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1GIANTleap’s Start-up Programme In Full Swing

“South Africa’s next tech hero” to be revealed during final pitch event on August 16.

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Ntando Shabalala
Ntando Shabalala

Ntando Shabalala

1GIANTleap’s start-up programme is in full swing, with only two more weeks to go. On Wednesday, August 16, the final event takes place in Johannesburg, hosted by Edge Growth at the stunning Exclusive Books in Hyde Park. During this event, the start-ups will pitch their businesses to a judging panel of successful entrepreneurs, specialists and investors.

Amongst the panelists are Llew Claasen (Partner at Newtown Partners), Clive Butkow (CEO at Kalon Venture Partners), Professor Barry Dwolatzky (Founder at Tshimologong) and Stephen Newton (ex-head of Google). The event will be attended by many respected players in the tech, start-up and investment space. The top two winners may have great prizes to look forward to.

Related: 9 Answers You Need About Yourself Before Starting Your Own Business

The current “South Africa’s next tech hero” programme was launched on June 8 in Johannesburg. Entrepreneurs from both Johannesburg and Cape Town were invited to pitch “a tech idea that will disrupt the African continent”. After a rigorous selection process, both on and offline, the eight entrepreneurs, the “Tech Heroes”, were cherry-picked for their promising business acumen, resilient entrepreneurial spirit and savvy technical insight.

Amongst the Tech Heroes are: Alex Gabriels and Jade Venter from Spritzed: “The Airbnb for office space”, Patrick Machekera from Ispani: “A brand activation agency focused on township communities”, Aubrey Nyaguse from Skills Gorilla: “A talent matchmaking platform”, Anthony Bruce from Flippen Clever: “A textbook rental service for students”, Tannon Balanco from Bazinga Services: “On demand transportation services”, Thomas Hart from Rover: “A personalised travel platform” and Ntando Shabalala from Graft House: “Tinder for job seekers”.

The purpose of the programme is for the startups to take their wild idea to a validated business model, with their prototype created and their first customers onboarded. The focus is on the lean and agile: How to onboard your customers, which can usually take over a year, in the space of just 12 weeks while not spending any money?

1GIANTleap has a secret recipe for this: It offers a combination of weekly Bootcamps by our mentors who are highly successful entrepreneurs and investors, field trips to partner organisations such as Facebook Africa and IBM Research, weekly one-on-one mentorship by both business and tech experts as well as product development.

While incubators all over the world are generally playing a ‘numbers game’, 1GIANTleap takes the opposite approach: A human-centered approach.

“The word ‘business incubator’ suggests a nurturing approach to growing start-ups, but it’s still quite rare to run a business in a nurturing way. 1GIANTleap is a “conscious incubator”; our philosophy is to focus on building people, so that their businesses will be built. We do this by providing an opportunity to get up close and personal with successful entrepreneurs and investors, who – besides sharing their entrepreneurial insights and achievements – share their mistakes and personal struggles in an honest way. This human-centered approach creates an open environment for people to connect and learn, and that’s where the magic happens,” says 1GIANTleap Head Moniek van Erven.

Related: What Business Should You Start In Africa?

Moniek van Erven continues to explain: “1GIANTleap aims to create the job of the future for Africa; those that are still relevant in say 10 or 20 years as they haven’t been made redundant by automation. We believe that technology is the answer to this.”

1GIANTleap’s technology partner VSpace adds to this: “We support the entrepreneurs with building quick and cost-effective tech products that they can use to get feedback from potential customers. Creativity and speed are key in this process, as we often offer an unusual way of testing these solutions on their customers,” says Vinu Nair, CEO at VSpace.

1GIANTleap’s unconventional approach is further emphasized by its choice of Bootcamp topics: Where else could you learn about “mental health for start-up founders” from an innovation expert? Or how to “Use Artificial Intelligence to boost your business” from IBM research experts?

As one of our Tech Heroes so aptly put it: “Bootcamps are intense, fast and without fluff.”

Our list of mentors, just to name a few, includes Justin Drennan (Founder at Parcel Ninja), Davis Cook (CEO at RIIS), Gavin Symanowitz (Founder at Feedback Rocket), Matthew Barclay (MD at Meltwater Africa) and Llew Claasen (Partner at Newtown Partners).

“We’ve gathered a whole lot of great minds within this program who are genuinely motivated to help the Tech Heroes to succeed. All that the Tech Heroes need to do is to tap into that knowledge; to use that brain power to their advantage. Our mentors had to find out everything they know today by trial and error: Our Tech Heroes can save themselves a lot of time by learning from the mentors’ mistakes and insights,” says van Erven.

Tech Hero Patrick Machekera, Founder at Ispani, has this to say about the mentors: “The mentors are definitively a highlight for me. All of them are brilliant and non-conventional. I had originally thought that it would just be a quick meet and greet because they are such busy and successful entrepreneurs, but they truly took an interest in me as a startup entrepreneur, making an effort to fully understand my business and my purpose and, ultimately, connect me to the right people to roll out my business on a large scale!”

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Entrepreneur Today

3 Stealthy Tax Hikes Payroll Managers And Employees Need To Take Note Of

By Rob Cooper, tax expert at Sage, and chairman of the Payroll Authors Group of South Africa

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“Dammed if you do and dammed if you don’t.” 

The adage summarises the difficult decisions government and the Finance Minister faced when balancing the country’s books, rescuing state-owned enterprises, and reviving the growth of our economy. Given the economic pressure that most taxpayers are facing, government ideally needed to achieve all of that without direct increases to personal income tax in the most recent Budget Speech.

Personal income tax has comprised at least a third of South Africa’s total tax revenue in recent tax years, despite growing unemployment. The 2019 Budget, presented in February, forecasts that personal income tax will account for nearly 39% of tax collected during the upcoming (2019/20) tax year. Given that we are in an election year and that the tax base is fragile, it’s not surprising that the Finance Minister and the National Treasury avoided direct increases to the statutory tax tables used to calculate PAYE for employees in the budget.

Nonetheless, government has made inflation work in its favour to impose some tax increases by stealth. Here are three ways government is raising more revenue without direct tax increases:

1. Bracket creep

The statutory tax tables used by payrolls and employers have not been changed for 2019/20, nor have the brackets been adjusted for inflation. This effectively amounts to an indirect tax increase that will yield a revenue saving of approximately R12.8 billion for government’s coffers.

It is not unusual for government to use ‘bracket creep’ to effectively raise more revenue. But unlike previous tax years, even low- and middle-income earners are not getting much relief. Rebates and the tax threshold are being increased by small amounts to allow some relief, but many people this year will feel the pain as inflationary salary increases push them into a higher tax bracket.

2. Medical aid credit not adjusted for inflation 

As proposed in the 2018 Budget, the Finance Minister did not apply an inflationary increase to the Medical Tax Credit, which allowed him to raise an extra R1 billion in revenue for the year. Surprisingly, these funds will be allocated to general tax revenue rather than ring-fenced for healthcare. In previous tax years, revenue generated from below-inflation increases on medical scheme credits was used to fund National Health Insurance (NHI) pilot projects.

There is still no clarity on how the NHI is going to be funded except for a general statement that the funding model is a problem for the National Treasury to solve, and that the principles of cross-subsidisation will apply. One wonders if any real progress will be made soon, given the fiscal constraints government faces.

3. Business travel deduction left untouched

The Budget leaves the per-kilometre cost rates used to determine tax deductions for business travel untouched. By not increasing travel rates to account for inflation, government effectively increases income tax collection at the cost of the taxpayer. This will be a blow for people who need to claim from their employers for business travel in their personal vehicles. This change has slipped through largely unnoticed and the budget does not provide numbers for the expected increase in tax revenue.

Closing words

Amid political turmoil and uncertainty, the Finance Minister presented a balanced budget for 2019/20 that offers hope for the future along with some tough love. With government taking steps to accelerate economic growth and improve revenue collection, we should hopefully see a steady improvement in government finances, which will translate into less pressure on the taxpayer in future years.

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Entrepreneur Today

SMEs: Staying On The Right Side Of The Taxman

Remaining SARS compliant can be a constant challenge for small- to medium-enterprises (SMEs), especially when they are trying to focus on growing their businesses and streamlining their operations.

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EasyBiz Managing Director, Gary Epstein, says submitting taxes can be a seamless process that does not have to take up more time than is necessary. “If business owners understand what is required of them and they put a few processes into place to deal with their tax submissions properly, their lives will be so much easier.”

What are the top three considerations for SMEs when submitting tax returns?

“Firstly,” says Epstein, “SARS returns must be accurate and submitted in terms of the relevant Act. Secondly, returns should be submitted and paid on time to avoid unnecessary penalties and interest, and thirdly, business owners must follow up on queries issued by SARS. “Do not ignore these queries, act on them as soon as possible”.

What are the major SARS submission deadlines for SMEs?

Epstein points out that small business owners need to adhere to various tax deadlines, each with their own particular dates for submission. “It is important that business owners diarise the dates (and set advance reminders for themselves) and/or enlist the services of an accountant or financial adviser to help them keep abreast of requirements.”

Value-added tax (VAT)

VAT payments need to be submitted in the VAT period allocated to the business, according to various categories and ending on the last day of a calendar month. This may mean making payments once a month, once every two months, once every six months or annually, depending on the category.

Provisional taxes

Provisional tax should be submitted at the end of August (first provisional) and at the end of February (second provisional) – for February year-end companies.

Employee taxes

In addition to submitting an annual reconciliation (EMP501) for the period 1 March to end of February for Pay-As-You-Earn (PAYE), Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF), employee tax, in the form of an EMP201 return, needs to be submitted by the seventh of every month.

When can SMEs get extensions and is it worth it?

Epstein says SMEs can apply for various extensions, but these are subject to the Income Tax Act and Tax Administration Act.

“It is best for SMEs to consult their tax professionals to get advice regarding extensions for their businesses.”

What is SARS not flexible about?

SARS is not flexible when it comes to late returns and late payments.

“I cannot stress enough how important it is for SME owners to ensure their tax returns are submitted on time. In this way, they will avoid the inconvenience and expense of additional fines and interest,” notes Epstein.

What skills do SMEs need in their organisations to be able to submit to SARS efficiently?

Business owners often don’t have the time or expertise to deal with tax submissions throughout the year. If the business cannot afford to employ a full-time accountant or financial services expert, it would do well to outsource its tax requirements to a registered tax practitioner.

“I would recommend that even if they are not submitting the tax returns themselves, business owners should have a broad understanding of the tax regulations and what is expected of them. There is a lot of helpful information on the various Acts and tax requirements on SARS’ website,” says Epstein.

How does the right software help SMEs remain SARS compliant?

SME’s (and their accountants’) jobs can be made easier by using reliable accounting software to calculate accurate VAT reports. These reports are only as accurate as the data entered into them, which means care needs to be taken when inputting data into the accounting programme. Epstein says a good accounting software package must be reliable, easy to use and functional.

“SMEs need to check that the software has thorough reporting capabilities and can interface with other software solutions. Of course, it is also important to find out whether the software is locally supported by the vendor or not.”

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4 Dangers Of Business Under-insurance

A common short-term insurance peril that many SMEs face when submitting a claim following an insured event is the risk of being underinsured.

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Malesela Maupa, Head of Products and Insurer Relationships at FNB Insurance Brokers says, many small business owners mistakenly believe that by merely having a short-term insurance policy in place they are adequately protected against unforeseen events.

“This is technically correct provided that the business is covered for the full replacement value of the items insured. However, in circumstances where the sum insured does not cover the full replacement value or material loss of the item insured, the business is underinsured,” explains Maupa, as he unpacks the dangers of business underinsurance:

1. Financial loss

The most common risk is financial loss on the part of the business. If the business is underinsured or the indemnity period understated, the short-term insurance policy will only pay out the sum insured for the stated indemnity period as stated in the schedule, with the business owner having to provide for the shortfall. This often leads to cash flow challenges, impacting profit margins or rendering it difficult for the business to recover following the financial loss.

2. Reputational damage

Should an underinsured business not have sufficient funds to replace a key business activity or critical component following a loss, this may impact its ability to fulfil its contractual obligations, leading to a loss of business or market share, and irreparable reputational damage in the worst-case scenario.

3. Legal action

A small business also faces the risk of customers or clients taking legal action against it, should it fail to deliver on goods and services following a loss or be unable to honour its financial commitments that they committed to prior to the loss.

4. Survival of the business

A catastrophic event such as fire, which could result in the loss of stock or company equipment and documentation, could threaten the survival of a small business that is not yet fully established, if the business assets are not adequately insured.

Working with an experienced short-term insurance broker or insurer is essential when taking up short-term insurance to ensure that business contents are covered for their full replacement value.

Furthermore, depending on the nature of the business or item insured, the policy should be reviewed on a regular basis to avoid underinsurance as the value of items often change overtime due to fluctuations in economic activity. Where it’s necessary, evaluation certificates need to be kept up to date.

“Lastly, SMEs should ensure that the sum insured does not exceed the replacement value, which would lead to over insurance. Should a business submit a claim following a loss, the insurer would only pay out the replacement value, regardless of the higher sum insured,” concludes Maupa.

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