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SARS And Your Small Business

Darlene Menzies and Kantha Naicker address the elephant in the room and give some tips on dealing with SARS.

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Perhaps one of the biggest challenges faced by South African small businesses is understanding and dealing with SARS. The key, regardless of what type of business you are running, is knowledge. Knowledge of SARS’ practices and requirements, as well as the belief on your part that SARS wants small businesses to succeed.

Communication is the other important key. Communicate with them and they will work with you to keep your business going.

Darlene Menzies, CEO of SMEasy, and Kantha Naicker, Managing Director of Evolve Accounting, provide expert advice on understanding and dealing with SARS as small business owners.

You are not alone

Many entrepreneurs believe that SARS is the bogeyman and they also tend to feel as if they are the only business facing challenges with them. It’s this thinking that breeds a secrecy mentality and hinders transparent and open communication with SARS when you find yourself in difficulty.

Although complying with tax regulations and legislature can be daunting, understanding that you are not the first or last company to deal with these challenges is a huge comfort.

Related: How to Survive The SARS Season

Using VAT or PAYE as cash flow

When it comes to SARS the best piece of advice to give small business owners is not to use your VAT and PAYE money as part of your cash flow: this is a very reckless way of running your business. Many entrepreneurs do end up using VAT and PAYE money to pay staff costs and crucial month-end expenses. This is a very common and irresponsible business practice.

Heavy penalties and interest are imposed on late submission of returns, as well as late payments.Interest on VAT is levied at a prescribed monthly rate of 10.5 % on all amounts due, while the penalty is levied at a prescribed rate of 10%. The same applies to PAYE and UIF, but interest of 10.5% is levied on a daily basis and

the penalty is set at 10%. When dealing with late payments for PAYE or UIF, SARS can also impose an additional penalty not exceeding twice the total of the outstanding amount on your business for failing to pay the relevant amount with the intent to evade your obligation. These penalties are very onerous and can easily sink a business.

The bottom line is: Never use SARS money to survive; it is a very expensive and dangerous business strategy.

Sars-money-cash-flow-

What if you have used SARS money to survive?

In this situation, avoidance is the worst strategy you can embark upon. The first step you need to take is to make contact with SARS without delay, either via their contact centre on 0800 00 SARS (7277) or by visiting your nearest branch.

Like any creditor, the key is communication; by communicating clearly and discussing your financial situation openly you make it clear that you are not evading your tax obligations. In certain circumstances, you can reach an agreement with SARS to defer your tax debt for later payment or for payment by instalment.

The key thing to bear in mind in dealing with SARS is that it is in their best interest for your business to remain afloat because it’s the only way they can recover their money. Work with them to find a viable solution.

How do you avoid getting yourself into the same situation in the future?

The only way to avoid getting into debt with SARS in the future is to focus on your cash flow management. It is crucial to watch your cash flow carefully, to manage it closely and efficiently. You need to check your bank account and track the movement of the money in your business daily.

Be aware of what money is due to come in and go out so you can make plans well in advance if you are going to run out of money at any time. Upon reflection on the heavy penalties and interests levied by SARS, it is crucial to recognise the signs that you are getting into the same situation and make appropriate plans to resolve it. Hoping you can trade your way through it is the worst possible approach.

Related: Ways To Save More Tax

Investigate accessing finance, understanding that using SARS money is a very expensive way of funding your business. There are far cheaper ways to raise working capital. Be creative in managing your cash flow, reduce expenses where possible and consider offering discounts to your customers if they pay you sooner.

While it may be difficult for some entrepreneurs to believe, the reality is that SARS really does wants to see small businesses succeed. They don’t want to see jobs lost or liquidations occur. Remember to communicate, rather than avoid, SARS if you have fallen behind on payments and, most importantly, recognise that using SARS money is a very expensive and reckless way to run your business and should be avoided at all costs.

For more information visit www.smeasy.co.za.

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The Innovator Trust And Citi Are Searching For Black-Owned Smes Who Are Ready For Growth

The Innovator Trust, an enterprise development organisation, and the Cape Innovation and Technology Initiative (CiTi), Africa’s oldest incubator, are calling on Cape Town-based growth-stage ICT entrepreneurs to join the intensive 2-year enterprise development programme.

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The ICT sector has gone from strength to strength and is one of the fastest-growing industries on the African continent. Yet African entrepreneurs are still finding it a difficult business landscape to navigate. That is why The Innovator Trust and CiTi, through exposure, training and mentorship, now aim to equip entrepreneurs and businesses in the sector with tools that will keep them on track, assist them to achieve their goals and create tech leaders of the future.

ICT entrepreneurs in need of mentorship, skills development and business support who have been operating for more than 2 years and are fiercely committed to growing their business, can now apply to the prestigious 2-year Innovator Trust programme, co-developed and run by CiTi at the Woodstock Bandwidth Barn and remotely in Cape Town. Applications close on 22 February and the selected candidates will be announced on 4 March.

The Innovator Trust programme aims to support the: increase annual turnover, equip businesses with the necessary accreditation to remove red tape, as well as increase profitability and number of employees. Get ready to move the dial on your business.

Celebrating its 20th year of supporting entrepreneurs, CiTi currently runs a number of incubation programmes from idea to growth stage. After a very successful first cohort of the programme, completed in 2018, CiTi confirmed a second collaboration with the Innovator Trust to support further Cape Town businesses over the next two years. Applicants need to be in “ICT”, but this has included a broad range of focusses in the past, from IT recruitment, network security to cabling service provider and software solutions.

Related: Watch List: 50 Top SA Black Entrepreneurs To Watch

The programme, designed by CiTi and Innovator Trust, is not to be taken lightly. Monthly training, mentorship sessions with industry experts, and a strong focus on technical improvements means a substantial time and focus commitment by the entrepreneur. But this intensive design enables significant business progression over the two years.

 “Once the entrepreneurs who take part in our Enterprise Development programmes become more established, they turn their focus to growth. This accelerator is especially for entrepreneurs who’ve created businesses with high-growth potential and provides them with the skills to scale at speed and responsibly,” says Tashline Jooste, CEO of the Innovator Trust.

Cape Town was recently confirmed as the Tech Hub of Africa, by an Endeavor Insight Report commissioned by CiTi and partners, presenting growing opportunities for those businesses serious about growth, and with the right support.

“I believe strongly that ICT entrepreneurs are going to be critical to South Africa’s economic growth, which is why we need to focus on equipping these businesses with the skills they need to grow, create jobs and stimulate our economy,” adds Jooste.

In order to be considered for the programme, prospective applicants must meet the following criteria:

  • A company defined in South Africa as an SMME, QSE or EME;
  • Must be operational and trading for two or more years;
  • The business should be at least 51% black-owned;
  • A minimum Level 1 – 4 BBBEE status according to the DTI or ICT Codes;
  • The business must be a registered company with key focus in ICT and be based in Cape Town and surrounding areas.

In addition, applicants will need to supply copies of their company registration, company profile, and annual financial statements along with their BEE certificate and IDs with their applications.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

“We had a fantastic experience on the Innovator Trust programme, perhaps most beneficial was the advice and mentorship on our financial management, up-skilling of our team, and establishing a 3-year budget and growth plan for the business. Our advice to entrepreneurs considering the course is “JUST DO IT!!!” The skills and knowledge you gain are invaluable and put us on a serious growth trajectory.” states Jennifer Classen, Founder of Ngaphaya Y2K10, and Participant in the 2015 – 2018 Innovator Trust programme.

Ready to grow your business? Learn more about the programme and submit your application HERE.

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Rocket Challenge Targets Local Coding Skills

The Rocket APT Challenge is open to undergraduate students 18 years of age or older who are currently studying engineering, science, or technology at an accredited college or university.

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Addressing the growing skills gap within software development, local information technology value added distributor, Axiz has sponsored the Rocket APT Challenge and encouraged 39 students to participate in the regional round of the Rocket.Build coding challenge. This comprises 40% of the total numbers of entries received globally. Hosted by Rocket Software and APT Solutions, this annual challenge provides a forum for participants to develop applications on Rocket’s MultiValue platform.

Colleen Becker, Axiz pre-sales engineer, says that the response to the challenge was exceptional and the company is excited to be part of this global initiative: “This is a fantastic innovation challenge that provides students with an opportunity to hone their coding skills on a leading software platform. South Africa is by far the bigger pool of entrants and we are excited to see who is selected for the global Rocket.Build 2019 Hackathon.”

Participants are required to design an app on Rocket’s MultiValue application platform in support of the challenge theme: ‘Improve your Community’. Consisting of three regions: EMEA, Asia-Pacific, and the Americas, three winners from each region will be selected and awarded a cash prize of:

  • $1,000 (USD) – third place
  • $2,500 (USD) – second place
  • $5,000 (USD) – first place

Related: Want To Take Your Coding To The Next Level? Check Out These 7 Productivity Hacks

The nine developers will also be given an all-expenses-paid trip to Massachusetts, USA in June 2019 to participate in Rocket.Build 2019, where they will compete in teams of three to decide the global winner of the Rocket APT Challenge. The winning team will share a grand prize of $24,000 (USD).

Becker says that this is the first year Axiz is participating and the company will definitely register for the 2020 challenge, recruiting of which starts in September 2019: “We are committed to grow the number of young coders on the Rocket platform. There is a global opportunity for students to graduate into a developing industry and support the growing shortage of MultiValue-certified coders. Participants also stand the chance of receiving an internship from participating partners across all industry sectors.”

The Rocket APT Challenge is open to undergraduate students 18 years of age or older who are currently studying engineering, science, or technology at an accredited college or university.

For more information, contact colleen.becker@axiz.com

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SMEs: Have You Completed Your Financial Planning For 2019?

While small to medium enterprise (SME) owners may not have a great deal of control over South Africa’s broader economic issues, they do have control over how they plan and manage their finances, says EasyBiz Technologies Managing Director, Gary Epstein.

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“The failure of many SMEs to make it past the critical 3.5-year mark is more as a result of their inability to get the fundamentals right, rather than being able to deal with issues such as political uncertainty, crime or credit-rating downgrades.

“Several SMEs do not gain an adequate understanding of their markets or the competition they are up against. In addition, failure to manage their finances properly or to access funding and adapt to changes in the marketplace can also be serious hindrances to success.”

Epstein believes without proper financial planning and management, businesses place themselves on the back foot. “Business owners can only make informed decisions when they have a clear view of what is happening with their finances.”

That’s why having the proper financial management tools in place is so important for start-ups and SMEs. “At EasyBiz Technologies, we offer accounting solutions that are aimed at helping businesses manage their finances properly and placing them on a sound financial footing,” adds Epstein.

Tangible outcomes of a good system include increased productivity, reduced monthly expenses, improved accuracy, simplified tax compliance and better financial security. An effective system can also provide critical business insights and allow business owners to make informed and proactive decisions.

Epstein says efficient accounting solutions can help speed up business processes, affording business owners more time to focus on their core processes and growing their operations. “After all, time and money are the most precious resources when it comes to running a small business.

Related: 6 Steps Of Financial Planning

“Our solutions include analysis tools, report making applications and payroll assistance. In addition, income and expense trackers provide valuable information for tax and audit preparations,” he adds.

Epstein urges SMEs to plan for 2019 if they haven’t done so already. “It’s not too late to prepare for the year ahead and, with the financial year end for many businesses looming, now is the time to get a good system in place.”

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