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Don’t Be Tempted To Cancel Your Insurance Cover

These may still be difficult economic times, but with criminals targeting smaller businesses, cancelling your insurance policy may not be the wisest move – especially when there are ways to reduce your premiums.

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With armed robberies rising 41% last year and the country still struggling to emerge from the recession, many business owners are faced with the dilemma of cutting costs on the one hand,while continuing to insure their business against crime on the other. Doing away with insurance is not such a good idea, especially when 70% of all armed robberies target small businesses, according to the police.

Business Against Crime and the police are piloting two interventions – one in Tembisa, the other in central Johannesburg. They are quizzing business owners about how they handle their cash and what security they have in place, the idea being to provide these businesses with security tips. But it’s not enough to rely solely on their help.

A study by small business research company SBP, released in July last year, found that half of all South African business owners surveyed don’t have insurance to cover a burglary or robbery.At the same time, stats provided by Indwe Risk Services reveal that the number of clients hit by armed robberies increased by nearly 100% from 2007 to 2008.

Identify Risks

However, in recent months most of Indwe Risk Services’ clients have chosen to cut cover for things like cash, laptops and business interruption, according to the firm. But the advice from Indwe Risk Service’s Peter Olyott is that before you decide to cut your premiums, ask yourself which risk if it ever were to occur, could close your business down or ruin you financially.

Olyott advises business owners to insure against loss or damage to their own vehicles, theft of their assets and loss of money. He also recommends looking at practical ways of reducing insurance spend by reviewing the insured values on equipment, stock and vehicles.

Shop around

Another way to cut costs is to shop around. Opting to go with a direct insurer is also an option, especially as they claim to offer more affordable cover. Traditional insurance firms,however, often argue that direct insurance companies offer boxed products which don’t cater to a business’s specific needs.

But Ernst Gouws, CE of Outsurance, says that direct insurers are more modern in their approach and so provide more flexible offerings than traditional brokerages. In his view it’s also not good enough to simply ask your broker to shop around for you, because broker commissions make up 15% of your premium.

Gouws says one way of cutting the cost of your premiums is to consider which risks you are willing to take. His suggestion is to take out insurance on items such as your company vehicles and trucks, as well as items like laptops, tools and equipment that are most likely to be stolen in the event of a robbery or burglary. He recommends lower premiums and a high excess on office contents or non-moveable fixtures.

“This way you self-insure these goods against the unlikely event of them being stolen, but you still have proper insurance for worst-case scenarios such as your whole office or factory burning down”.

Jon Jon Smit, sales director for CIB Insurance, recommends some simple steps to reducing your premiums. These include ensuring your fire-fighting equipment is serviced, making sure your housekeeping is neat and tidy, taking the necessary security precautions like having two people present at opening and closing times, doing regular stock takes to ensure stock levels are accurate and switching off high-voltage electronic equipment after hours to avoid electrical fires.

Stephen Timm is a freelance writer at Entrepreneur Magazine.

Tax

7 Direct And Indirect Taxes You Should Consider Before Registering Your Business

Tax planning is critical for us all more so for the success of your newly registered entity.

Kenlin Stride

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If your business has been registered, guess what in the eyes of the law your business is now a legal entity, congratulations. What does this mean? Well this means your business is a distinct legal entity separate from you in the eyes of the law, this means your business can now enter into contracts to purchase assets, utilise debt instruments and hire staff amongst other things. This unfortunately also means your business is subject to tax compliance. Let me try and give you a snapshot of what taxes to be aware of as a business owner however not all will automatically be applicable to your business.

1. Income Tax

Income tax is one of the state’s main sources of revenue and is levied on taxable income determined in terms of the Income Tax Act. All businesses must be registered for Income Tax. It is illegal not to be registered for Income Tax if you have a business.

2. Provisional Tax

The payment of provisional tax is to assist taxpayers in meeting their tax liabilities by way of installments out of their taxable income. Income tax is only paid once the full 12 months of trading is complete. It would be impractical to expect taxpayers to pay one large lump sum of income tax to SARS. Companies automatically fall into the provisional tax system.

Related: Tax Basics For Business Owners

3. Small Business Corporations Tax

SBC Tax was introduced as a tax relief measure for small business. SBC Tax will not be calculated on the flat 28% of taxable income. Dependent on your annual taxable income, you will be liable at the percentages in the table.

4. Pay As You Earn

Employees’ tax refers to the tax required to be deducted by an employer from an employee’s remuneration (salary) paid. The process of deducting or withholding tax from remuneration as it is earned by an employee is commonly referred to as PAYE.

5. Value Added Tax

This is an indirect tax levied on the ‘sale’ and ‘purchase’ of goods and services. This tax is not compulsory unless your turnover has exceeded R 1 000 000 mark however you choose to register voluntarily if it makes sense for your business strategy.

Related: How to Reduce Your Taxable Income

6. Unemployment Insurance Fund

UIF contributions are compulsory for all employees working more than 24 hours a month. The contributions are paid to the Department of Labour (DOL), or can be included in the SARS payment of PAYE on the EMP201

7. Workman’s Compensation

An employer must register with the Commissioner within seven days after the day on which he employs his first employee, (this includes the Director or Owner of the company)

You might be thinking tax compliance, what’s the big deal? I’ve been doing that most of my adult life, well personal tax is very different to business tax. As the director of your newly registered business it is assumed that you have done the research as to what laws to comply with as a business owner. In reality however the thrill of having a business overshadows the mundane compliance elements that go hand in hand when running a business. Let’s face it as much as your business is now a legal entity your business won’t do the research and comply with the necessary taxes on its own that responsibility lies with the director and when I say director I mean you.

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Tax

Tax Refunds – What You Need To Know

You are able to object/dispute any SARS decision not to release the refund on efiling or through your tax practitioner.

Maselaelo Mphela

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Most taxpayers are not aware of the requirements for a tax refund to be facilitated and SARS very often will delay paying out the refund. In this article, we will look at the requirements taxpayers need to be aware of and the Tax Ombud’s report on the investigation into alleged delayed payment of refunds as a systemic and emerging issue in terms of section 16 (1) (b) of The Tax Administration Act No. 28 of 2011 (TAA).

What you need to know as a taxpayer:

  • The tax refund must be claimed within 5 years from date of submission of the return.
  • SARS has the right to withhold the refund as per section 190 (2) of TAA: “SARS need not authorise a refund as referred to in subsection (1) until such time that a verification, inspection or audit of the refund in accordance with Chapter 5 has been finalised.”
  • Authorisation of payment of refund done once SARS is satisfied with the acceptable security provided by the taxpayer in terms of section 190 (3) of TAA: “SARS must authorise the payment of a refund before the finalisation of the verification, inspection or audit if security in a form acceptable to a senior SARS official is provided by the taxpayer.”
  • As a taxpayer, you need to ensure that you verify your banking details with SARS and that there are no outstanding returns in order for your refund not to be delayed.
  • Any decision not to refund by SARS is subject to an objection and appeal by the taxpayer in terms of section 190 (6) of TAA.
  • Refunds less than R100 are not refunded but carried forward to the next tax period.
  • To view the status of your refund you can use the Refund Dashboard on efiling under the ‘Returns History’ tab for the tax period in question or contact the SARS call centre.
  • Interest starts accruing from 21 business days from the date on which the refund became due, i.e. verification/audit outcome finalised.

Related: Tax Basics For Business Owners

Tax Ombud’s Report

The Tax Ombud’s report identified various mechanisms used by SARS to defer or delay the payment of refunds due:

  • SARS failing to link submitted supporting documents at a SARS branch to the main file.
  • The use of special stoppers on taxpayers’ accounts and the delay in lifting the stoppers, e.g. being required to verify banking details in person at a SARS branch. Even after the verification is done, there is still a lengthy delay in paying the refund.
  • Using the filing of new returns as an excuse to block refunds. The system blocks already verified refunds the moment a subsequent return is submitted by the taxpayer.
  • Withholding of refunds for one period while an audit/verification is in progress on another period. This is contrary to section 190 of the TAA.
  • The use of historic returns suddenly reflecting as outstanding but these have never been shown as outstanding on the Tax Clearance Certificate or the Statement of Account.
  • The raising of assessments and passing of journals to absorb credits on taxpayers’ accounts, i.e. overpayments. In doing so, SARS creates fictious tax liabilities instead of making a decision on the refund.
  • Requesting further information during the audit to delay finalisation, thus delaying the time frame from when the interest accrues.
  • No turnaround time for assessments successfully disputed.
  • Obstacles regarding diesel refunds.
  • Raising of assessments prematurely before the 21 days to submit the supporting documents
  • Refunds for periods that have been verified automatically set-off against bad debts on other periods not withstanding a request for suspension or where there is the suspension of payment. SARS may not instate any collection steps from date of submission of request for suspension of payment until 10 days after decision to not grant the request has been communicated to the taxpayer in terms of section 164 (6).

You are able to object/dispute any SARS decision not to release the refund on efiling or through your tax practitioner.

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Company Posts

Reimagine The Use Of Technology

The phenomenon of ‘big data’ is rapidly catching up with the world of tax.

PwC

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As tax professionals we live in a new reality, fueled by the blinding pace of change. The digital revolution is here. Reimagine the future of the tax function through the lens of analytics.

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