Financial Statements – PROBIZSERV – Chartered Certified Accountants

Steering Your South African Business Through Economic Realities: The Unseen Power of Sharp Financial Accounting and Profit and Loss Insights

R@dney007 — Thu, 05 Jun 2025 13:55:22 +0000

The current South African economic climate presents a stark test for every business. For entrepreneurs and company leaders, merely weathering the storm isn’t the goal; it’s about dissecting the challenges and finding a clear path forward. This requires a forensic examination of your financial core, moving beyond surface-level numbers. True command comes from rigorous financial accounting, particularly the unvarnished truths found within your profit and loss statement and meticulously audited balance sheet accounts. This isn’t just about keeping score; it’s about uncovering the critical intelligence needed to survive and strategically advance. To begin this deeper financial inquiry for your own enterprise, see what Probizserv can reveal.

The Interrogation Room: What Your Profit and Loss Statement Truly Reveals

In any economic conditions, but especially challenging ones, your profit and loss (P&L) statement isn’t just a report; it’s a primary source for interrogation. What is it really telling you about your business’s performance? This document, detailing revenues, costs, and expenses over a period, exposes the raw data of your profitability – or lack thereof. For South African businesses, a forensic approach to the P&L allows you to:

Pinpoint True Revenue Drivers: Which activities are genuinely fuelling your income, and which are merely a drain on resources? The numbers don’t lie.
Expose Cost Bloat: A detailed line-by-line scrutiny of your Cost of Goods Sold (COGS) and operating expenses often uncovers inefficiencies and areas ripe for aggressive cost management.
Track Profitability Under a Microscope: Gross profit, operating profit, net profit – these aren’t just figures; they are vital signs. How are they trending? What do these trends predict if current conditions persist?

A meticulous understanding of your P&L, a fundamental aspect of financial accounting, empowers you to make surgical adjustments rather than blunt, reactive cuts. This could mean exposing underperforming segments or validating high-performing ones. Professional scrutiny can often highlight what’s hidden in plain sight; discover how expert Financial statements services can bring these critical details to light.

The Financial Health Audit: The Unvarnished Truth of Your Balance Sheet Accounts

While the P&L shows operational flow, your balance sheet accounts offer a stark snapshot – the unvarnished truth of your company’s financial standing at a specific moment. These accounts detail your assets (what you possess), liabilities (what you owe), and the resulting equity. Why is this so critical?

Cash Flow Realities: Your balance sheet exposes the reality of your liquidity. Can you meet your immediate obligations? A deep dive into current assets versus current liabilities reveals your operational bloodstream. Effective cash flow management isn’t just important; it’s fundamental to survival when economic pressures mount.
Solvency Under Scrutiny: How resilient is your business to financial shocks? The balance sheet lays bare your debt levels versus your equity, a key indicator for lenders, investors, and your own strategic planning.
Foundation for Strategic Moves: Understanding the true value and composition of your assets and liabilities is essential before making any significant financial commitment, be it expansion or consolidation.

The story told by your balance sheet accounts, when interpreted through disciplined financial accounting, is a direct reflection of your business’s structural integrity.

The Evidence Trail: The Indispensable Role of the General Ledger Accounting System

Beneath the surface of your P&L and balance sheet lies the general ledger (GL) – the comprehensive evidence trail of every single financial transaction your business undertakes. From the smallest expense to the largest sale, each is documented here. Why is this granular record so vital in our investigation?

Veracity of Financial Reports: The GL is the source document. Any corruption or neglect here directly contaminates your P&L and balance sheet, leading to decisions based on flawed intelligence.
Audit and Compliance Backbone: For regulatory scrutiny, tax declarations (Tax services depend heavily on this), and internal controls, the GL is your primary defence and point of reference.
Deep-Dive Analysis Capability: The GL allows for the kind of detailed financial investigation that forms the bedrock of finance economics and accounting. It allows you to trace financial anomalies back to their source.

The meticulous upkeep of a general ledger accounting system is non-negotiable. This is where accurate Bookkeeping services prove their weight in gold, ensuring the evidence trail is clean and reliable.

Financial vs. Management Accounting: Two Lenses for Critical Insight

It’s crucial to differentiate, yet connect, financial accounting and management accounting. Financial accounting is largely about reporting historical data accurately for external eyes – the tax authorities, investors, lenders. Management accounting, however, takes this data and turns it inward, using it as a tool for strategic dissection and future planning. In challenging economic periods, you need both lenses sharpened.

Financial accounting ensures your reported numbers are beyond reproach. Management accounting then interrogates these numbers – especially from the profit and loss statement and balance sheet accounts – to ask the tough questions:

Where are the hidden inefficiencies?
Which product or service lines are truly driving value, and which are a mirage?
What do realistic forecasts predict, and what pivot points does this suggest for our strategy?

Decisions Forged in Financial Truth: Thriving Beyond Survival

The ultimate aim of this deep dive into your financial accounting, your profit andloss statement, your balance sheet accounts, and the foundational general ledger is to equip you, the South African business leader, to make decisions forged in financial truth. This isn’t just about defensive cost-cutting; it’s about building a resilient, agile operation ready to seize opportunities others might miss.

With this forensic financial clarity, you can:

Master Your Cash Flow: Move beyond hoping for the best to actively engineering your liquidity.
Price for Reality and Profit: Ensure your pricing isn’t just competitive but also robustly profitable.
Detect Financial Weaknesses Early: Spot and address financial red flags before they become critical threats.
Uncover Hidden Strengths and Opportunities: Sometimes, a thorough financial review, perhaps even leading to an updated understanding of your company’s worth through Business valuation services, can reveal untapped potential or strategic advantages.

Uncover Your Business’s Full Financial Story

Successfully steering your business through the prevailing economic conditions demands more than surface-level adjustments. It requires a commitment to uncovering the full, unvarnished financial story your numbers are trying to tell. By rigorously examining your financial accounting systems, you gain not just control, but true insight.

Are you ready to move beyond standard reports and truly understand the financial levers of your business? Contact the specialists at Probizserv. We provide the expert Financial statements services and robust Bookkeeping services that empower you to make decisions with clarity and confidence.

The Ultimate Guide to Financial Statements for South African SMEs

R@dney007 — Thu, 24 Apr 2025 10:32:19 +0000

Beyond Compliance: Leveraging Financials for Growth and Funding

From Rear-View Mirror to Roadmap – Financials as a Strategic Asset

For many Small and Medium Enterprises (SMEs) in South Africa, the preparation of Annual Financial Statements (AFS) often feels like an exercise driven purely by obligation. The focus tends to land squarely on meeting the demands of the Companies Act, satisfying the Companies and Intellectual Property Commission (CIPC), preparing for potential funding applications, or fulfilling South African Revenue Service (SARS) requirements for the annual ITR14 tax return. Financial statements are viewed primarily as a historical record, a rear-view mirror reflecting past performance, often prepared reactively when external pressure dictates.

However, this compliance-centric perspective overlooks the immense strategic potential embedded within these financial documents. While fulfilling legal and tax duties is non-negotiable, the true value of financial statements lies in their ability to serve as a forward-looking roadmap. They contain the data necessary to diagnose business health, inform critical decisions, secure vital resources, and ultimately steer the SME towards sustainable growth and resilience in a challenging economic landscape. This article investigates how South African SMEs can transition from viewing financials as a mere burden to leveraging them as a powerful strategic asset, transforming historical data into actionable intelligence for future success. The core question is: how can SMEs practically unlock this potential to navigate hurdles like access to finance and drive meaningful growth?

Financial Statements as a Diagnostic Tool: Analysing Performance

Before financials can guide future strategy, they must be effectively used to understand past and present performance. This requires moving beyond simply generating the statements to actively analysing the information they contain.

Trend Analysis: A single set of financial statements offers a snapshot, but the real narrative emerges when comparing data over multiple periods – month-on-month, quarter-on-quarter, or year-on-year. Tracking key line items like revenue, cost of goods sold, operating expenses, gross profit, and net profit reveals crucial trends. Is revenue consistently growing, or is it plateauing? Are costs escalating faster than sales? Are profit margins improving or eroding? Identifying these patterns helps pinpoint areas of strength or weakness and provides early warnings of potential issues.

Ratio Analysis Revisited: Financial ratios distill complex information into comparable metrics, offering insights into different facets of business health. Key categories include:

Liquidity Ratios (e.g., Current Ratio, Quick Ratio): Indicate the ability to meet short-term obligations. Deteriorating liquidity ratios can signal impending cash flow problems.
Solvency Ratios (e.g., Debt-to-Equity Ratio): Measure long-term financial stability and leverage. High or rapidly increasing leverage might indicate excessive risk.
Profitability Ratios (e.g., Gross Profit Margin, Operating Profit Margin, Net Profit Margin): Assess the efficiency of operations and overall profit generation relative to revenue. Declining margins warrant investigation into cost structures or pricing strategies.
Efficiency Ratios (e.g., Inventory Turnover, Receivables Days): Gauge how effectively assets are being managed.

Simply calculating these ratios is insufficient. Their true diagnostic power comes from comparison. Analysing how ratios change over time reveals performance trajectories. Comparing them against industry benchmarks provides external context – is the SME performing better or worse than its peers? Furthermore, consistent application of accounting policies, such as those outlined in IFRS for SMEs, is fundamental. Without consistent accounting treatment from one period to the next, comparisons become invalid, akin to comparing apples and oranges, rendering the analysis misleading.

Variance Analysis: For SMEs that engage in budgeting or forecasting, comparing actual financial results against these planned figures is a critical diagnostic step. Variance analysis highlights where the business over- or under-performed relative to expectations. Investigating significant variances – whether positive or negative – helps understand why results differed. Was revenue lower than forecast due to unforeseen market changes or internal sales issues? Were costs higher due to unexpected price increases or operational inefficiencies? This analysis provides valuable feedback for refining future plans and improving operational control.

Meaningful financial analysis, therefore, hinges on context and consistency. It requires looking at trends over time, comparing ratios against relevant benchmarks (past performance, budgets, industry data), and ensuring the underlying data is prepared using consistent accounting methods. Only then can the financial statements serve as a reliable tool for diagnosing the SME’s health.

Unlocking Funding: Presenting Your Financial Story

Access to finance remains one of the most significant hurdles for South African SMEs. Whether seeking loans from traditional banks, attracting equity investors, or applying for government grants or support programmes, credible financial statements are almost always a prerequisite. Funders rely heavily on this information to assess risk, viability, and the potential return on their investment.

Preparing for Scrutiny: Before approaching any funder, SMEs must ensure their financial house is in order. This means having:

Accurate and Up-to-Date Financial Statements: Prepared according to recognised standards like IFRS for SMEs. Incomplete, inaccurate, or outdated financials are immediate red flags.
Supporting Documentation: Funders may require detailed records beyond the main statements, such as aged debtors and creditors lists, asset registers, and bank statements. Good record-keeping is essential.
Compliance: Ensuring compliance with CIPC filing deadlines and SARS obligations demonstrates financial discipline.
Appropriate Assurance: Depending on the funder and the SME’s profile, compiled statements may suffice, but often an independent review or even an audit will be required to provide the necessary level of confidence. Lack of an auditable financial history is a common barrier.

Telling a Compelling Story: Financial statements are more than just numbers; they tell the story of the business’s journey, its current position, and its future potential. SMEs need to effectively communicate this narrative to funders:

Highlighting Strengths: Use the financials to showcase positive trends, strong margins, effective cost control, or a healthy balance sheet structure.
Explaining Weaknesses: Be prepared to address any red flags (e.g., declining profitability, high debt levels) proactively, explaining the context and outlining corrective actions. Transparency builds trust.
Linking Financials to Plans: Demonstrate how the requested funding will impact future financial performance, using forecasts and projections grounded in historical data. Show how the investment will generate returns or improve stability.
Understanding Funder Perspectives: Different funders have different priorities. Banks may focus more on collateral and repayment capacity (solvency and liquidity ratios), while venture capitalists might prioritize growth potential (revenue trends, market size). Tailor the presentation accordingly.

The quality and presentation of financial information act as a business’s curriculum vitae when seeking external support. Just as a poorly written CV undermines a job applicant, weak or poorly explained financials significantly reduce an SME’s chances of securing funding.

Exploring Funding Alternatives: While traditional bank loans are common, SMEs should also be aware of alternative funding avenues where strong financials are equally important:

Government Agencies: Organisations like SEDA and SEFA offer various funding and support programmes, often requiring business plans and financial records.
Angel Investors & Venture Capital: These investors seek high growth potential and require robust financial projections supported by historical data.
Invoice Finance & Asset Finance: Options that leverage specific assets (receivables or equipment) on the balance sheet.
Crowdfunding: Platforms may require financial information to assess campaign viability.

Regardless of the source, a clear, credible financial picture is fundamental to accessing the capital needed for survival and growth.

Driving Strategy: Financial Data as Your Compass

The most profound shift occurs when SMEs move beyond diagnosis and funding applications to actively using financial data to shape future strategy and operational decisions.

Informing Budgets and Forecasts: Historical financial statements provide the baseline for creating realistic budgets and cash flow forecasts. Analysing past revenue patterns, cost structures, and cash cycles allows for more accurate projections. Budgets then serve as a financial plan against which future performance can be measured (variance analysis). Cash flow forecasting, as discussed previously, is critical for anticipating needs and managing liquidity proactively.

Setting Key Performance Indicators (KPIs): Financial statements yield numerous potential KPIs beyond standard ratios. SMEs can identify and track specific metrics crucial to their strategic goals. Examples might include:

Customer Acquisition Cost (CAC) vs. Customer Lifetime Value (CLTV)
Revenue per Employee
Break-Even Point
Specific Expense Ratios (e.g., Marketing Spend as % of Revenue)

Tracking these KPIs provides real-time feedback on strategic initiatives and operational efficiency.

Scenario Planning and Decision Support: Financial data allows SMEs to model the potential impact of different strategic decisions or external changes. What happens to profitability if key input costs rise by 10%? What is the financial impact of launching a new product line? How would a drop in sales affect cash flow? Building simple financial models based on statement data enables more informed decision-making and helps prepare contingency plans for different economic scenarios. This proactive approach, grounded in financial realities, replaces reactive crisis management or decisions based purely on gut feel, which is particularly risky in volatile environments.

Benchmarking for Competitive Advantage: Comparing financial performance (ratios, margins, growth rates) against industry peers helps identify areas where the SME excels or lags. This insight can inform strategic adjustments to improve competitiveness, whether in pricing, cost management, or operational efficiency.

Using financial statements proactively for strategy requires a commitment to regular analysis and integrating financial thinking into all major business decisions. It transforms the finance function from a compliance necessity into a strategic enabler.

Table: Example Key Performance Indicators (KPIs) Derived from Financial Statements

KPI Category	Example KPI	Formula / Derivation	Strategic Relevance	Related Snippets
Profitability	Gross Profit Margin	(Gross Profit / Revenue) x 100	Efficiency of core production/service delivery
	Operating Profit Margin	(Operating Income / Revenue) x 100	Profitability after operational overheads
	Net Profit Margin	(Net Income / Revenue) x 100	Overall profitability after all costs and taxes	–
Liquidity	Current Ratio	Current Assets / Current Liabilities	Ability to meet short-term debts
	Cash Flow from Operations	Per Cash Flow Statement (Operating Activities section)	Cash generated by core business activities
Solvency	Debt-to-Equity Ratio	Total Liabilities / Shareholders’ Equity	Financial leverage and long-term risk
Efficiency	Inventory Turnover (Days)	(Average Inventory / COGS) x 365	How quickly inventory is sold
	Accounts Receivable Days	(Average Accounts Receivable / Revenue) x 365	Average time to collect cash from customers
Growth	Revenue Growth Rate	((Current Period Revenue – Prior Period Revenue) / Prior Period Revenue) x 100	Top-line business expansion
Investment	Return on Equity (ROE)	(Net Income / Average Shareholders’ Equity) x 100	Return generated on owners’ investment

Note: Formulas may vary slightly depending on specific definitions used. Average balances are often used for balance sheet items in ratio calculations involving income statement figures.

The Evolving Role of the Accountant: From Scorekeeper to Strategic Partner

Historically, SMEs may have viewed their accountant primarily as someone who prepares year-end statements and handles tax compliance. However, in the face of increasing complexity and the need for strategic financial management, the role of the accountant or financial advisor is evolving.

SMEs struggling with financial literacy, lacking internal expertise, or simply constrained by time can greatly benefit from leveraging external professionals not just for compliance, but for strategic advice. A good accountant can:

Interpret Financial Data: Help owners understand what the numbers actually mean for their business.
Improve Systems: Advise on implementing better bookkeeping practices and accounting software.
Assist with Budgeting & Forecasting: Provide expertise in developing financial plans.
Offer Tax Planning Advice: Go beyond simple compliance to identify potential tax efficiencies.
Support Funding Applications: Assist in preparing financial information and narratives for lenders or investors.
Provide Strategic Insights: Act as a sounding board for financial decisions, offering objective analysis and advice based on their expertise and potentially broader industry knowledge.

Engaging with an accountant proactively throughout the year, rather than just at year-end, transforms the relationship from a transactional one focused on compliance to a strategic partnership focused on growth and sustainability. While cost is a factor, viewing professional financial advice as an investment in better decision-making and risk mitigation, rather than purely an overhead expense, is crucial for SMEs aiming to thrive.

Conclusion: Your Financials – Burden or Bedrock?

Financial statements are an unavoidable aspect of running a formal business in South Africa, mandated by law and required by SARS. However, their true potential extends far beyond compliance. For the SA SME navigating a landscape fraught with challenges, particularly around funding and economic volatility, financial statements offer a bedrock of objective data.

By embracing financial analysis – understanding trends, calculating and interpreting ratios, and comparing performance against plans – SMEs can gain crucial diagnostic insights. This understanding forms the foundation for crafting compelling financial narratives to unlock funding opportunities from various sources. Most importantly, integrating financial data into strategic planning, budgeting, KPI tracking, and decision-making transforms financials from a historical record into a dynamic tool for navigating the future.

The journey requires a shift in mindset, a commitment to financial literacy, and often, a strategic partnership with qualified financial professionals. Ultimately, the choice lies with the SME owner: will financial statements remain a dreaded compliance task, or will they become the bedrock upon which sustainable growth and resilience are built? The latter path offers a significantly greater chance of success in the demanding South African business environment.

Business & Asset Valuations

R@dney007 — Tue, 24 Sep 2024 16:12:56 +0000

The Importance of Business and Asset Valuation: What Every Business Owner Should Know

As a business owner, understanding the value of your business and its assets is essential, not just for knowing your company’s worth but also for planning, growth, and long-term strategy. Business valuation is more than just a number; it’s a comprehensive analysis that provides insight into your company’s financial health, its future potential, and the overall market environment. Here’s what valuation entails and why having your business and assets valued by a qualified, experienced accountant is a smart move.

What is Business Valuation?

Business valuation is the process of determining the economic value of a business or its assets. It typically involves a detailed examination of financial statements, market conditions, and various other factors to calculate what your business is truly worth. Valuations are often used for:

Mergers and acquisitions: When you’re looking to sell your business or acquire another, knowing the accurate value of each business is critical.
Raising capital: Investors want to know the value of your business to determine how much equity they’ll receive for their investment.
Succession planning: Whether you’re planning to retire, transfer ownership, or bring in new partners, a business valuation provides a roadmap for equitable transitions.
Tax purposes: Valuations may be needed for tax-related events such as estate planning, gifting, or business restructuring.
Litigation support: In cases of legal disputes, like shareholder disputes or divorce settlements, having an objective business valuation is necessary.

What is Asset Valuation?

In addition to valuing the business as a whole, asset valuation focuses on determining the value of specific assets within your business, such as real estate, equipment, intellectual property, and other tangible or intangible assets. Properly valuing these assets ensures that you have an accurate balance sheet and can make better decisions about the allocation and management of resources.

The Process of Valuation

The valuation process usually involves multiple steps, including:

Financial Analysis: Reviewing the company’s financial performance, including income statements, balance sheets, and cash flow.
Market Comparison: Comparing your business to similar companies within your industry to understand market value.
Risk Assessment: Identifying any risks associated with your business model or industry that may affect future performance.
Valuation Methods: Accountants often use various approaches, such as:
- The Income Approach, focusing on projected future earnings.
- The Market Approach, comparing the business to similar companies.
- The Asset-Based Approach, assessing the value of the business’s net assets.

Why Should You Use an Experienced Accountant for Valuation?

Hiring an experienced and qualified accountant to handle your business and asset valuations ensures that the process is thorough, accurate, and meets legal and industry standards. Some of the key benefits include:

Expert Insight: Accountants can provide a deep analysis of financial data, identifying trends and areas of potential growth or risk that may not be immediately obvious.
Objectivity: A third-party accountant can provide an unbiased view of your business’s value, which is crucial when dealing with buyers, investors, or partners.
Compliance: Valuations may need to meet specific regulations for tax reporting, legal purposes, or financial audits. An accountant ensures compliance with all necessary standards.
Strategic Planning: Beyond simply knowing your business’s value, an experienced accountant can offer guidance on how to enhance your company’s worth, improve financial performance, or optimize asset usage.

Benefits of Valuation for Business Owners

Better Decision-Making: Knowing the value of your business and assets empowers you to make informed decisions about expansion, investments, or potential sales.
Securing Financing: Accurate valuations provide banks or investors with the confidence they need to provide financing or investment.
Tax Efficiency: Asset valuations can help you structure your taxes in a way that minimizes liabilities and maximizes deductions.
Business Continuity: Whether you’re planning for retirement or transitioning the business to the next generation, having a clear understanding of your business’s value is key for smooth succession planning.
Increased Credibility: A well-executed valuation demonstrates professionalism and financial responsibility, which can enhance your business’s credibility with stakeholders, potential buyers, and partners.

Conclusion

Valuing your business and its assets isn’t just a financial exercise—it’s a crucial part of strategic planning. It provides business owners with essential insights for making smart decisions, securing investments, and ensuring long-term growth. By working with an experienced and qualified accountant, you can ensure that your business valuation is not only accurate but also serves as a foundation for your company’s future success.

Whether you’re preparing for a sale, seeking investment, or simply want to know your business’s true worth, having your company and its assets valued by a professional can provide clarity and confidence in your next steps.

TAX SEASON 2023 FOR INDIVIDUAL TAX PAYERS

R@dney007 — Thu, 22 Jun 2023 10:16:35 +0000

Filing Season 2023 for Individuals

What’s new?

Pre-population of ITR12 Third Party Data in preparation for the opening of Filing Season 2023: Please be advised that in preparation for the opening of the Personal Income Tax Filing Season in July 2023, between the period of 2 June 2023 until the opening of Filing Season, there is a possibility that the prepopulated data reflecting within your Personal Income Tax or Provisional Tax returns requested via eFiling, the SARS Mobi application or via a SARS Branch Office during this period, will pre-populate but may not be comprehensive until Filing Season is officially opened to the public.

Income tax return filing dates

Here are the dates and criteria for the 2023 Filing Season:

Individual taxpayers (non-provisional): 7 July 2023 @ 20:00 to 23 October 2023
Provisional taxpayers: 7 July 2023 @ 20:00 to 24 January 2024

What are the changes this year?

SARS has made the following updates for the upcoming Personal Income Tax (PIT) Filing Season:

Aligning the 40 Business Days Rule to the Filing Season End Date

Last year, when the rule was first introduced, those in the auto-assessment population were granted 40 business days from the issue date of the auto-assessment to revise their return if they needed to amend their auto-assessment.

This year, we are extending the 40 business days to coincide with the normal filing due date for non-provisional taxpayers, which is 23 October 2023. This will give those in the auto-assessment population more time to file a return if they wish to edit their auto-assessments.

Payment Due Dates

This year, the payment due date for non-provisional eFilers will be adjusted as follows:

For taxpayers who are not in the auto-assessment population, payment due date will be 30 days after a notice of assessment has been issued,
For taxpayers who are auto-assessed, payment due date will be 30 days post Filing Season 2023 closing date.

Statement of Assets and Liabilities

Provisional taxpayers with business interests are required to declare their assets and liabilities (based on cost) in their tax returns each year. Taxpayers who fall within this category, and with assets above R50 million, are required to declare specified assets at market values on their 2023 tax returns.

Foreign Income Disclosure

SARS introduced a Foreign Income container on the return for taxpayers who must declare worldwide foreign income, however it was noted that taxpayers who must declare income sourced from a foreign employer while working in South Africa and/or abroad do not have an appropriate source code to declare remuneration for foreign service rendered income. The following three new fields will now apply.

New field “Income received from foreign employment services not reflected on a South African IRP5/IT3(a) certificate, subject to tax outside RSA and the s10(1)(o)(ii) exemption does not apply”.
New field “Income received from foreign employment services not reflected on a South African IRP5/IT3(a) certificate, subject to tax outside RSA and the s10(1)(o)(i) exemption applies.”
New field “Income received from foreign employment services not reflected on a South African IRP5/IT3(a) certificate, subject to tax outside RSA and the s10(1)(o)(i) exemption does not apply.”.

Spouses Married in Community of Property Assessment

Taxpayers who are married in community of property are taxed on half of their interest, dividends, rental income, and capital gains. This Filing Season SARS has retrieved “Married in community of property” status from taxpayer’s previous declaration and collaborated with the Department of Home affairs to confirm marital status. Where the spouses are successfully matched and have interest investments, SARS will replicate the interest investment certificate on both spouses’ return where they will be taxed 50% upon assessment.

Section 93 Reduced Assessment

SARS has automated the process of requesting Reduced Assessment in terms of section 93 of the Tax Administration Act. The process will use a form called RRA01 where taxpayer will be able to complete it on e-Filing. This will enable efficiency and reduce costs for taxpayers.

Have you received an Auto Assessment?

Between 1 July and 7 July 2023, taxpayers will be notified by SMS or email if they were selected to receive an auto-assessment. Should you receive the SMS, the next step for you would be to review the auto-assessment on the SARS MobiApp or eFiling.

If you agree with the Auto-Assessment, you do not have to do anything.
If a refund is due, you can expect it within approximately seventy-two (72) hours, provided your banking details with SARS are correct.
If you owe SARS, please make the payment before the due date that is shown on your Notice of Assessment (ITA34) to avoid interest charged on outstanding debt.
You can make payment via eFiling or SARS MobiApp; alternatively see our payment options.
Do not agree with the Auto Assessment? Auto assessed taxpayers have until 23 October 2023 to amend and file their return on eFiling or the SARS MobiApp if they do not agree with the auto assessment received.

How is Auto Assessment different this year (2023) from last year (2022)?

Last year you had 40 days to file a return if you were not happy with your auto-assessment, but this year we are giving you until the due date of 23 October 2023. If an auto-assessment has been issued after 23 October 2023 the 40 business days will start on the date of the notice of the assessment.

For more information, see How does Auto-Assessment work.

Let us help you prepare for a smooth Filing Season

Only individuals who were Auto Assessed will receive the SMS or email. If you did not receive a notification from SARS that you were auto assessed; you must submit your Personal Income Tax Return (ITR12).

You can access the tax return via eFiling or the SARS MobiApp from 7 July 2023 at 20:00, complete it, and file it, using eFiling or the SARS MobiApp. Taxpayers who are unable to file their returns online must first book an appointment to visit a branch. The deadline to submit your tax return is 23 October 2023.

What to prepare before filing starts?

Make sure that you have received your IRP5/IT3(a) and other tax certificates like medical aid, retirement annuity fund, and any other third-party data relevant to determining your tax obligations.

If you have forgotten your password you can reset it online through the eFiling website by clicking on Forgot Password or Forgot Username.

Use our self-help online query system to retrieve your tax reference number and submit any required supporting documents. In addition, check and/or update your personal information such as banking details, address and contact details online on eFiling or the SARS MobiApp.

No need to call

Taxpayers, your tax matters are in better hands when you make use of eFiling or the SARS MobiApp. Register your profile now to ensure a smooth filing experience. No need to call us, you can register online or download the MobiApp on your phone or tablet. To make an appointment with SARS is now easier, you can click here to make an appointment, send an SMS to request a booking.

You can send us a query via SARS Online Query System (SOQS) if you have forgotten your tax reference number, to submit supporting material and more. The SARS Online Query System (SOQS) assists taxpayers who wish to raise queries with SARS without going into a SARS branch. To initiate a query, you will simply need to complete the online form by selecting a Query Type. For more information, see SARS Online Query System – External Guide.

SARS USSD Channel

You can now request specific Personal Income Tax related services by submitting a USSD string to SARS. The USSD channel activation involves you typing a string of characters which comprises of an asterisk (*), followed by a few digits and ending with a hashtag (#) and dialling.

The following services are available on this channel:

What’s my Tax number?
Request Account balance
Do I need to file a tax return?
Request an e-Booking appointment

Steps on how to request tax services via the SARS USSD Channel:

Step 1: Initiate USSD by dialing *134*7277#
Step 2: Select the service you require.
Step 3: Taxpayer Verification – SARS will request you to complete either your ID/Passport/Asylum Number
Step 4: Tax Resolution – Upon successful verification by SARS, a response will be displayed.

SARS SMS Channel

Taxpayers can request specific Personal Income Tax related services by sending an SMS to SARS on 47277. The following additional tax related services are offered to taxpayers via their mobile device. These services can be accessed with or without data/airtime:

Request an eBooking appointment
- Booking (Space) ID number/Passport number/ Asylum Seeker number
Confirmation request to determine whether to submit a (PIT) tax return
- File (Space) ID number/Passport number/ Asylum Seeker number
Request the issuing of the IT150 (Tax Registration Number)
- TRN (Space) ID number/Passport number/ Asylum Seeker number
Request Account related queries (balance statements) and/or provision of Statement of the Account (SOA)
- Balance (Space) ID number/Passport number/ Asylum Seeker number

For more details, see the Guide to SARS Mobile Tax Services or see our tutorial video on how to use the SMS services.

Need help?

Our online service Help you eFile is available – Help-You-eFile allows you, the taxpayer, to interact with a SARS agent while the agent shares the displayed view of your eFiling profile screen. This service allows the SARS agent to identify the problems you’re experiencing and to help you resolve these. You benefit by being able to call on the support and advice of our staff without having to visit a SARS branch. You can even ask a SARS agent to call you back.
The SARS YouTube channel – watch our helpful tutorial video on the SARS YouTube channel to provide detailed guidance on how to file.
If you have no other choice but to visit a SARS branch, ensure that you have booked your appointment before your visit.
You may also visit our Mobile Tax Units and pop-ups in the different regions, see the schedule here.
If you have forgotten your password you can reset it online through the eFiling website by clicking on Forgot Password or Forgot Username.
Not sure whether you must submit an Income Tax Return (ITR12)? Answer the simple questions on our Do you need to submit a return webpage.

Source :SARS Tax Season | South African Revenue Service (sars.gov.za)

If you need further assistance to file your taxes please get in contact with a tax professional – you can reach us at info@probizserv.co.za or contact us on 0823007954.

https://www.probizserv.co.za/blog ; https//www.probizserv.co.za/services ; https://www.probizserv.co.za/contact

How can bookkeeping services assist your business

R@dney007 — Sat, 10 Jun 2023 08:28:20 +0000

Bookkeeping services are important for any business regardless of size or industry

Here are some key reasons why bookkeeping is important:

Compliance: Accurate bookkeeping is necessary to comply with tax laws and regulations. A professional bookkeeper can ensure that all financial records are up-to-date and in compliance with applicable laws.
Financial planning: Accurate and timely bookkeeping is essential for effective financial planning. With a clear picture of financial records, business owners can make informed decisions about spending, investments, and other financial matters.
Fraud prevention: Bookkeeping can help prevent fraud by providing a clear audit trail of financial transactions. This can help detect and prevent fraudulent activities such as embezzlement, misappropriation of funds, and other financial crimes.
Better decision-making: Bookkeeping provides business owners with financial data that can be used to make informed decisions about future plans and investments.
Time-saving: Bookkeeping is a time-consuming task that requires attention to detail and organization. By outsourcing bookkeeping, business owners can save time and focus on growing their business.
Cost-effective: Outsourcing your bookkeeping to a professional bookkeeper can be a cost-effective alternative to hiring an in-house bookkeeper or managing bookkeeping tasks in-house.
Accurate financial reporting: Bookkeeping services ensure accurate financial reporting, including the preparation of financial statements such as income statements, balance sheets, and cash flow statements. These reports provide a comprehensive overview of a business’s financial health and performance, which is crucial for investors, lenders, and stakeholders.
Budgeting and forecasting: Bookkeeping data forms the foundation for budgeting and forecasting activities. By analyzing historical financial records, business owners can develop realistic budgets and forecast future revenue and expenses. This helps in setting financial goals, monitoring performance against targets, and making necessary adjustments to achieve desired outcomes.
Business valuation: Accurate bookkeeping is essential when valuing a business for various purposes, such as potential sale, mergers, acquisitions, or seeking investment. A well-maintained set of financial records helps in assessing the value of assets, liabilities, and overall financial worth, providing transparency and credibility to potential investors or buyers.
Audit and legal requirements: In the event of an audit or legal dispute, having proper bookkeeping records is crucial. It allows businesses to provide supporting documentation and evidence to auditors, tax authorities, or legal entities, ensuring compliance and avoiding penalties or legal consequences.
Strategic planning: Bookkeeping services can support strategic planning by providing financial insights and trends. Analysis of financial data helps identify areas of strength and weakness, assess profitability, and make informed decisions about resource allocation, product pricing, and market expansion strategies.
Business scalability: As businesses grow, their financial operations become more complex. Professional bookkeeping services can adapt to the changing needs of a growing business, ensuring scalability and maintaining accurate financial records as the business expands its operations, hires more employees, or enters new markets.
Financial analysis and insights: Bookkeeping services offer in-depth financial analysis that goes beyond basic record-keeping. Professional bookkeepers can interpret financial data, identify trends, and provide valuable insights into the financial health of the business. They can analyze key performance indicators, assess profitability, and highlight areas for improvement. This analysis helps business owners make data-driven decisions, implement strategies to enhance efficiency and profitability, and stay ahead in a dynamic business environment.
In conclusion, bookkeeping services are indispensable for businesses of all sizes and industries. They provide accurate financial records, ensure compliance with regulations, facilitate better decision-making, and help in strategic planning and business growth. Outsourcing bookkeeping tasks to professionals not only saves time and resources but also ensures the accuracy and reliability of financial data. By investing in reliable bookkeeping services, businesses can focus on their core activities, enhance financial management, and gain a competitive edge in the marketplace.

Also refer to our services page:

https://www.probizserv.co.za/services

useful link:

https://www.xero.com/za/try-now/accounting/xero-accounting-software/

Independent Review – Everything you need to know

R@dney007 — Thu, 25 May 2023 09:33:57 +0000

WHAT IS AN INDEPENDENT REVIEW?

A review is a limited assurance engagement where the practitioner performs primarily inquiry and analytical procedures to obtain sufficient appropriate evidence as the basis for a conclusion on the financial statements as a whole, expressed in accordance with the requirements of ISRE 2400(Revised).

WHEN IS AN INDEPENDENT REVIEW REQUIRED?

All companies that are not required to have audited financial statements must have their financial statements independently reviewed (with the exception of companies where all the shareholders are also directors and therefore are not required to obtain an audit or a review).

The Act requires public companies and state owned companies to have an audit. In addition, the Regulations, which provide for both activity and size criteria to determine whether or not companies require audited financial statements, require any company that falls within any of the following categories in any particular financial year to have its financial statements audited :

a) Any profit or non-profit company if, in the ordinary course of its primary activities, it holds assets in a fiduciary capacity for persons who are not related to the company, and the aggregate value of such assets held at any time during the financial year exceeds R5million

(b) Any non-profit company, if it was incorporated

(i) directly or indirectly by the state, an organ of state, a state-owned company, an international entity, a foreign state entity or a company; or

(ii) primarily to perform a statutory or regulatory function in terms of any legislation, or to carry out a public function at the direct or indirect initiation or direction of an organ of the state, a state-owned company, an international entity, or a foreign state entity, or for a purpose ancillary to any such function; or

(i) 350 or more; or

(ii) at least 100, but less than 350, if its annual financial statements for that year were internally compiled.

All companies that are not required to have audited financial statements must have their financial statements independently reviewed (with the exception of companies where all the share holders are also directors and therefore are not required to obtain an audit or a review)

HOW IS THE PUBLIC INTEREST SCORE CALCULATED?

The PI Score is calculated on a points basis, with points allocated as follows:

a) Number of employees (or average over a financial year, if this number varies from year to year) – 1 point per employee;
b) Third party liabilities – 1 point per R1 million (or portion of);
c) Turnover – 1 point per R1 million (or portion of); and
d) Number of shareholders – 1 point per shareholder (irrespective of how many shares they hold individually)

WHO CAN PERFORM AN INDEPENDENT REVIEW?

An Independent Review is a review engagement performed by a practitioner who was not involved in the preparation of the financial statement.

DIFFERENCE BETWEEN LEVEL OF ASSURANCE PROVIDED BY A REVIEW VS AN AUDIT

INCREASED DEMAND FOR INDEPENDENT REVIEWS

●Companies Act

●SME’s desire for increased credibility of financial statements

●SME’s demand for lower cost assurance services

●Group auditor demands where a component of a group is not considered to be a significant component where the group engagement team considers a review necessary pursuant to ISA 600

USES OF INDEPENDENT REVIEWS

An independent review engagement may be used to:

●Support a financing proposal presented to potential investors and financial institutions or an application for a government grant.

●Validate a need for partners to invest additional capital in the entity.

●Provide users, such as shareholders, with some assurance on the annual financial statements where an audit is no longer required.

●Help management understand, and take steps to meet, the evolving requirements of regulatory and business reporting.

●Help prepare the finance function of a growing company for a transition to mandatory audit.

●Obtain limited assurance with regard to the financial statements of small subsidiaries that are part of a group audit.

●Support internal reviews of the business by management, acting as an additional control.

●Less costly than an audit.

●More flexible and targeted engagement.

Source : SAACCOUNTING ACADEMY – WEBINAR https://accountingacademy.co.za/news

https://www.probizserv.co.za/contact

VAT REGISTRATION

R@dney007 — Fri, 05 May 2023 09:59:57 +0000

Who should register for VAT?

A person can only apply for vat registration if they are carrying on an enterprise. A “person” is defined in the VAT Act and includes, but is not limited to, an individual, company, partnership, trust fund and a municipality.

“Enterprise” is a defined term in the VAT Act. It includes any activity carried on continuously or regularly by any person in or partly in South Africa where goods or services are supplied to another person for a consideration, whether or not for profit. Anything done to start or terminate an enterprise is also included as conducting an enterprise for VAT purposes.

The activities or supplies of the following persons are specifically included in the definition of “enterprise”:

- Public authorities as notified by the Commissioner.

- Welfare organisations.

- Share block companies (subject to certain conditions).

- Implementing agency of a foreign donor funded project.

- Intermediaries and non-resident suppliers of electronic services.

The following are some examples of when you are not regarded as carrying on an “enterprise”:

- Making exempt supplies, for example, the supply of financial services, residential accommodation, public transport, etc. Refer to the VAT 404 Guide for Vendors for more detailed information in this regard.

- An employee earning a salary or wage from an employer (excluding an independent contractor). Note that a non-executive director of a company is considered to be an independent contractor and not an employee.

- Hobbies or any private recreational pursuits not conducted in the form of a business.

- Private occasional transactions, for example, the sale of domestic/household goods, personal effects or a private motor vehicle.

- Supplying “commercial accommodation” in circumstances where the total value of those supplies made or reasonably expected to be made does not exceed R120 000 in any consecutive period of 12 months.

It is compulsory for a person to register for VAT if the value of taxable supplies made or to be made, is in excess of R1million in any consecutive 12 month period.

Voluntary registration is possible under certain circumstances.

When must a person register for VAT?

A person may register for VAT if they are carrying on an enterprise in or partly in the Republic where goods or services are supplied for a consideration. It is compulsory for a person to register for VAT under the following circumstances:

- where the value of taxable supplies made in any consecutive 12 month period exceeded or is likely to exceed R1 million; or

- where in terms of a written contractual obligation, the value of taxable supplies to be made in a 12 month period will exceed R1 million.

Compulsory Registration

An application for a compulsory VAT registration must be made within 21 business days from the date the R1 million is or will be exceeded.

Non-resident suppliers of certain electronic services are also liable for compulsory VAT registration at the end of the month in which the total value of taxable supplies exceeds R1 million. An intermediary is also allowed to register and account for VAT on behalf of supplies made by the non-resident supplier of electronic services. For more detailed information see the VAT-Reg-02-G02 Guide on Foreign Suppliers of Electronic Services and the VAT Frequently Asked Questions for the Supplies of Electronic Services.

Voluntary Registration

A person may also choose to register voluntary for VAT if the value of taxable supplies made or to be made is less than R1 million but has, under certain circumstances, exceeded R50 000 in the past period of 12 months.

A voluntary registration may be applied for by the following persons or under the following circumstances, although the minimum registration threshold of R50 000 has not yet been made:

- Municipalities;

- Welfare Organisations;

- Acquisition of a business as a going concern;

- The person meets the requirements and conditions listed in General Notice R447 as published in Government Gazette No. 38836 dated 29 May 2015 (the Voluntary Registration Regulation); and

- The person carries on the specific nature of activity listed in General Notice R446 as Published in Government Gazette No. 38836 dated 29 May 2015 (the Nature of Activity Regulation).

Listed activities in the Nature of Activity Regulation include the following:

- Agriculture, Farming, Forestry and Fisheries

- Mining

- Ship and aircraft building

- Manufacture or assembly of plant, machinery, motor vehicles or locomotives

- Property development

- Infrastructure development

- Beneficiation

The requirements listed under the Voluntary Registration Regulation are as follows:

- Taxable supplies made for 1 month:
  - - Where taxable supplies have been made for only 1 month preceding the date of application, the value for that month must have exceeded R4 200;

- Taxable supplies made for 2 months or more:
  - - Where the average value of taxable supplies made in the months preceding the date of application, exceeded R4 200 per month;
  - - The average is calculated using a minimum of 2 months and a maximum of 11 months prior to date of application.

- Written contracts:
  - - Where taxable supplies exceeding R50 000 in the 12 months following the date of registration must be made;

- Expenditure:
  - - Expenses incurred or to be incurred for commencement or continuing an enterprise; or
  - - capital goods acquired in connection with commencement of the enterprise; and
  - - Payment or any extended payment agreement where:
      - as at registration application date, payment has exceeded R50 000; or
      - in any consecutive 12 month period commencing before and ending after registration application date, payment will exceed R50 000; or
      - in the 12 months following registration application date, payment will exceed R50 000
  - - Finance Agreement:
      - Financial agreement with a registered bank; or
      - Credit agreement with a credit provider as per National Credit Act; or
      - Agreement with a designated entity, public authority or other person who continuously or regularly provides finance; or
      - Financial agreement with a non-resident; and
      - The total repayment in the 12 months following registration application date must exceed R50 000

In addition, there are other general requirements that must also be met for a voluntary registration for VAT. Refer to the VAT 404 Guide for Vendors in this regard.

How does the VAT liability date work?

- Voluntary VAT registrations:
  - - The VAT liability date will be set according to the date of application. The backdating of a voluntary registration is not allowed. If you want to backdate your voluntary registration application, you must provide SARS with the necessary supporting documents to justify the backdating request.

- Compulsory VAT registrations:
  - - The SARS eFiling (RAV01) system only allows backdating up to 6 months from the date the compulsory registration threshold of R1 million was exceeded. If the backdating is more than 6 months from the date the compulsory registration threshold was exceeded, please make an appointment to visit a SARS branch with the necessary supporting documents such as financial statements, signed contracts or invoices issued, etc.

Please note: The VAT liability date must not be prior to 01 September 1991 and not more than 3 months in the future.

How to Register for VAT

The VAT Registration application must be made through one of the following channels:

- eFiling; or

- Make a virtual appointment via our eBooking system by selecting the following options:

- Appointment channel: Telephonic engagement or Video
  - - Reason category: Other
  - - Reason for appointment: VAT registration

It is important that you submit the correct documents with your VAT registration application. Failure to do so will result in a delay in processing the application. The prescribed supporting documents can be submitted through eFiling, SARS website online query system or walk-in channel, the latter is by appointment only. For more information, see the VAT-Reg-02-G01- Guide for Completion of the VAT Application.

Immediate allocation of a new VAT registration number upon application

Where no risk is identified, SARS will issue a VAT reference number immediately.

How to register for VAT on eFiling

Follow the easy steps below to register for VAT on eFiling:

Step 1

Create or logon to your eFiling profile

Step 2

Navigate to SARS Registered Details functionality:

- On the Individual portfolio, select Home to find the SARS Registered Details functionality on the left menu

- On the Tax Practitioner and Organisations eFiling portfolio, the SARS Registered Details functionality is under the Organisations menu tab

Step 3

Select Maintain SARS Registered Details on the left menu

Step 4

The Maintain SARS Registered Details screen will display. Select I Agree to confirm that you are authorised to perform maintenance functions of the registered details of the vendor.

Step 5

Select VAT under My tax products > Revenue on the left menu

Step 6

Select Add new product registration to register new or additional VAT branch registration

Step 7

Complete the following in the VAT container:

- Registered particulars, if not pre-populated

- Trading As name, where applicable

- Liability Date

- Select Business Activity Code
  - - The codes may be obtained in the VAT 403 Vendors and Employers Trade Classification Guide

- Select Farming Activity Code, if applicable
  - - Note:If you select a different business activity code after you have received the containers for Diesel concession, you will receive the following error: ‘Mark here if you derive farming income in addition to your main business activity income: If you select this indicator, the “Farming Activity Code” field will be mandatory.

- Select relevant registration option

- Value of taxable supplies

- Accounting basis

- Tax period

- The following fields if not pre-populated:
  - - Contact details
  - - Physical Address
  - - Postal Address

- Banking details

VAT vendors can also request and obtain a VAT Notice of Registration on eFiling – there are 2 options:

The short cut:
- Logon your eFiling profile; and
- Click on the Notice of Registration icon on the top right-hand side of the home screen; or
Follow these easy steps:
- Logon your eFiling profile;
- click SARS Registered details on the side menu;
- Select Notice of Registration; and
- Select VAT

Source – South African Revenue Services

For any further assistance on VAT registration please contact one of our tax specialist https://www.probizserv.co.za/https-www-probizserv-co-za-contact/

Small Business Corporation Taxation – Insights and Guidance from SARS

R@dney007 — Wed, 12 Apr 2023 09:31:12 +0000

How to comply as a Small Business?

Complying with your tax obligations as a small business has been made a lot easier over the past few years. Read below for more information:

If you are starting out and need to register as a company, you will have to contact the Company and Intellectual Property Commission (CIPC), formerly called CIPRO. Please note that Companies are first required to register with the (CIPC) offices before registering with SARS for an Income Tax reference number, click here for CIPC. Once a taxpayer registered with CIPC, SARS will automatically generate an Income Tax reference number. Taxpayer must then register on eFiling to transact electronically.

See Registering on eFiling and services available online.

How to obtain your Tax Clearance Information: As a Small, Micro or Medium Enterprise (SMME), at some point or another you will be required to provide / confirm / share your Tax Clearance information with another entity. This could be to apply for a tender, new contract, good standing or in respect of Foreign Investment.

Registering for Turnover Tax. Turnover tax is a simplified tax system for small businesses with a qualifying turnover of not more than R1 million per annum. It is a tax based on the taxable turnover of a business and is available to sole proprietors (individuals), partnerships, close corporations, companies and co-operatives. Turnover tax takes the place of VAT (in the instance that you have not decided to elect back into the VAT system), provisional tax, income tax, capital gains tax, secondary tax on companies (STC) and dividends tax. So qualifying businesses pay a single tax instead of various other taxes. It’s elective – so you choose whether to participate. For Tax Tables see below.

Registering your business for VAT

Registering for PAYE, UIF and SDL.

In the case where you are already registered as a company and you meet certain qualifying requirements, you may register as a small business corporation (SBC) in order to get additional tax incentives. One of the incentives for SBCs is a reduced corporate tax rate. Click here to see reduced tax rates for small businesses.

Entrepreneurs who want to start a business need to be aware of the tax obligations of running a business whether it is in the form of a legal entity or in a personal capacity. It is also important to note the various options with regard to reducing some of the administrative requirements to make tax compliance easier as well as the different tax incentives and rates that may apply in certain instances.

Once you have decided on the type of business entity that is to be established and it is a legal entity, you must register with the Companies and Intellectual Property Commission (CIPC). See their website at www.cipc.co.za.

The following legal entities are required to register at CIPC and as a taxpayer for corporate income tax purposes:

Listed public companies

Unlisted public companies

Private companies

Close corporations (Note that from 1 May 2011, no new close corporations will be registered)

Co‐operatives

Non-profit companies

State owned companies

Collective investment schemes

Other

In the case of starting a business that is not a legal entity, it can be done in the form of the following:

Sole proprietorship (taxed on profits in an individual capacity)

Partnership (note that each partner is taxed on their share of taxable profits in an individual capacity, as a partnership is not registered separately for income tax purposes)

If you are a close corporation, co-operative or a private company, you may qualify for certain tax incentives and preferential rates in terms of the small business corporation (SBC) incentive. Alternatively, if you are a natural person or a company and you meet specific requirements, you may qualify for the turnover tax system.

For information on the types of business you can establish and the tax implications for each one, click here.

Small Business Corporation Tax Table for years of assessment ending any date between 1 April 2023 and 31 March 2024:

Taxable Income (R)	Rate of Tax (R)
1 – 95 750	0% of taxable income
95 751 – 365 000	7% of taxable income above 95 750
365 001 – 550 000	18 848 + 21% of taxable income above 365 000
550 001 and above	57 698 + 27% of the amount above 550 000

Source: South African Revenue Services

For any assistance with you small business corporation tax please don’t hesitate to contact us for expert tax advice. Whatsapp 0823007954 , e-mail rodney@probizserv.co.za , https://www.probizserv.co.za/contact

Personal Income Tax

R@dney007 — Wed, 12 Apr 2023 09:01:37 +0000

What is it?

Income tax is the normal tax which is paid on your taxable income.

Examples of amounts an individual may receive, and from which taxable income is determined, include the following –

- Remuneration (income from employment), such as, salaries, wages, bonuses, overtime pay, taxable (fringe) benefits, allowances and certain lump sum benefits

- Profits or losses from a business or trade

- Income or profits arising from an individual being a beneficiary of a trust

- Director’s fees

- Investment income, such as interest and foreign dividends

- Rental profit or losses

- Income from royalties

- Annuities

- Pension income

- Certain capital gains

Who is it for?

You are liable to pay income tax if you earn more than:

For the 2023 year of assessment (1 March 2022 – 28 February 2023)

- R91 250 if you are younger than 65 years.

- If you are 65 years of age to below 75 years, the tax threshold (i.e. the amount above which income tax becomes payable) is R141 250.

- For taxpayers aged 75 years and older, this threshold is R157 900.

Structure of Tax Computation

Gross Income (S1)

Less

Exempt Income (s10)

Income

Less

DEDUCTIONS (S11)

Plus

Taxable Capital Gains (S26A)

Less

Prior Year Assessed Loss (s20/20A)

TAXABLE INCOME

Rates of Tax (s5)

Less

Rebates S6 etc)

Income (Normal) Tax payable.

What steps must I take to ensure compliance?

Step 1: You must register for income tax

If you earn taxable income which is above the tax threshold (see above), you must register as a taxpayer with SARS.

The various options to register can be viewed on How do I register for tax. All additional tax type registration can be performed from eFiling without having to visit a branch again. You can register once for all different tax types using the client information system.

Step 2: You must submit a return

If you are registered for income tax, you will be required to submit an annual income tax return to SARS based on the Gazette. See the Tax Tables.
The year of assessment (commonly referred to as a “tax year”) runs from 1 March to 28 February. Every year, SARS announces its Tax Season, a period during which you are required to complete and submit your annual income tax return. The income tax return which should be completed by individuals is known as the ITR12 form.

If you don’t submit your income tax return on time, you may be liable for penalties.

How should it be submitted?

Online: The easiest and quickest way to file a tax return is online, by making use of SARS eFiling or the MobiApp. You must, however, first register for eFiling on the SARS eFiling website or using the MobiApp.

We have a page where we explain to you in detail how to register for eFiling. Once registered, you can complete the online form to create your return.

Note that you will start by completing the first page of the form which contains several questions regarding the nature of your tax affairs (referred to as a return “wizard”). Completion of this part will automatically tailor the tax return to your specific tax requirements.

In a branch: Tax returns can be submitted at a SARS branch office by making an appointment. To find your nearest branch visit our branch locator.

Auto-assessment

SARS will assess a significant number of taxpayers automatically. These will be original assessments based on an estimate, and will be based on third-party information readily available to SARS. The information may be received from multiple institutions such as banks, fund administrators, insurers, medical aid schemes and employers. An individual who receives an estimated assessment from SARS has 40 business days from the date of the assessment to submit his or her original return if he or she does not agree with the assessment raised by SARS.

An individual who is auto-assessed, will be notified by short message system (SMS) – so there will be no need for the individual to call SARS or to visit a branch. The SMS will direct the individual to eFiling or the SARS MobiApp to view the Notice of Assessment if he or she is an eFiler. If the individual is not registered for eFiling, an SMS will be sent communicating the summary of assessment results and, in addition, the comprehensive Notice of Assessment will be sent via mail.

An individual who disagrees with the estimated assessment, will be able to request SARS to make an additional or reduced assessment, by submitting an original return with relevant details within 40 business days from the date of assessment.

An individual who is unable to submit an original return within 40 business days after the assessment was made, may request an extension to file the return. SARS may extend the period to submit if SARS receives the request for extension, together with reasonable grounds for requesting the extension, before the expiry of the 40 business days.

A request for extension that is received after 40 business days from the date of the estimated assessment, may only be granted if –

- the individual’s request is submitted to SARS within 21 business days after the expiry of the 40 business days, and outlines reasonable grounds for not requesting the extension in time; or

- the individual’s request is submitted to SARS within three years after the expiry of the 40 business days, and outlines exceptional circumstances for not requesting an extension in time.

The period of any extension that is granted by SARS is within SARS’s discretion, but may not exceed a period of 40 business days, or the date that the original assessment prescribes, whichever is longer.

An individual who has not been auto-assessed, has not been selected to participate in the auto-assessment programme and, if required to file a return, must proceed to do so.

A business day is any day that is not a Saturday, Sunday or public holiday.

Top Tip:

When completing your return, you will require the following documentation in order to verify the existing, pre-populated information that appears in the return, as well as to complete any remaining portions:

IRP5: This is the employees’ tax certificate your employer issues to you.

Certificates you received for local interest income earned.

Any other documentation relating to income received or accrued, such as remuneration that has not been reported to SARS by your employer, or business or investment income, etc.

Details of medical expenses paid and medical scheme contributions made.

The relevant certificates reflecting your retirement annuity fund contributions made.

A logbook and other documents in support of business travel expenses (if the travel allowance is part of your remuneration or if you have the right of use of a company car taxable benefit).

Any other documentation relating to the allowable deductions you wish to claim.

For any assistance with your tax returns please don’t hesitate to contact us – Whatsapp 082 300 7954 , Email rodney@probizserv.co.za

Services

https://www.probizserv.co.za/2023/04/12/small-business-corporation-tax/

https://www.sars.gov.za/types-of-tax/personal-income-tax/

Importance of having a professionally compiled business plan

R@dney007 — Tue, 11 Apr 2023 13:02:20 +0000

A professionally compiled business plan is an essential tool for any business, whether it is a new startup or an established enterprise. It serves as a roadmap for your business and outlines your goals, strategies, and tactics for achieving success. A well-crafted business plan is not only important for securing financing but also for managing your business effectively. In this article, we will discuss the importance of having a professionally compiled business plan.

Provides a clear direction

One of the most significant benefits of having a professionally compiled business plan is that it provides a clear direction for your business. It outlines your mission, vision, and goals and helps you to prioritize your activities. With a business plan, you can focus on the most important tasks and allocate resources more effectively. It also helps you to make informed decisions, as you have a clear understanding of your business’s objectives and the steps required to achieve them.
Attracts financing

It is critical for securing financing. Lenders, investors, and other stakeholders require a well-documented business plan before they will consider providing financial support. A comprehensive business plan that outlines your company’s potential for success, the strategies for achieving that success, and the financial projections for the future is essential for securing funding. Without a professionally compiled business plan, your chances of securing financing are greatly diminished.
Identifies potential roadblocks

It can also help you to identify potential roadblocks before they occur. It allows you to assess the risks and challenges that your business may face and develop strategies for mitigating them. By identifying potential roadblocks, you can take proactive steps to address them and minimize their impact on your business.
Assists with resource allocation

A well-crafted business plan also helps you to allocate resources more effectively. It allows you to determine the resources you need to achieve your goals and prioritize them accordingly. This ensures that you are making the most of your available resources and not wasting time and money on activities that are not aligned with your business goals.
Facilitates communication

It also facilitates communication within your organization. It provides a common framework for everyone to work from and ensures that everyone is on the same page. It also ensures that your team understands your business goals and the strategies for achieving them. This can lead to increased collaboration and productivity, as everyone is working towards the same objectives.
Provides a basis for performance monitoring

Finally, a professionally compiled plan provides a basis for performance monitoring. It allows you to set measurable goals and track progress towards achieving them. This helps you to identify areas where you may need to make adjustments and ensure that you are on track to meet your business objectives.

It therefore :

1. Helps clarify your vision and strategy: A well-written business plan helps you clarify your business idea, define your goals, and develop a strategy for achieving them. It forces you to think critically about your product or service, target market, competition, marketing and sales strategies, financial projections, and more.

1. Attracts investors: A solid business plan can help you secure funding from investors or lenders by demonstrating that you have a clear vision, a viable business model, and a plan for generating revenue and profits. Investors want to see that you have done your homework and are serious about your business idea.

1. Guides decision-making: A business plan is a living document that can help you stay on track and make informed decisions as your business grows and evolves. It can help you assess the feasibility of new projects, evaluate potential risks and opportunities, and adjust your strategy as needed.

1. Provides a roadmap for growth: A business plan can serve as a roadmap for your company’s growth and expansion. It can help you identify key milestones and benchmarks, set realistic goals, and measure progress over time.

Improves your chances of success: Overall, having a professionally compiled business plan can increase your chances of success as an entrepreneur. It provides a framework for success and helps you stay focused on your goals, track your progress, and make informed decisions along the way.

In conclusion, a professionally compiled business plan is essential for any business. It provides a clear direction for your business, attracts financing, identifies potential roadblocks, assists with resource allocation, facilitates communication, and provides a basis for performance monitoring. A well-crafted business plan is a critical tool for managing your business effectively and achieving long-term success.

Probizserv can assist in creating a solid professional-looking business plans that can be easily shared with investors, lenders, or other stakeholders through a professional presentation.

We will also provide you with a one page summary of the plan which includes all the key points and highlights that you can pitch to your investors.

Get in touch with us today to setup a free consultation

www.probizserv.co.za/contact

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What are some of the benefits of outsourcing your payroll function to a professional accountant

R@dney007 — Wed, 01 Feb 2023 17:16:56 +0000

Outsourcing the payroll function to a professional accountant can bring numerous advantages to small business owners. Let’s explore these benefits in more detail:

Time-saving: Processing can be a time-consuming and intricate task, particularly for small business owners who have limited resources. By outsourcing the administration of your wages & salaries to a professional accountant, business owners can free up valuable time that can be allocated to other critical areas of their business. This increased focus on core operations can lead to enhanced productivity and growth.
Accuracy: Professional accountants possess the necessary expertise and experience to ensure that all transactions are processed accurately and efficiently. They are well-versed in handling complex calculations, tax deductions, and employee benefits. By entrusting this function to a professional, the risk of errors and penalties associated with incorrect processing is significantly reduced.
Compliance: Staying up-to-date with constantly changing tax laws and regulations can be challenging for small business owners. However, professional accountants make it their priority to remain well-informed about employee taxes, deductions, and other payroll-related compliance requirements. Through outsourcing the administration function of your wages & salaries, small business owners can rest assured that their payroll function is in full compliance with applicable laws and that all necessary submissions, such as employee taxes, UIF (Unemployment Insurance Fund), and SDL (Skills Development Levy), are diligently and punctually handled.
Cost-effectiveness: It can be a cost-effective alternative to hiring an in-house specialist or managing payroll internally. Hiring a dedicated employee often entails significant costs, including salary, benefits, and training expenses. In contrast, outsourcing allows small business owners to leverage the expertise of a professional accountant without the additional overhead costs.
Peace of mind: Entrusting your wages & salaries function to a professional accountant offers small business owners peace of mind. They can be confident that this function is being handled competently and accurately. This reduces the risk of errors, penalties from tax authorities such as SARS (South African Revenue Service), and other issues like audits. Knowing that payroll responsibilities are in capable hands enables business owners to focus on their core competencies and overall business growth.
Access to expertise: Through outsourcing the administration of your wages & salaries to a professional accountant, small business owners gain access to a wealth of expertise and support that may not be available in-house. Professional accountants possess in-depth knowledge of financial reporting, taxation, and payroll best practices. This expertise can be leveraged to improve financial reporting accuracy, enhance decision-making processes, and provide valuable insights for business development.
Scalability: As small businesses grow and expand, their needs may become more complex. Outsourcing the administration of your wages to a professional accountant provides scalability. Professional accountants have the capacity to handle an increasing volume of transactions, adapt to changing employee numbers, and accommodate evolving payroll requirements. This ensures that payroll processes remain efficient and accurate, even during periods of growth.
Confidentiality and Data Security: Professional accountants understand the importance of maintaining confidentiality and safeguarding sensitive information. They have robust data security measures in place to protect data from unauthorized access, breaches, or loss. Through outsourcing their payroll function, small business owners can benefit from the expertise of accountants who prioritize data privacy and implement industry-standard security protocols, reducing the risk of data breaches and maintaining the trust of their employees.

In conclusion, outsourcing your payroll to a professional accountant offers numerous benefits to small business owners, including time-saving, accuracy, compliance, cost-effectiveness, peace of mind, and access to expertise. These advantages empower small business owners to prioritize their core operations, streamline processes, and focus on growing their business. By entrusting all of these responsibilities to professionals, small business owners can achieve greater efficiency and success in their overall business endeavors.

Useful link

https://www.simplepay.co.za/

https://www.probizserv.co.za/blog

For assistance with your payroll function, contact us today 082 300 7954

https://www.probizserv.co.za/services

https://www.probizserv.co.za/contact

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What are some of the benefits of outsourcing your payroll function to a professional accountant

Outsourcing the payroll function to a professional accountant can bring numerous advantages to small business owners. Let’s explore these benefits in more detail:

For assistance with your payroll function, contact us today 082 300 7954