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What More Can We Do for You This International Accounting Day?

WHAT MORE CAN WE DO FOR YOU THIS INTERNATIONAL ACCOUNTING DAY?

Accounting is the bridge between financial chaos and structured prosperity..

- Amanda Green

International Accounting Day is the ideal opportunity to assess the value of robust accounting in your business. Now’s the time to ensure you’re enjoying all the benefits a professional accountant can unlock for you.  Simply reach out to us, and we will gladly help you to identify areas where our expertise and experience can add further value to your business. Whether it be ensuring compliance, optimising tax or enabling strategic planning for future growth.

INTERNATIONAL ACCOUNTING DAY

International Accounting Day is celebrated on November 10 every year. The day is all about acknowledging the role of accountants in supporting businesses and the economy – at local, national and global levels.

ACCOUNTANTS SUPPORTING THE ECONOMY
Accountants are integral to any economy, as they:

  • Enable strong, sustainable, and inclusive global economic growth through quality financial reporting, auditing, and ethical behaviour.
  • A greater number of accountants correlates to better economic performance in each measure reviewed in IFAC research.
  • Accountants who are members of professional accountancy organisations (like SAICA), make an even more meaningful contribution, correlating to even stronger performance on the economic indicators.

Source: The International Federation of Accountants (IFAC)

ACCOUNTANTS SUPPORTING BUSINESSES
At the risk of tooting our own horns, now seems a good time to remind you of the many ways that we help businesses to not only survive but also thrive. We can do this by:

  • Translating companies’ financial data, so all stakeholders can “understand the numbers”, using accounting, aka the “language of business”.
  • Monitoring, recording and reporting business performance.
  • Keeping track of finances to help you manage cash flow.
  • Enabling accurate budgeting.
  • Ensuring compliance with laws and regulations to help you avoid penalties.
  • Managing payrolls.
  • Optimising your tax affairs.
  • Facilitating informed, data-driven decisions by providing understandable financial reports that help you to:
    • identify the most profitable products or services
    • optimise spending
    • allocate resources to high-growth areas.
  • Enabling accurate forecasting of revenue and expenses, and informed financial planning.
  • Detecting and preventing fraud by identifying red flags and investigating suspicious transactions.

REAP ALL THE BENEFITS AVAILABLE

This International Accounting Day is a great opportunity to ensure that you and your business are reaping all the benefits of having a professional accountant in your corner. Simply reach out to us, and we will gladly identify areas where our expertise and experience could add further value to your business…Be it ensuring compliance, optimising tax or enabling strategic planning.

Not Another Lanyard! How to make the most of promotional gifts.

not another lanyard! how to make the most of promotional gifts

Many companies have forgotten they sell to actual people. Humans care about the entire experience, not just marketing, sales, or service..

- Dharmesh Shah, CTO and co-founder, HubSpot

Anyone who’s attended a conference or expo has been given a promotional gift. Usually, it’s a water bottle, a pen or, worse still, a branded lanyard. It’s got so bad that very few of us understand why they even exist, including the marketing teams themselves.  Done right, however, promotional gifts remain one of the best ways to get your message out there. Here’s how to make promotional gifts work for you.

Brand awareness is at the heart of building a successful business. If your target customers, and the public at large don’t know who you are, you might as well close your doors. Promotional gifts have long been a powerful and effective element of successful marketing. But recently companies seem to be forgetting this and instead are offering their customers the cheapest thing they can stick a logo on.  This attitude lowers the effectiveness of the brand campaign, and risks making your promotional gifting a total waste of money. Here are five reasons you should ask your accountant to free up the budget for a proper campaign, rather than handing out something your client is just going to put in the bin.     

HERE'S HOW TO MAKE THE MOST OF YOUR PROMOTIONAL GIFTS

By giving your customer a cheap, nearly useless gift you inadvertently send them the signal that they are unimportant to you. A well-thought-out gift that they can actually use does the opposite. This doesn’t mean you need to break the bank (although spending big for high-end clients can be well worth it). Think of items that they may need such as a torch, measuring tape, or small kitchen implement. Another great option is experiential gifting. Depending on the customer, this might be a round of golf at a sought-after course, or a bungee jumping voucher. By giving customers something they might really use (or an experience they will never forget), you make them feel like you value them as more than just a source of income. In a recent report, 58% of respondents said that they kept useful promotional gifts for more than a year, and many of them for a lot longer.

If you’re really crafty, you’ll give people something they can actually use outside of their home. By giving folks a gift they’ll go out with, you turn them into a walking billboard for your business. An umbrella, backpack, or warm jacket that is built to last will give you many years of value as your brand will be subtly showcased at events and venues you haven’t even dreamed of.

Many companies first meet new customers at events or expos. By giving potential customers a gift before they have even bought anything, you stand out from the horde of other companies vying for their business. Once again, you need to make your gift useful – if everyone else is doing pens and lanyards, your bottle opener, snack or kids’ toy can be the difference between blending into the crowd and being remembered when the time comes to make an enquiry.  According to Giftsenda’s Customer Gifting Report for 2024, almost 85% of people who receive a promotional item remember the advertiser, with 82% of recipients saying it gave them a more favourable perception of that brand. What’s more, a whopping 66% are able to clearly recall the name of that brand a year after receiving the gift.

If you have done this correctly over many years, you may find a customer has several of your products circulating in their daily lives – each of those items is a constant reminder of you and the impact you have had. This helps reinforce connections and ensure you are top-of-mind for the next call. 

Depending on which study you believe, acquiring a new customer is anywhere from five to 25 times more costly than retaining a loyal one. The best promotional gifts are those that help you keep your loyal customers by showing that you truly understand them. The key to giving these is research.  If your research reveals most of your clients are travellers, then offering them protective suitcase covers, or travel pillows may be the way to go. If they’re into gaming, why not offer them a branded carry bag for their laptop or a quality mousepad with a unique design? We humans want to be understood – and if the companies we work with show they know us, we’re much more likely to stick around.  Promotional gifting doesn’t have to be expensive. In fact, one of the attractions is that it can give you a lot of bang for your buck. But don’t get so lost in the price that you forget why you’re doing it in the first place.

If this article has convinced you to up your gifting game, ask your accountant to help you with your budget.
This way you can ensure you make an impact instead of throwing money away on yet another lanyard.

Global Corporate Tax Changes: Advice Is More Crucial Than Ever

GLOBAL CORPORATE TAX CHANGES

Over the next few years, we are also implementing a global minimum corporate tax to limit the negative effects of tax competition.

- Enoch Godongwana, Minister of Finance, Budget 2024

There have been significant shifts in the corporate income tax landscape of late – not only in South Africa, but across the globe. The global minimum tax is a pertinent example. And although its immediate impact is on large multinationals, the changes could well benefit local businesses in the long term.  This and other pivotal changes in global and local company income tax (CIT) regimes underscore how important the right tax advice is for businesses of all sizes in today’s fast-changing business world.

There have been significant shifts in the corporate income tax landscape in South Africa and globally. Recent trends noted by the OECD and The Tax Foundation include:

  • Statutory corporate income tax rate changes in 13 countries in 2023
  • A reversal of a two-decade downward trend in corporate tax rates
  • An increase in the average global CIT rate from 20% to over 21% in the last year

Corporate tax rates have declined from the highs of an average 40% in 1980 and 28% in the early 2000s to around 21%. South Africa has also reduced its CIT rate over the years, from 30% in 2000 to 27% in 2022 – but it is still substantially above the international average.

A new global tax treaty
Dubbed “an historic step towards changing the financial landscape”, 110 UN Member States, including South Africa, recently voted in favour of the terms of reference for a new global tax treaty. The UN says that all 193 UN Member States could vote on a finalised UN global tax treaty as early as 2027.  In the meantime, more than 140 countries have already agreed to this global minimum tax, and some have already implemented this tax reform, including South Africa. Finance Minister Enoch Godongwana announced in his 2024 Budget Speech that South Africa will be implementing the global minimum tax with effect from years of assessment commencing on or after 1 January 2024.

Why a minimum global tax?
Multinational companies use tax planning strategies, like moving profits to low-tax jurisdictions, to minimise their tax liabilities. A global minimum tax aims to ensure that these multinationals pay their fair share of taxes, regardless of where they operate.  This limits the race to the bottom of effective corporate tax rates for large multinationals, with countries competing to attract income by offering low tax rates and tax incentives.  On a social responsibility level, it goes without saying that companies should contribute fairly to the financial stability of the countries they operate in.

Who is affected?
A global minimum tax will ensure that any multinational enterprise group with annual revenue exceeding €750 million (+-R15 billion) will be subject to an effective tax rate of at least 15%, regardless of where its headquarters, operations, sales or profits are located.

Implementation in South Africa

Government plans to introduce two measures to effect this change for qualifying multinationals:

  1. The income inclusion rule applies to multinational entities headquartered in South Africa and requires a tax top-up if the effective rate in the jurisdictions the multinational entity operates in is lower than 15%. This tax is payable to SARS as opposed to the relevant jurisdiction.

  1. The domestic minimum top-up tax applies in situations where the multinational entity’s effective tax rate in respect of its South African profits is lower than 15%. In such circumstances, the South African constituent entities of the multinational entity are jointly and severally liable for the top-up tax.

What is the expected impact?
A global minimum tax will ensure that multinational corporations contribute their fair share of taxes in jurisdictions where they operate, curbing tax avoidance and safeguarding countries’ tax bases. It’s expected to generate significant additional tax revenues for many countries, especially those in the Global South.

In South Africa, National Treasury predicts that implementing the global minimum tax will bolster our corporate income tax base by approximately R8 billion in 2026/2027.  Whether a global minimum corporate tax can deter corporate tax avoidance and evasion remains to be seen. Concerns have also been raised about the impact on companies’ competitiveness, likely increased compliance costs, and possible double taxation.

Will it affect SMEs?
In the long run, the changes should benefit smaller local companies. With a broadened tax base, there may be opportunities in South Africa to lower the personal income tax burden on individuals, or to consider more globally competitive corporate tax rates than the current 27%, which is well above the international average.  The change may also create a more certain and predictable global tax environment, which is conducive to long-term planning and investment decisions.

WHAT NEEDS TO BE DONE?

Qualifying multinationals should assess their effective tax rates for the income inclusion rule and domestic minimum top‐up tax from 1 January 2024. Their local and global tax planning, and financial structuring, may need to be reviewed and updated.

While this probably doesn’t apply to your business (yet), companies of all sizes should note the significant shifts in international and local tax policy. This makes our up-to-date, expert tax assistance a must-have for every company navigating the changing tax landscape.

6 Ways to make the most of your Employees’ Performance Reviews

6 ways to make the most of your employees' performance reviews

Always treat your employees exactly as you want them to treat your best customers.

- Stephen R. Covey

With the end of the year around the corner, many businesses will be thinking of conducting their annual performance reviews. These discussions are essential for streamlining business operations and strengthening the bonds between team leaders and employees. But all too often they’re viewed as nothing more than a necessary evil by all involved.  

HERE ARE 6 TIPS TO MAKE THE MOST OF YOUR EMPLOYEE ASSESSMENTS

Good business leaders recognise that regular employee performance reviews play a vital role in improving transparency, identifying talent, and enhancing performance – yet often this process is handled in a casual fashion or even not implemented at all. In fact, a recent study revealed that only 13% of employees and managers, and only 6% of CEOs, think their organisation’s performance appraisal system is useful. Even worse, 88% of respondents said their current performance review negatively impacted their opinion of the HR department.         

During a review it’s vital that the employee feels truly understood. Data shows that leaders who come to reviews with preconceived notions and a list of complaints are more likely to have unhappy teams. A massive 85% of employees would consider quitting if they thought their review to be unfair – and there is no surer way of making someone feel unfairly treated than to brush off their side of the story and make them feel unheard.       

Companies should therefore focus on getting their leaders to:

  • actively listen to employees during reviews
  • avoid making assumptions
  • ignore distractions such as phone calls
  • pay attention to verbal and nonverbal cues

Because performance reviews are often linked to raises and other benefits, it’s extremely important that the employee understands exactly why certain decisions were made. Giving clear, fair, specific and actionable feedback allows the employee to see how they can get a better raise next year and what they need to do to gain a promotion. Vague or unclear feedback only leads to distrust of the system – and of the company’s HR and leadership.     

While the very name “performance review” suggests a look back over the course of the past year, it’s also the ideal time to project forward into the future. By using the review to set new goals and speak about career progression, your leaders will be able to motivate employees to do well. Knowing that you’re being considered for promotions or that there are rewards at the end of the tunnel is motivational. Little wonder, then, that forward-looking performance reviews have been shown to improve employee productivity by 13%.

A decent performance review is a conversation between employer and employee. It is a chance to listen as well as to speak, and this dynamic should be carried through to the very design of the review. Speak with both managers and employees about the reviews. Ask them what works and what doesn’t and encourage them to suggest things that would make the process more useful. Then actually adjust the review to accommodate these requests where possible. Employees who feel they have power and buy-in over the review process are far less likely to feel hard done by.

According to many business experts, traditional annual business reviews are inadequate. Doing them once a year leaves you with too much ground to cover and places undue stress on the employee – who is then less likely to function optimally during the review. In fact, a recent study suggested the pressure can be so bad that 34% of millennials admitted to crying during their performance review.  By having more frequent and casual performance chats, and addressing any issues when they arise, companies can reduce stress and get better results. According to a report by ClearCompany, employees at companies that use continuous feedback systems are 65% more motivated and 66% more productive.     

At the end of the day, an employee performance review is about reward and improvement. Before going into a review, it’s important to know exactly what rewards you’re able to offer, and how these can be implemented.  Work with your team to create a system that is not only motivational, but effective. And speak to your accountant (that’s us) about defining what you can put on the table.

Business Owners: Have You Tried These Money-Saving Hacks

BUSINESS OWNERS: Have You Tried These Money-Saving Hacks?

Beware of little expenses; a small leak will sink a great ship.

- Benjamin Franklin

Times are tough, so it’s only natural to look for ways to scale back and save money.  Retrenchments and cutting down on marketing are both popular solutions. But there are many more effective ways to save money, restructure cash flow and put your business on a healthier footing.

When a company is struggling with cashflow, or simply looking to improve profitability, the directors will often consider making grand sweeping changes like retrenching staff, slashing the marketing budget or even selling off resources. While this kind of kneejerk reaction can provide instant gratification, it may not be the solution to your long-term struggles. Cutting back on marketing might impact future sales, for example, and end up making things even worse. That’s why it’s often a good idea to eliminate small expenses and wasteful expenditures, when you’re looking to streamline cash flow. Here are five simple ways to save money that you may not have considered.

HERE ARE 5 HACKS YOU COULD IMPLEMENT RIGHT NOW

  1. Beware bank charges
    How did your company open its first bank account? Why did you choose that particular bank? If you haven’t thought about these things in a while, now’s a good time to start. The first step would be comparing bank charges – how much are you being charged to transact, and could you be paying less? Your accountant can help you to break down your company’s needs and find the best solution. Do you need to transact every day, or can you save money by paying off your creditors in scheduled payment runs? Would bundled services work better than transacting at will? How many credit cards do you need? Do you use overdraft facilities? The bottom line: stop paying for services you don’t need.

  2. Trim the tech costs
    Technology is essential for running a business, but do you need (or even use) everything you currently have? Costs such as software subscriptions, fibre lines and cell phone contracts should all be looked at closely. Do you need a 200Mb/s download or will a 50Mb/s work just as well? Which of your employees really uses their company phones to generate profit? Small businesses will even benefit from looking at their software licences. Many popular work solutions have free, open-source counterparts that work very well and don’t require a monthly payment. Even if you decide you do need to pay for licences, you might be able to cut down on the number of licences.

  3. Exercise office efficiency
    Monthly utilities may seem like something you can’t go without, but it might be wise to reconsider. Have a look at your work arrangement. Could you operate a shared desk situation for hybrid workers? Have you considered installing flow restriction nozzles on bathroom taps, and LED bulbs in the light fittings? Reducing the size of your office space and then maximising the savings attained on the utilities can save thousands each month – money that could be spent on attracting new clients.

  4. Commit to your favourite vendors
    In business, commitment can be a cost-saving. If you have regular suppliers you’re happy with, why not speak to them about longer-term arrangements for cheaper monthly charges? Small business owners are particularly guilty of accepting supplier prices without considering the various ways these can be negotiated. Some of your suppliers might place great value on a one-year contract as opposed to a month-by-month one. Or they may be prepared to throw in free services in exchange for your guaranteed monthly spend. Ask your accountant to take a look at your current supplier arrangements and suggest alternatives and/or ways to reduce costs. It could have a significant impact.

  5. Adjust your payment and collection terms
    Most big companies have their invoice payment and collection systems down to a fine art – but smaller businesses may not even think about them. Making sure that your creditors settle their invoices long before you need to make payments yourself allows you to benefit from the interest of having money in your account. It also ensures you never have to pay fines for missed payments or become overdrawn. As your accountants, we can help to streamline your payment and collection terms, and potentially achieve some significant savings.

THE BOTTOM LINE

Making cost savings doesn’t need to mean losing clients, products or expertise. And the hacks above are just the tip of the iceberg – there are loads of other small ways to save money.
Speak to us about taking the small steps to greater profitability.

How To Avoid an eFiling Profile Hijacking

HOW TO AVOID AN EFILING PROFILE JACKING

“…it is vital that all stakeholders in the digital ecosystem, including the taxpayers, SARS, and the banks, work together to prevent and combat profile hijacking

- SARS

SARS eFiling profile hijackings are becoming an increasingly concerning and common hazard. Reports of this type of cybercrime have peaked in recent months and both individuals and businesses must take proactive steps to prevent an attack. This Cyber Security Awareness Month, it’s vital to understand how you could fall prey to cybercriminals. Improving your cybersecurity processes and relying on a trusted accountant can go a long way towards protecting you and your business.

HERE'S ALL YOU NEED TO KNOW ABOUT A SARS PROFILE HIJACKING

The recent spike in the number of SARS eFiling profiles being hacked by cybercriminals should raise red flags for every taxpayer. It’s got so bad that the Minister of Finance has given the Office of the Tax Ombud (OTO) approval to conduct a review of SARS’ service failures in assisting taxpayers timeously with eFiling profile hijacking.  This is a type of cybercrime in which fraudsters use phishing, malware, or social engineering to access and modify your personal or professional profile on a digital platform like SARS’ eFiling without your knowledge or consent.

  • You receive an email, SMS, or WhatsApp, seemingly from SARS, asking you to click on a link or attachment to update your profile, verify your information, or claim a refund. It appears legitimate, and not realising it’s a fake, you just do as the message says…
  • You receive a call from someone pretending to be a SARS official, asking you to confirm your personal details or to click on a link, and you do, not realising that it will install malware on your device…
  • You are contacted by someone pretending to be a SARS official, offering you tax assistance or advice, and asking you to share your login credentials, OTP, or personal information with them, and you do…

Fraudsters use methods like these to trick you into revealing your login credentials. An alarming number of taxpayers have fallen victim to these unscrupulous predators, despite continuous system enhancements to secure and strengthen the security of SARS’ channels.

Fraudsters can access and modify your details (e.g. contact number, password) without your knowledge or consent – with serious consequences for your tax compliance and financial security.  They can then also change the bank details to divert a SARS refund due to you into their own accounts. And they can even submit fraudulent returns on your behalf to claim refunds!   

Prevention is far better than cure. Here are a few pointers, direct from SARS.

  • Use a strong and unique password for your eFiling profile. Change it regularly.     
  • Don’t use the same password for other online accounts or services.
  • Never share your login credentials, OTP, or personal information with anyone, even if they claim to be from SARS.     
  • If you hear about a security compromise at any organisation you deal with, immediately log in to your account and update your password.      
  • Always access eFiling through the official website (https://www.sars.gov.za) or the SARS eFiling mobi app.     
  • Do not click on any links or attachments in emails, SMSes or WhatsApps that claim to be from SARS, and never “confirm” or submit your login details after clicking on a link.      
  • Keep your computer and mobile devices updated with the latest security software and antivirus programs.     
  • Activate multi-factor or “app” authentication on your eFiling profile. This will authenticate you every time you log in by sending an OTP message to your registered mobile number or email address or requesting you to authorise the action via your mobile phone.    

As your accountants, we are well versed in avoiding these scams. Whenever you receive communications that seem to be from SARS, simply contact us. 

  • We are alerted to all known scams claiming to be from SARS, so we can quickly help you to identify phishing attempts.
  • We can check your eFiling profile and tax information regularly and report any discrepancies or unauthorized changes to SARS immediately.
  • We constantly update our security details to ensure the safety of our profile and our clients’ profiles.

SARS itself recognises that profile hijacking is a serious crime that harms taxpayers. But prevention is always better than cure.
Take proactive steps to protect your security and contact us whenever you receive communications that seem to be from SARS.

Five Signs It’s Time for a Rebrand

FIVE SIGNS IT'S TIME FOR A REBRAND

Your brand is what other people say about you when you’re not in the room.

- Jeff Bezos

Marketing is a tricky game with ever-changing rules. When your marketing doesn’t seem to be working and you aren’t getting the results you want, it might be time to go back to the drawing board.  If you have great products and services, but no one is buying, it could be because you are desperately in need of a rebrand. Here are our five signs you may need a refresh.

HERE ARE THE SIGNS

You have a great product or service that fills a need. You are doing your marketing. Your accountant has helped you streamline your cashflow and provided you with your financial forecasts. You are well aware of the risks and challenges, but you are still not connecting with your customers. What could possibly be going wrong? There’s a strong chance you may need a rebrand. Here are five signs that it’s time to think of a brand refresh.

If you notice one or more of these signs, it’s likely your company may need a rebrand. And before you worry about freeing up the budget to make it happen, remember that we are here to help. As your accountants, we can help you to find the funds required to shake up your brand and get yourself on the right foot again.

01

YOUR BUSINESS HAS CHANGED

Growth is generally considered a good thing, but if you have grown too much you might have left behind the little brand you once were. Merging with competitors, bringing in new products and moving into new areas to seize opportunities can all result in your brand becoming muddled. If you’ve morphed into a jumble of different products, services and merged divisions it can become hard for your customers to work out exactly what you do. Now might be the time to bring everything under one new banner – or, alternatively, to split your brand into clearly identifiable offerings.

02

YOU DON’T STAND OUT FROM THE COMPETITION

If you look up your services and see a multitude of similar companies, chances are your brand is not defined well enough. If your company looks just like the others in the same sector, then how will your customers know to choose you over anyone else? You need to show the market that you are different – and a well-articulated brand offering can do just that.

03

YOUR BUSINESS HAS SUFFERED REPUTATIONAL DAMAGE

This is a tough one for leadership to admit. Did you get off to a bad start? Did something happen that put your company in the news for the wrong reasons? Were you caught up in something unsavoury that maybe you had nothing to do with? Or were the previous owners simply incompetent? If you answered yes to any of these questions, then it’s definitely time for a brand refresh. Casting off the old image and adopting a new one is the quickest way to leave the past in the past – and it needs to happen urgently.

04

YOUR POLL RESULTS ARE CONFUSING

The best thing you can do if sales aren’t living up to expectations is to start asking people why. A simple poll that asks your clients, employees, friends and family what your company does and how it could do things better could be just what the doctor ordered. If the results are inconsistent, then you have your answer: it’s time for a rebrand. Your brand narrative needs to be strong and focused if you want your audience to recognise your value.

05

YOU HAVE HIGH EMPLOYEE TURNOVER

We live in an age where employees want to work for companies they believe in. It follows, that companies with weaker brands and undefined missions can find it hard to hang on to talent. While South Africa’s poor employment stats may mitigate this somewhat, a weak employer brand can also be identified by the way high-value candidates react to interviews. If you notice you’re struggling to get your chosen candidates to sign on the dotted line, it may mean you haven’t been able to communicate what you stand for – and they have decided to work for more attractive brands that they do understand.

Ready to Submit Your Interim EMP501 Reconciliation by 31 October

READY TO SUBMIT YOUR INTERIM EMP501 RECONCILIATION?

The interim reconciliation process has become an integral part of the employer reconciliation and assists employers…

- SARS

Yes, yet another EMP501 reconciliation is due! That’s because not one, but two recons are due in each tax year. By 31 October, the interim EMP501 reconciliation for the last six months must be submitted, accurately and on time.  We can provide expert help to smooth the submission process and help you maintain your compliant tax status. We’re dedicated to helping you avoid financial penalties and interest, while unlocking the benefits of a process which serves to assist employers, according to SARS.

Employers are assisted by the interim EMP501 reconciliation, says SARS, because it makes it easier to:

  • make more accurate annual reconciliation submissions          
  • maintain an up-to-date employee database       
  • register employees for income tax purposes      

Of course, there are other benefits, such as maintaining your compliant tax status, and avoiding wasting money on stiff penalties and interest. It goes without saying that you want to reap all these benefits for your business. Allow us to help you to understand what needs to be done. We will be able to assist in ensuring a smooth, hassle-free submission process – even with the next deadline right around the corner.

EMP501 RECONCILIATION FAST FACTS

  • All employers are required to submit an EMP501 Reconciliation       
  • There are two deadlines in each tax year. For the 2025 tax year the deadlines are:
    • 31 October 2024 – 2025 Interim Reconciliation (for the period 1 March 2024 – 31 August 2024)
    • 31 May 2025 – 2025 Annual Reconciliation (for the period 1 September 2024 – 28 February 2025)            

POTENTIAL PITFALLS

The EMP501 Reconciliation is an intricate process which creates many opportunities for errors:

  • Payroll information must be verified         
  • Correct deduction of employees’ tax (PAYE), Skills Development Levy (SDL), and Unemployment Insurance Fund (UIF) contributions must be verified            
  • Deductions must reconcile with IRP5 / IT3(a) tax certificates 
  • Employment Tax Incentive (ETI) values claimed must be reconciled
  • EMP201 returns must be reconciled with actual payments made to SARS  
  • EMP201 returns must be reconciled with EMP501 statements   
  • Employee information needs to be updated on eFiling
  • Employees without tax numbers must be registered    
  • Employer’s Reconciliation Declaration (EMP501) needs to be submitted via the eFiling website or the e@syFile application         

This is an intricate and time-consuming process, and, as SARS puts it, “accuracy and timely filing are critical”.

CONSEQUENCES OF NON-COMPLIANCE

This is serious business. Inaccuracies or late submission can result in severe consequences.

  • Calculating PAYE liability incorrectly will result in the imposition of both penalties and interest. This includes corrections made on the EMP501 reconciliation, as any shortfall is attributed to the last month of the reconciliation period.      
  • If an employer submits their EMP501 late, administrative penalties will be charged. The penalty will equal 1% of the year’s PAYE liability, increasing each month by 1% (up to a maximum of 10% of the year’s PAYE liability).
  • An employer who wilfully or negligently fails to submit an EMP201 or EMP501 return to SARS is guilty of an offence and could face a fine or imprisonment for a period of up to two years.           

THE BOTTOM LINE

The penalties are stiff, and the submission process is fraught with opportunities for inaccuracies and errors.
We understand the importance of tax compliance to your business. And we have the expertise and experience to help ensure a smooth and stress-free submission for you.

How to survive Trust Tax Season 2024

HOW TO SURVIVE TRUST TAX SEASON 2024

A Trust is a ‘person’ for tax purposes and is therefore a taxpayer in its own right.

- SARS

Trustees take note! The 2024 Tax Season for trusts opens on 16 September this year and will close on 20 January 2025. During this time, all trusts – including dormant trusts – are required to submit income tax returns aligned with other SARS reporting requirements and accompanied by extensive supporting documents.  With the delayed filing season opening date and the numerous changes that have recently been implemented, trustees should rely on our expertise to ensure all the compliance boxes are ticked and penalties are avoided.

ONEROUS REQUIREMENTS

With Tax Season 2024 for trusts opening on 16 September, there’s no better time to draw trustees’ attention to SARS’ continued emphasis that all trusts must register for income tax purposes, including dormant trusts. Once registered, trusts are obligated to submit income tax returns that are aligned with other trust reporting requirements from SARS and substantiated by extensive supporting documents and information.

Trustees are held responsible for non-registration of trusts for income tax, and they will not be able to evade enforcement actions by blaming third parties for failing to file returns. “But I didn’t know I was meant to,” is not a valid excuse.  Trust tax returns can be filed from 16 September 2024 (much later than the usual June/July opening) until 20 January 2025.  Along with the new filing season dates, trusts also face several onerous compliance requirements – and some stiff potential penalties.

  • SARS introduced changes to the Income Tax Return for Trusts (ITR12T) last year, with additional probing questions, and even more mandatory supporting documents.

  • The range of mandatory and supporting documents that must be submitted with the ITR12T depends on the trust type, and may include:
          • All certificates and documents relating to income and deductions
          • Trust Deed and Letters of Authority
          • Resolutions/minutes of trustee meetings 
          • Details of the ‘Main’ Trustee (the SARS registered representative)
          • Financial statements and/or administration accounts
          • Particulars of assets and liabilities
          • Confirmation of banking details
          • Proof of payment of any tax credits
          • Supporting schedules         
  • Detailed disclosure of the beneficial ownership, including the submission of identity documents of all beneficial owners. This information will be checked against the beneficial ownership register lodged with the Master of the High Court. Non-compliance could result in a trustee receiving a fine of up to R10 million, a prison sentence of up to 5 years – or both.

  • To provide SARS with a clearer understanding of the assets, income and activities within trust structures, trust returns now feature additional questions such as any local or foreign amounts vested in the trust as a beneficiary of another trust.

  • Information reported on the trust tax return must also align with the IT3(t) reporting of prescribed information by trusts, now also mandated by SARS. It includes trust distributions and their beneficiaries, trust and beneficiary demographic information, trust financial flows, and amounts vested in a beneficiary, including net income, capital gains and capital amounts. The first IT3(t) certificates are due to be submitted at the end of September 2024 for the 2023/24 tax year, and then on an annual basis.

  • Despite the above reporting deadline, SARS confirmed that trust beneficiary income tax returns will not be pre-populated with IT3(t) data for the 2024 year of assessment. This means trustees must also provide details of trust beneficiaries’ 2024 trust earnings timeously to the beneficiaries for inclusion in their personal income tax returns, for which the submission deadlines remain unchanged despite the change in the trust tax filing season.

WE CAN HELP YOU SURVIVE TAX SEASON 2024

Without professional assistance, surviving trust Tax Season 2024 would be a tough ask. The complexity of the processes and the new requirements exponentially increase the risk of errors. And that’s before you factor in the significant time required to manually upload the extensive list of supporting documents – especially in light of SARS’ increased efforts to improve tax compliance and the severe penalties for non-compliance.

Luckily, you can rely on our friendly, professional assistance to ensure all the compliance boxes are ticked and penalties are avoided this trust Tax Season.  

5 Top Tips for Managing Debt in your Startup

5 TOP TIPS FOR MANAGING DEBT IN YOUR STARTUP

There are no shortcuts when it comes to getting out of debt.

- Dave Ramsey, finance journalist and author

Whether you’re launching a fintech app or a fish ’n chips shop, taking on and managing debt is an essential component in the success of most startups. As your business grows, it may be necessary to take out a loan for advertising, infrastructure improvement or expanding your workforce.  Knowing how to effectively manage this debt is crucial if you hope to create a company that can grow sustainably and is capable of meeting all its obligations. Here are our five top tips for managing debt in your startup. 

Most businesses have debt of some kind or another. Whether you need help to buy stock, maintain equipment or even fund a property, it’s likely that at some stage in your business’ life you will need to take out loans. The challenge comes in balancing the needs of your business with the debt you’ve taken on in a way that ensures growth. Here are our five tips for managing debt in your startup.

HERE ARE YOUR 5 TIPS FOR MANAGING DEBT IN YOUR STARTUP

In order to successfully manage debt, you first need to fully understand it. As your accountants, we can help you create a complete spreadsheet of your debts detailing everything from the amounts owed, to interest rates, repayment schedules, and even penalties that may be triggered by late payments. This information will be critical for making the right choices.

Provided you have a good relationship with your lenders, your next step should be to try to renegotiate all your loans. Asking for lower interest rates, extended repayment terms or consolidation of debts could make the whole process of debt repayment simpler.

With your debts now in their healthiest place, it’s important to recognise that some debts are more important than others and thus need to be paid off first. Generally, you should aim to pay off high-interest loans first as these will cost you the most in the long run. Next you need to cover any debts which are secured by collateral – this will stop you from losing your assets in the future. Tax debts should also be prioritised as these can come with severe penalties and even criminal prosecution.  Sometimes the choices are not immediately obvious, so don’t be afraid to ask us for a debt repayment schedule which factors in your business’ operating conditions, cashflow and ultimate goals.

If you want to make sure your debt never becomes a problem, it’s vital that you improve the cash flow in your business to the point where you can meet your obligations. This can happen either through increasing sales, decreasing costs, or optimising operations – or from a combination of all three. For example, any money you can save on unnecessary expenses can go towards repaying your debt, lowering your interest payments and ultimately increasing the likelihood of success. It’s therefore essential that you work with us, your accountants, to optimise your inventory, cut costs, improve sales opportunities and chase your debtors and invoices to ensure prompt payment.

Your repayment schedule should not be set in stone. It needs to be reviewed and adjusted regularly to account for any changes in your business condition. The goal here is not to be entirely free of debt, but rather to leverage debt for improved business growth. Managing debt is an ongoing process that could very likely last for the entire lifespan of your company.   

THE BOTTOM LINE

Debt can be the leg-up your business needs – or the lead weight that holds it back.  Speak to us to make sure it’s the former.

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