South African SMEs stand a chance of securing funding, market exposure and new partnerships through the annual Eskom Business Investment Competition (BIC) and the Small Business Expo 2017.
Enjoying a rare opportunity to improve their businesses, market their companies effectively, network with potential business partners and carry out live market research, small business owners report that this annual opportunity delivers long-term benefits.
Through the Eskom Development Foundation, Eskom supports entrepreneurship and small business development at South Africa’s leading annual small business event, the Small Business Expo, organised by Reed Exhibitions and presented in partnership with Eskom.
Eskom utilises the opportunity to announce the winners of the annual Eskom BIC, in which substantial prizes are awarded to black-owned businesses in the manufacturing, engineering/construction, agriculture/agri-processing and services/trade sectors. The overall winner across all four sectors of the competition stands to win R150 000 to invest in their business, while each sector winner receives business investment support of R100 000. Runners-up and finalists also receive cash prizes.
The BIC finalists are also hosted at the Eskom pavilion at the Small Business Expo, taking place from 31 August – 2 September in Johannesburg, where they meet with potential business partners, investors and customers; and attend the numerous training events and development workshops at the expo.
In addition to hosting the BIC awards and showcasing the finalists at the expo, Eskom also features leading Eskom Simama Ranta schools who run enterprise clubs across South Africa at the expo.
The overall winner of the 2016 BIC, Nomcebo Sibanyoni, owner of Nomcebo Printers in Lydenburg, Mpumalanga, reports that her participation in the competition and expo has delivered long-term benefits for the company.
“The BIC was quite intimidating, but my participation gave me an opportunity to review my business model and strategies; and the input from the expert judges helped us to focus on long-term goals,” she says.
“One concern raised during the process was our focus on servicing the mines within our province. As a result, we have reconsidered our strategy and are diversifying our products and customer base.”
Winning the BIC also gave Nomcebo Printers valuable exposure, adding to its credibility, she says. “The Lydenburg Chamber of Commerce subsequently gave us an award for being a business that helped put Lydenburg on the map. This has helped build trust in our abilities among existing and potential customers.”
Participation in the Small Business Expo added significant value to the experience, says Sibanyoni: “Not only did we benefit from market engagement and networking with potential partners, we also learnt a great deal from the workshops at the event. For example, I took learnings from the social media workshop and applied them to our own business strategy – and we are now using social media very successfully to engage with our customers.”
Previous Eskom BIC runner-up and three-time participant at the Eskom pavilion at the Small Business Expo Kroutz Sprouts, says the competition and expo exposure have been very beneficial for the company.
Candice Kroutz-Kabongo, co-founder of the family-owned hydroponic vegetable farm, says the entire BIC process and the participation in the Small Business Expo has helped the company on several fronts: “The actual competition adjudication process is an eye-opener,” Kroutz-Kabongo says.
“You subject your company to scrutiny by experts in their field, and they point out areas you may not have considered. In our case, this scrutiny highlighted price fluctuations in fresh produce, and led us to consider processing our own produce. At the Small Business Expo, we were then able to showcase these products and assess market response on the show floor.”
Kroutz-Kabongo says participating in the Small Business Expo also gave Kroutz Sprouts a rare opportunity to network with other business owners to discuss potential partnerships.
“We had access to food franchise owners, for example, and we opened talks on possibly supplying them with our fresh produce. Overall, we found our participation in the Eskom BIC and the Small Business Expo very worthwhile.”
“Eskom’s participation and the BIC innovator showcase are highlights of the Small Business Expo, illustrating the high level of creative business flair South Africans are capable of and giving show visitors access to the most innovative new businesses around. This is in line with our overall goal to provide a platform for small business networking and growth,” says Carol Weaving, Managing Director of event organisers Reed Exhibitions.
The three-day expo, which is co-located with the #BuyaBusiness expo, provides SMEs, businesses, investors and franchisors with a versatile platform from which to network, explore new business partnerships, build brand awareness, interact with potential customers and investors as well as to generate media coverage. The #BuyaBusiness expo and Small Business Expo offer business opportunities, franchise opportunities, business tools, business services, financial advice and networking for anyone considering starting their own business or franchise, and for those already in business and looking to expand, or to source BEE procurement partners.
Related: New Ways SMEs Can Find Funding
About the Small Business Expo
The Small Business Expo, to be held at the TicketPro Dome from 31 August – 2 September 2017, is devoted to the development of small and medium-sized enterprises, providing an invaluable platform for small businesses to market their businesses and interact with prominent business leaders, corporates and procurement buyers.
Attracting thousands of visitors each year, it is the ideal platform to stimulate business growth and motivate both current and aspiring entrepreneurs. The Small Business Expo runs alongside #BuyaBusiness Expo and is presented in partnership with Eskom. Visit www.smallbizexpo.co.za.
About the #BuyaBusiness Expo
The #BuyaBusiness Expo is an annual exhibition held alongside Small Business Expo. To be staged at the Ticketpro Dome from 31 August – 02 September 2017, this expo connects thousands of entrepreneurs and investors who are looking to grow, diversify or enter into business ownership with one of the many business and franchise opportunities available at the show. It also presents business funding and service support solutions. Visit www.buyabusinessexpo.co.za.
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
“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.
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.
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.
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 tax should be submitted at the end of August (first provisional) and at the end of February (second provisional) – for February year-end companies.
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.”
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.
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.