By Colin Timmis, Xero South Africa Country Manager
For many South African businesses, February marks financial year end and along with it a range of important to-do’s for small business owners, finance teams and their advisers – reconciliations need finalising, financial reports need to be drawn up and tax returns submitted. As small businesses continue to face the difficulties of the current energy crisis and volatile economic landscape; a closer eye will be fixed firmly on the tax man to avoid any tax penalties and additional unwelcome surprises.
However, this time of year has equal opportunity for a fresh start. A time to make the necessary changes that can help improve and streamline business – not only ensuring compliance but unlocking growth opportunities to help business thrive.
According to Xero’s State of Small Business report, released last year, small business owners are optimistic about the future. 87% of respondents expressed confidence in their businesses and 99% expect to survive the next five years.
Here are a few tips to help ease financial year-end anxiety and make tax work for your small business:
Embrace automation to streamline processes
Using a cloud accounting platform to manage your finances makes it easy to see your finances in real-time and collaborate with your accountant seamlessly throughout the year. Automation can also help manage PAYE, bank reconciliation and debtors.
You should also ensure that all your details and documentation with SARS are in check – incorrect or outdated details may lead to unnecessary penalties. Always promptly address any questions from SARS and use a cloud-based accounting system to keep a record of all your accounting transactions and supporting documents that they may request.
Tap into technology for business efficiencies
Filing taxes can be time-consuming, but SARS has embraced new technology to reduce the tax burden for businesses by offering digital alternatives to filing in-branch, such as eFiling and online bank transfers. This makes tax filing simpler and faster. Businesses can now submit tax returns, review their tax status, and pay SARS online at any time for free. Xero has developed a suite of cloud-based tools for preparing, storing, and eFiling VAT returns directly to SARS in a matter of clicks. It has never been simpler or quicker to eFile with new tools, which boost productivity and reduce errors and administrative burdens.
“Increasing SA’s tax base is a tremendous opportunity to stimulate the economy. With the aid of technology, we must facilitate and encourage businesses to pay their taxes. Technology is a key enabler for closing the tax gap and revitalising our economy, and supporting small businesses at tax time is one way to help us do that,” Colin Timmis, Country Manager South Africa, Xero.
Get to know Small Business benefits better
Speak to your financial adviser about small business benefits that are available to your business. SARS allows for various tax-deductible expenses, which are incurred during business operations that could often reduce the amount payable on small business tax. Aside from getting lower tax rates, there are additional small business tax benefits. Being tax compliant unlocks various government funding opportunities in the shape of tax incentives as well as grants, loans and equity finance options. Speak to your financial advisor about which of these options would be viable for your business.
Embracing financial skills development opportunities
When the South African business community comes together great things can happen. Look at opportunities for learning and mentorship within reputable circles such as corporates, funders and accelerator programmes that can help support you. The government has also announced its intention to invest in digital skills through the National Skills Fund, which will provide R800 million to develop skills in the digital and technology sector.
Lean on professional support for tax Planning
A vital step to getting tax planning right is by leaning on the right support to ensure compliance by working together with a reputable and experienced tax professional. Partnering with an accountant to support your business means you’ll be up-to-date on the latest tax rules. Look out for any updates from the upcoming Budget Speech that will inform much of the direction or new changes that need to be considered for business.
“In the upcoming Budget Speech we would like to see the Minister of Finance Enoch Godongwana introducing measures to further simplify tax compliance and provide incentives (employment tax, solar investment) to support SMEs and help them thrive. This is going to be crucial for stimulating the health of our economy,” concludes Timmis.
Pivotal to a pain-free financial year-end is consistently adopting sound financial habits and working with an adviser or tax professional.
