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How the 2012 Budget Impacts SME Owners

Sanlam urges business owners to comply with the relevant legislation.

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Kobus Engelbrecht, marketing head for Sanlam Business Market, notes some of the key aspects of the National Budget in relation to business owners:

An end to secondary tax on companies

A key change is the implementation of dividend withholding tax on 1 April 2012. This will bring an end to secondary tax on companies, and entails that dividend withholding tax at 15 % will be paid on any dividend paid out to the shareholders of the company.

The inclusion rate with regard to capital gains tax for companies and trusts (other than special trusts) would increase to 66.6 %. This will raise the effective capital gains tax rate to 18.6% for companies, and to 26.7 % for trusts (other than special trusts).The tax exclusion amount on the disposal of a small business when a person is over the age of 55, will rise from R900 000 to R1 800 000.The market value of assets allowed for a small business disposal for business owners over 55 years of age increases from R5 million to R10 million.

Good news for micro businesses

Businesses with a turnover of less than R1 million (micro businesses) are likely to welcome Minister Gordhan’s announcement that they will be given the option of making payment for turnover tax, VAT and employees’ tax at twice-yearly intervals from 1 March 2012. The Minister further announced that businesses in this category would be able to file a single combined tax return on a twice-yearly basis from 1 March 2013. This essentially means that the number of returns required for these taxes will fall from about 18 per year to only two a year.

Tax threshold for small businesses increases

On the other end, it was announced that this year will see an increase in the tax threshold for small business corporations from R59 750 to R63 556. Currently, taxable income up to R300 000 is taxed at 10%. This threshold will now increase to R350 000 and the applicable rate will be reduced to 7%. For taxable income above R350 000, the normal corporate tax rate of 28% applies. These amendments will come into effect for years of assessment ending on or after 1 April 2012.

Potential tax interventions

In an effort to improve governance, streamline procedures and provide more focused support to businesses operating within special economic zones, the National Budget announced the introduction of legislation to build on industrial development zone policy. In support of this initiative, the Minister said the following tax interventions would be explored:

  • A possible reduction in the headline corporate income tax rate for businesses within selected zones (as determined by the Minister of Finance after consultation with the Minister of Trade and Industry);
  • An income tax exemption for the operators of special economic zones; and
  • An additional deduction from taxable income for the employment of workers earning below a predetermined threshold.

The South African tax system is complex and Sanlam urges business owners to employ the services of adequately qualified professionals to help them to comply with the relevant legislation and to assist them to benefit from the allowable deductions.

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5 Ways SMMEs Can Best Use An Incubation Centre

Here are some tips on how entrepreneurs can make the most of these incubation centres.

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Incubation centres play a meaningful role – not only in South Africa but around the world – as they groom SMMEs and give them access to opportunities that will help them survive in a competitive marketplace. These centres help entrepreneurs modernise their businesses with world-class technology, while providing insights that can help turn ideas into products. Incubation centres offer infrastructure and support, knowledge-sharing and a unique environment that helps strengthen their businesses.

Earlier this month, Cisco South Africa launched its R10 million Edge Incubation Centre in Pretoria where 30 SMMEs per year will have the opportunity to make use of the platform and speed up their entry to market. The centre gives SMMEs access to complete business facilities including workspaces, video conferencing and collaboration platforms, boardroom and training facilities, and access to global Cisco experts who can help them develop business ideas in a digital world.

Here are some tips on how entrepreneurs can make the most of these incubation centres:

1. Collaboration

Gain insights from global experts using the latest Webex technology and collaborate with other SMMEs. Utilise the meeting spaces to drive commercial sales initiatives with the help of business support facilities.

2. Resources & Equipment

Make use of laboratories and tools like cloud-based facilities, smart interactive whiteboards for content sharing, video conferencing, and meeting rooms. Utilise the high-tech customer demo centre as a practice platform.

Related: The Definitive List Of South African Business Incubators For Start-Ups

3. Support

Take advantage of the enablement programmes as well as the ongoing training and development. Knowledge transfer will always help your business. Utilise the technical support and business insights to grow your business and make it competitive in the digital economy.

4. Connectivity

This is your main tool in a digital marketplace. Make use of the high-speed broadband facilities and develop your digital skills because you will need it.

5. Sales

Don’t forget to utilise the pre-sales support as this may give you the edge in the marketplace. Gain insights and experience and use it to your advantage.

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9 In 10 Workers Want A Festive Gift From Their Employer To Make Them Feel Valued

29% Would like to receive vouchers from their company.

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As the festive season approaches, digital print company instantprint have revealed what managers can be doing to show staff they are appreciated.

Over 9 in 10 workers (94%) want a gift from their employers to make them feel valued, appreciated and happy this Christmas.

The research, which surveyed 1,500 UK office workers, also revealed the most in demand gifts that employees would like to receive from their employers:

  • 29% would like a gift voucher
  • 8% would like an early finish
  • One in five (20%) would like a free bar at the company Christmas party
  • One in ten (10.3%) would like a physical gift
  • 7% would like a charitable donation to be made in their name.

Related: Why Innovative Employee Benefits Are Your Competitive Advantage

Different sections of the workforce had varying demands. IT professionals would prefer an early finish this festive period, with 35% in the IT department choosing this as their ideal Christmas gift.

Senior management seem to have a more selfless approach to the gifts they would like to receive. One in ten (11%) said they would like a charitable donation to be made in their name, compared to the average demand for this present of just 7%.

There was some difference between men and women too. Women are the ones really pressing for gift vouchers, with 33% saying they are the ideal present, compared to just 23% of men. Male employees seem to prefer a free bar, with 22% choosing this, compared to just 18% of women.

James Kinsella, CEO and Co-founder of instantprint, said about the research:

“Most organisation take part in the festive period, with decorations, Christmas parties and office Secret Santas.

“But this research highlights how important a small show of gratitude can be for your workforce. Something as simple as an early finish, free bar at a party or a Christmas gift voucher can make employees feel valued and appreciated. This in turn can help boost employee morale, loyalty and productivity in the workplace.”

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South African Students To Battle In Universities Business Challenge To Win Up To R50 000

Students will compete in a simulation that encourages business skills.

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Cognity Advisory’s Universities Business Challenge (UBC), sponsored by General Electric (GE), launched in July this year, has seen 500 students from 13 different universities across South Africa participate in a business simulation competition, that’s designed to develop their entrepreneurship skills. The challenge is now down to just 10 teams from five different universities (approximately 50 students), who will travel to Johannesburg to compete in the two-day final event on the 5 and 6th December 2018.

The ten teams competing in the final includes three teams from the North West University, two from Mangosuthu University of Technology, two from the Vaal University of Technology, two from the University of Limpopo and one from The University of KwaZulu Natal (UKZN). These teams will be competing for the chance to win up to R50,000.

Related: Call For Applications: Young Entrepreneurs Global Exposure Trips

The aim of the UBC, now in its second year in South Africa and 20th year globally, is to tackle South Africa’s high level of youth unemployment. Statistics South Africa (Stats SA) announced that South Africa’s official unemployment rate increased by 0.3 of a percentage point to 27.5% in the third quarter of 2018.

The competition simulates a business environment, with students given a problem to solve. The simulation is designed to foster skills such as analytical thinking, problem solving, commercial awareness and team-working. The challenge is designed to empower young people and equip them with the necessary skills to succeed in business.

Tope Toogun, development advisor and CEO of Cognity Advisory says, “Students are very prepared in terms of theory when they leave university, but not the practical skills they need to start and run a business. Seeing as SMEs make up 90 percent of formal businesses it’s really important that these students know how to build a business on their own or at the very least, in small teams.”

Toogun explains how the simulation encourages business skills, “The students competing in the challenge learn all about managing people, customer service, working in teams and how to create a start up without even realising they are being exposed to all these skills. These are the skills that will separate the members in the final. Students must work as a team and make instinctive decisions.”

Cognity Advisory is engaging students through social media competitions and newsletter updates. These competitions include spot prizes for students who post an image or video and receive the highest engagement on it.

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