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Tools to Start your Business Right

New affordable business tool assists businesses to start right and boost the likelihood of success.

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In a drive to support start-ups in their first critical 12 months, Standard Bank has launched a fresh drive into the small business start-up market.

Clive Pintusewitz, director of Small Enterprise and Enterprise Development at Standard Bank, says many start-up businesses have met a premature end because they have not been built on the most solid foundation.

“Through working closely with start-ups over the past decades, we have developed an understanding of the holistic needs of start-ups. Based on these experiences, we have developed a product that offers real support during the high-risk first year following the launch of a new business,” he says.

Standard Bank’s new drive, known as BizLaunch, will focus on getting a business started the right way to avoid the false starts that many businesses face.

“If we concentrate on the essentials, what you really need is to register the business, keep track of cash in and cash out, pay suppliers, deposit funds into a business bank account, and get some basic advice when you ask for it,” says Pintusewitz.

A business account for R90/month

Among the key features is a R90 a month business account that includes various transactions and services to assist and set up the business for the first 12 months. With a 28% share of the business banking market, Standard Bank is best-placed in terms of experience and presence to lead this back-to-basics drive, says Pintusewitz.

“Starting a business is difficult and daunting. People with an idea just want to get cracking and yet they face all sorts of hurdles and bureaucracy, in spite of what everyone says about the importance of supporting small business.”

BizLaunch is aimed particularly at any new business (including sole proprietors) with no existing business account, any business wanting to switch with an account younger than 12 months and any business currently trading from a personal account.

“Twelve months is the typical period a business needs to get up and running, become aware of what banking transactions and what other services the business will use.  This means that after the 12 month period the entrepreneur will be correctly positioned to choose a suitable account package that will appropriately match the business needs,” explains Pintusewitz.

Full service offering

BizLaunch is a one-stop shop, full-service offering that includes a proper and affordable business account with no hidden costs; Pastel My Business Online; an affordable insurance offer, and access to expert advice and other support.

Whereas traditional small businesses got all these separately from various service providers, Standard Bank offers all of them under one roof.

“This approach is important in that it saves customers time, money and, more importantly, allows people to focus on running and growing their business. It means that Standard Bank’s small business staff can develop a relationship with start-ups based on a better understanding of the challenges and how we can help them grow. It means that most problems can be nipped in the bud, reducing typical causes of failure,” says Pintusewitz.

The BizLaunch offering

BizLaunch offers the critical things needed to get started:

  • A R90 per month (R3 per day) business account, which includes unlimited electronic transactions (electronic account payments, ATM deposits and inter-account transfers), unlimited debit orders, unlimited cheque card swipes, Internet banking, My Updates (SMS notifications); and 8 ATM cash withdrawals. This excludes branch transactions
  • My Business Online, an accounting package from Pastel, the market leader in accounting software
  • My Business Online from Pastel, the market leader in accounting software
  • Businesses also have access to a Business Banker to discuss and meet their needs
  • Packaged content business support and tips, such as how to start and grow a business

Over and above the core package BizLaunch offers:

  • A merchant device (Point of Sale device) for R325 a month – including telecommunication fees and insurance per month, at a commission rate of 3.25% irrespective of card type
  • Basic business insurance cover at R150 per month
  • Online business registration services and annual returns to help you get your business started
  • A 20% discounted training voucher on the basics of how to start a business, such as finance for non-financial managers (normal course fee approximately R1200)

“One thing we know for sure by now is that there are no silver bullets when it comes to starting a business. Every person who successfully starts a business will tell you that it takes hard work and persistence.

“Standard Bank’s wants to get businesses to succeed. Through BizLaunch, we are presenting practical solutions that are relevant to the market and that tackle head-on the challenges banks encounter in connecting with entrepreneurs,” concludes Pintusewitz.

How to get it

Visit a Standard Bank branch closest to you, call the BizDirect response Centre on 0860 109 075, email bizdirect@standardbank.co.za or visit www.standardbank.co.za/business

All you need to get started are your registration papers, FICS documents and your ID book.

If you’re not a registered business, Standard Bank can still cater for you, just visit any branch and bring your ID book.

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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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