Information worth knowing:
BASIC BOOKKEEPING RECORDS
If you fail to pay your taxes, submit your monthly and annual returns late or submit incorrect returns to SARS you will be costing your business unnecessary penalties and INTEREST!
You may also be liable for a fine or imprisonment for:
- Failing to pay your taxes
- Failing to complete tax returns
- Failing to disclose income
- Making false statements
- Claiming a refund to which you are not entitled
Successful business management starts with keeping all your data and transaction information in one place. This would be information about your company, customers, vendors, employees and banking.
Your record system should contain all business transactions including sales, invoices, deposits and purchases. This information, when organised in a bookkeeping system, can create summary reports that give valuable insight into the many important aspects of a business. These reports help when making important decisions on the future direction of your business.
To ensure that the financial reports are as accurate and valuable as possible, it is important to keep your records up to date.
The following basic records are essential to all business owners:
1. Record of all Income Received - Printed invoices or invoice books
2. Record of all Expenses Paid
- Invoices from suppliers
- Completed cheque book stubs
- Payment receipts of internet transfers
3. Record of all Cash Received - Balance your petty cash balance and cash paid
4. Deposit slips or Deposit Book - For cheques and cash deposited
5. File your Credit Card Statements - Together with your credit card slips
6. File your Garage Card Statements - Together with your garage card slips
7. File your Bank Statements
VAT INVOICE CHECK POINTS
Your VAT invoices must contain all the following information to ensure trouble-free claims.
1. The words “TAX INVOICE” must appear.
2. The invoice is made out to the company or CC, not to the director or member.
3. Your trading name, address and VAT registration number must appear.
4. The customers name, address and VAT registration number must appear.
5. Individualised Serial number (Invoice number) must appear.
6. Date of issue.
7. Full and proper description of the goods or services supplied.
8. The quantity or volume of goods or services supplied.
9. The amount of VAT is shown separately.
10. The Vat has been charged at 14% or 0%.
If the total amount (Including VAT) of the invoice is less than R3 000, the customers name, address and VAT number and description of goods need not appear on the invoice.
DIFFERENT TYPES OF TAXES
Income tax is the state’s main source of income and is levied on taxable income in terms of the Income Tax Act. Income tax is levied on a variety of entities, namely individuals, companies, close corporations and trusts. The tax rates for the different entities vary.
Provisional tax is not a separate kind of tax, it is merely a tax payment method that allows taxpayers to settle their tax in instalments, instead of a large amount only getting paid at the end of the tax year, namely February.
If an individual earns other taxable income that is not subject to employees’ tax such as SITE or PAYE deductions such as interest, rental income or business income, the individual must pay provisional tax on this income every six months.
The provisional tax paid will be offset against the final income tax the individual has to pay for the year of assessment.
The first provisional tax payment is made six months after the commencement of the tax year (end of August) and the second not later than the last day of the tax year (February). The third topping-up payment is voluntary and may be made within six months after the end of the tax year.
A provisional taxpayer is:
- An individual who earns business income or farming income
- Any director of a company
- Any member of a close corporation
- Any company or close corporation
- Any person who is notified by SARS that he or she is a provisional taxpayer
- Any individual who derives taxable interest, dividends and rental income in excess of R10 000 per annum
This is the tax that an employer, as an agent for SARS, deducts from the earnings of their employees and pays over to SARS every month. This acts as credit that is set off against the final tax liability of an employee, which is determined at the end of the tax year (February). Employees’ tax consists of SITE and PAYE.
Value-Added Tax (VAT) is levied on the supply of goods and services made by registered vendors in the course of their business. VAT is also levied on the importation of goods as well as on the supply of imported services into South Africa.
VAT is levied at the standard rate of 14%, but certain supplies are subject to the zero rate or are exempt from VAT. VAT is levied on an inclusive basis, which means that VAT has to be included in all prices on products, price lists, advertisements and quotations.
Compulsory registration - Any person who carries on an enterprise and whose total value of taxable supplies (taxable turnover) is greater, or is likely to be greater, than R300 000 per year must register for VAT.
Voluntary registration - In certain circumstances the VAT Act allows a person to register as a vendor if his/her taxable turnover is greater than R20 000, or is not likely to be greater, than R300 000 in a 12 month period.
The Unemployment Insurance Fund insures employees against the loss of earnings due to termination of employment, illness or maternity leave. A monthly contribution has to be made by the employer of 1% and the employee of 1% based on the earnings of the employee.
SKILLS DEVELOPMENT LEVY
This levy is currently 1% of the employer’s payroll each month. This levy is paid only by the employer. As from 1 August 2005, small employers with an annual payroll of R500 000 or less are exempt from this levy.