recognised entry is that of an Income, it is also not useful to ignore the expenses we incur during our operations. Because such has an effect on our businesses – positive or negative.

Being equally in control of our expenses helps us to not burn the business funds due to unexpected expenses that could have been managed or avoided. Track your expenses and review them as often as possible. It is advisable that it is done on a monthly basis to avoid being exposed to a loss or shrinkage only at the financial year end of the business. It might be too late to rectify.

In as much as you may rely on your bookkeeper or accountant please make it to a point that you receive frequent communication from them. Their job is to assist you with providing clarity via the numbers that will communicate clearly the position and the performance of your business.

Learn and be able to read at least the 2 parts of the Financial statements. The Income Statement and the Balance Sheet. It is extremely important that you are able to analyse them as they carry valuable business information. Whether your business is a promising success, stagnant or non-profitable.

Do not overlook the business deductions in your business. Though they have a limit as regulated by the receiver of revenue it is also important that you note them as they play a huge role in reducing your tax liability. Deductions such as: Gifts to clients, Software, Insurance premiums, Training and Development, bad debt written off, etc. All these are required one way or the other for scaling our businesses thus it will be dangerous not to recognise them in our recordings.

The blog is compiled by an accountant who runs a fast growing accounting firm. She would like to also remind the readers or business owners that though accountants are not magicians that can grow your business overnight, if you have a look at the information they put together – it might be helpful for you in running a successful business!

Happy trading 🤍

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

Dikeledi is a registered business accountant and qualified tax practitioner.

http://www.matsobanemetja.co.za

http://www.matsobanemetja.co.za

BUSINESS PRACTICES

I was invited for an interview by YOU FM and therefore decided to create a blog out of the questions that were asked.

1. What are the basic business practices?
1)a. Making profit – you must never compromise on this important business principle. For anything that will comprise the business from making profit, it is not good for the business.
1)b. Customer service – do realise that no business runs successfully without customers. Pay attention to them, treat them well and serve them to the best of your ability. Once a customer decide to buy from you, make it your job to retain them. That’s mainly how your business will grow.
1)c. Treat your employees well – Your employees play a very important and big role in your business. They are the most stakeholders in your organisation. Your employees are the one in close contact with your customers everyday. To receive customer satisfaction, make sure that you as an employer you create a very safe space and great work environment.

2. When starting off a business a very small one, is there a necessity to open a bank account or is there a particular amount of money I need to be making to open a business account?
– Yes. A business bank account must be opened immediately after you have received the company registration documents from CIPC. It is important that you transact every business activity from the right type of bank account. Business account assist in building a financial profile / portfolio for the business. It also assists us to account.

3. In order to register a business is there a need to have a business plan?
– Entrepreneurs and SMMEs need to move away from the popular notion that a business plan is only required for funding applications. It is an incorrect one. You need a business plan to measure your performance and progress. It serves as a roadmap for your business. You need to set goals for your business. Goals such as, what do you want your business to achieve in a certain period? Where do you see your business in x years time? Thus a business plan comes very handy to such.

4. What are the most common source documents important for every business owner?
4)a. Invoices – we need to comply with all the business requirements. Make sure we invoice our customers. Invoices: i) Getting paid on time. In this day and age we need to make sure that we make things easy for us to enable us to run our businesses smoothly. An Invoice with the important details such as the payment terms, full banking account details and amount payable make it easy for you. ii) Invoices assist for audit purposes. If SARS initiates an audit of your business you need to ensure that whatever paperwork they will require, you have. Failure to produce any paperwork is a failure to dispute any of their demands. iii) Invoices are also important for legal purposes. Imagine there are customers that do not want to pay for your Invoices. You require assistance from collection agencies or attorneys to recover the funds on your behalf. The starting point is that you produce all the source documents so they can assist you with the case.
4)b. Employment contract – employees need to know what is expected of them in the business. Important terms should be stipulated in the contract. This is same as committing work with our business associates. Contracts teaches individuals to act in a specific manner. Thus they act as the guidelines.

6. What are the most basic compliance principles that businesses should know and practice?
– Keeping the business active by making sure that the CIPC annual returns are filed every anniversary of the business.
– SARS returns must be submitted every financial year of the business. Whether operating or not. You need to declare the status of the business. Compliance is essential for every organisation, it creates growth as the business will always be ready for any open opportunities.

Happy trading!

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

Dikeledi is a registered business accountant and qualified tax practitioner.

http://www.matsobanemetja.co.za

Business Practices for Business Owners and Entrepreneurs

RANDOM BUSINESS ADVISES YOU DID NOT ASK FOR

Today I decided not to write a blog based on a specific topic however some useful pointers you may find useful in your business.

1. How much do I pay my first employee?
This question have re-surfaced many times during consultations with entrepreneurs. There is no straight answer to this. My usual response is that, as a small business owner you need to first know that you have limited resources to be able to pay what is called “market pay”. This mean you will also have a limitation in hiring people with vast experience in the industry. This right here requires you to decide with a very sober mind. Because a salary also affect the business cash flow. If you believe in skill transfer, I suggest that you hire individuals at a junior level with hope of giving them an extensive training on the job. Salaries are continuous expenses thus to uphold the integrity of your business please make sure that you pay employees what is due to them and pay them on time.

2. Register employees for statutory employee benefits
As a build up to the previous point, upholding the business integrity also includes registering employees for the basic statutory employee benefits such as UIF, PAYE (if employees are above the required threshold), COIDA, etc. This is simply because it is the right thing to do. Employees also require some assurance that they are not working for a “fly by night” type of a company. They will also be proud to work for a professional company that complies with labour laws.

3. What do you need to grow your company?
I have been recently asked this question. What better way to give a response from my own experience! There is a cliche saying that it is often used in business “Work on your business not in your business”.
As the leader of your business, you are responsible for spotting problems and delegating solutions. You are responsible for setting goals and thinking about the future. The only person in your company who will be genuinely motivated to grow your company is you. Every minute that you spend working on tasks that can be delegated is a minute that you are not planning, strategizing and building the best business possible.
This is why it’s important to work on your business, not in your business. I refer to myself as the sales person in my business. My key role is to supervise, train staff and bring more clients to the business.

I hope the above helps. Happy trading!

Compiled by Ms. Dikeledi Seoloane. Dikeledi is a registered accountant and tax practitioner. Founder and MD of an accounting firm Matsobanemetja Business Consulting (Pty) Ltd

How do you know that the company afford to obtain more credit facility?

Taking on a debt if you have a reasonable need, a sound financial track record, a firm financial history, and stable business, most banks, finance institutions, investors, etc will be willing to lend you the money.

Funds are required for different reasons. It could be the need of cash itself, or the need for the financing to purchase machinery or more equipments, even better acquiring big assets such as a property.

It is always better for the lender to make their own analysis so they can be able to calculate the risk of borrowing out their funds. Lenders may finds it encouraging to lend money to businesses that have activities. When people see activity, it generates excitement and excitement generates greater giving and participation in your request.

Briefly, what we are encouraging is that at least create an active profile that will best motivate your potential funder to assist with the funds.

One more important factor that is always overlooked is the proper structuring of the finances. As a director of the company, though you have a direct access to the business funds that does not mean you can spend as and when you wish. More so for your personal use. You ought to earn a salary from the business, which will qualify you to cater your personal needs.

Investors take seriously your relationship with the business funds. They are more likely to scrutinize the cash flow statement more than any other part of your financial report.

Some funding requests or credit applications are declined not because they think the business is not profitable but because of the lack of financial discipline.
Learn to implement order in your business. Keep a budget and stick to it. Set a sales target and fight to achieve it. A growing business is encouraging and a motivation.

Trade with direction. Happy trading!

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd
A registered Accountant and Tax Practitioner.

http://www.matsobanemetja.co.za

How do you know that the company afford to obtain more credit facility?