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Join the Revolution – Take your Business from Retailer to E-tailer

With the online revolution in full swing, retailers who haven’t yet set up e-commerce shopping facilities should be moving fast to get online.

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Led by kalahari.com, the oldest e-commerce site in South Africa and still the favourite, online shopping in South Africa is showing phenomenal growth of between 30 and 40% annually*.

According to Christelle Briedenhann, head of Marketplace at kalahari.com, “Online shopping in South Africa is maturing fast with demand increasing for a wider range of products. Our market started with low risk, predictable purchases like books and electronics but has moved on rapidly into fashion accessories, toys, kids and clothing. It is a great time for businesses to get online.”

Related: 5 Reasons to Start Your Business Today

Briedenhann oversees the component of kalahari.com that allows companies of all sizes to sell their goods via the online shopping site, offering them access to a huge audience of online shoppers.

She says business owners with an existing bricks and mortar business should not be intimidated by the thought of expanding their business online.

Here are her eight simple tips for taking a business online.

1. Work with an expert

Self-study and research can only take you so far. Employing the skills of an ecommerce website developer or ecommerce consultant can go a long way towards helping you set up your offering as effectively as possible. They will help you decide on your online strategy.

For instance, you may want to add this capability to your own site or alternatively you may consider using a route such as kalahari’s Marketplace. Here your products are listed on a large bustling site, you are given help with your product descriptions and all payments are taken care of for you – safely and securely.

All you need to do is ship your products on time to your buyers.

2. Don’t put all your eggs in one basket

Selling online via your own site is only one way to go about selling online – and in fact it is not essential. Starting your e-commerce capability via existing high traffic site, like kalahari Marketplace or one of the online classified sites is also a very good option.

These sites have huge existing traffic and perform extremely well on search engines so half the work is done even before you get started!

3. Understand who your audience is, and connect with them

The worldwide web is an incredibly vast space, so refining and targeting to reach the right people is vital. Do your research and ensure that any online marketing initiatives you undertake are carefully crafted to reach people with the demographics in the right geographical areas.

Here marketing tools such as paid search or targeted social media advertising can be incredibly effective.

4. Take marketing and traffic very seriously

It goes without saying that you face far stiffer competition online than in the real world. It is absolutely essential that your business and goods are ‘findable’.

A tight marketing strategy which includes components such as how to drive organic, direct and paid traffic to your site, search engine optimisation, a content plan, social media, email and traditional ‘real world’ marketing is vital.

As well as helping you get discovered, you can gather a solid database which you can target for education and specials about your product. Another advantage of listing on an existing successful site is you get access to their ‘best practice’ in terms of marketing and SEO.

5. Decide on your ‘promise’ and stick to it

When selling online it is very important to decide what your ‘promise’ to clients is and make sure this promise is practical and realistic. This includes the number of days you will deliver within and your returns and refund policy.

It is also critical to set up good communications channels between your business and your clients. So if anything goes wrong in the delivery process, you can keep your clients updated every step of the way.

Most customers accept that things do go wrong and are happy to wait a bit longer if they know how long the delay will be for. But not meeting a delivery deadline and not hearing anything from the company is likely to lead to very angry customers and possibly no repeat business. 

6. Staff up correctly

Make sure there is someone in your business trained in e-commerce, in particular in the customer service aspects. Whether this is a new and experienced employee or a trusted staffer who has been on an appropriate course, it should be someone’s responsibility to make sure your business fulfills its online promise to the highest possible standards.

7. Embrace your limitations

It is perfectly okay to put some restrictions on your service. For instance, if the fact that you can’t deliver outside your geographical area is putting you off going online, then add this as a condition in your online promise. If anyone outside the area wants your product badly enough, they will make a plan to get it.

8. Dress your products up in their finest

You know how wonderful your products are, but your prospective clients don’t. Spend time getting your products professionally photographed and writing beautiful, punchy descriptions to ensure they are shown off at their absolute best.

Also, think carefully about cross-selling opportunities. So, for instance, if someone is browsing bed linens, make sure that scatter cushions or bedside lamps are also visible on the page to hopefully increase your sales.

Related: Get Payments Right for the Final Step in E-commerce Success

Established in 1998, kalahari.com is SA’s largest online retailer. With over 12 million products, 25 categories to choose from and still growing. This September kalahari.com won the award for South Africa’s favourite online website, for a second year in a row, in the South African eCommerce Awards.

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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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Entrepreneur Today

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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