In this blog post I share 6 Bookkeeping Tips for Adequate Record Keeping and ways to enjoy Guaranteed Business Growth. Being a small business owner or entrepreneur, managing your business should not be an overwhelming task. With so many business tools, software applications and solutions available today, business bookkeeping is becoming the easiest part of running a successful business.

As a business owner, it is important to keep adequate records of the following business transactions:

• Business Incorporation Registration and Setup documents
• A list of all Financial Institution Accounts:
  • Bank Accounts,
  • Investment Accounts,
  • Savings Accounts,
  • Retirement Funds,
  • Medical Funds and
  • Taxation Accounts
• The Business Plan with clear financial details such as:
  • Cash Flow Forecasts,
  • Assets,
  • Liabilities,
  • Projected Income,
  • Estimated Expenses,
  • Marketing Strategy,
  • Marketing Research,
  • Core Values,
  • Vision and Mission Statements
• Human Resources and Payroll Records:
  • Employment Records,
  • Key individual details
  • Temporary Staff details
  • Contracts and Agreements
  • Leave Records
  • Attendance Records
  • Overtime Records
  • Payment Records
  • Statutory Records
• Privacy Policy
• Company Values
• Health and Safety Policy
• Lists of all Customers and potential Customers
• List of all Suppliers and Trade Accounts
• Assets purchased, sold and depreciated
• Trade and Receivables, Debtor Accounts and Loans Receivable
• Liabilities such as:
  • Loan Accounts,
  • Credit Card Accounts,
  • Overdraft Facilities,
  • Staff Loans,
  • Supplier Accounts Payable
• Summary of all Income Received, Quotes Generated and Service Agreements
• Summary of all Expenses, Cost of Sales, Ad hoc payments, Taxation and Monthly Overheads

By retaining these business records, you fulfill the requirements of the national Tax Administration Act and satisfy SARS that you comply with all requirements regarding business record keeping.

About the Tax Administration Act

The Tax Administration Act requires the following business types to keep records:

A registered business that:

• filed any type of tax return
• submitted a tax return but has not yet complied
• is not required to submit a tax return, but has during the tax period,

1. received any income,
2. had a capital gain or capital loss, or
3. engaged in any activity that is subject to taxation
4. a business that would have had to submit a tax return if not for an exemption or threshold

How to preserve compliant and adequate business records:

Keep your records in the following ways:

• In its original form
• In the form, including electronic, prescribed by the Commissioner by public notice
• In the case of a request by a specific taxpayer to retain records or documents in a different but acceptable form, the form authorized by a senior SARS official
• In an orderly fashion
• In a safe place
• Open for inspection, audit, or investigation by SARS at all times

How long do you need to keep your records?

1. A business that has submitted a tax return needs to keep its records for a minimum of five years: counting from the date of submission of a return, until the last day of the period
2. A business that had to submit a tax return, but has not complied, needs to keep its records for a minimum of five years: After the end of the five-year period, indefinitely until submission of the return
3. A business that is not required to submit a tax return, but has during a tax period, received income, experienced a capital gain or loss, or engaged in any other activity that is subject to tax or would be subject to tax but for the application of a threshold or exemption, needs to keep its records for a minimum of five years or until the conclusion of the audit, whichever occurs first
4. A business that has lodged an objection or appeal against an assessment or decision under the Tax Administration Act exemption needs to keep its records for a minimum of five years, or until the disputed assessment or decision becomes final, whichever occurs first
5. A notified business that is aware that its records are subject to an audit or investigation needs to keep its records until the conclusion of the audit or the investigation

6 Tips for Adequate Record Keeping to avoid paying penalties

You can very easily lose a dispute with SARS simply because of inaccurate record keeping.

Make sure this NEVER happens to you!

Use the following 6 Tips for Adequate Record Keeping to avoid paying penalties…

Tip#1:

You can only claim deductions if you have valid proof of your actual deductions or expense.

ALL invoices issued to you can reduce your tax, so if you lose any of them you’ll end up paying more tax than you legally have to.

NB: Speak to a Registered Tax Practitioner for guidance on how to structure your business to remain tax compliant

Tip#2:

Make sure you claim ALL your Business deductions you’re entitled to.

Without valid Tax Invoices, you’ll easily overlook certain expenses that you’ve incurred.

NB: Keep a record of EVERY expense, EVEN if you’re not sure it’s tax-deductible.

Tip#3:

Determine the amounts you pay towards salaries or wages.

Keep proof such as wages in the form of

• wage registers,
• proof of payment,
• proof of employment,
• copies of identity documents of casual employees,
• acknowledgments of the receipt of payments and amounts {NB!}

If you keep all of this, you can claim all amounts paid for salaries and wages, ESPECIALLY casual wages and wages paid in cash.

Tip#4:

Make sure you can fully explain the amounts you declare in your tax returns.

SARS will question the accuracy of your declarations if you’re unable to support them with evidence. And if you can’t prove any deductions you’ve claimed, then SARS will question the validity of ALL your claims!

Tip#5:

Ensure you’re in a position to prove your declarations, as this will improve your relationship with SARS, leading to trust and a reduction in unnecessary queries from their side, saving time performing audits.

Tip#6:

If you keep adequate and accurate records, your business will run smoothly, and be easier to manage in the long run.

How Business Record Keeping contributes to Guaranteed Business Growth?

Your business growth is directly linked to your net profits.

When your business profits are calculated for tax purposes, certain business expenses can be claimed to reduce your profit. Reduced profits means reduced taxes.

If adequate record keeping is in place for your business, it is easy to identify claimable expenses.

Once your business financials are drafted and calculated for tax purposes, your business might be audited and proof of these business expenses are to be submitted.

If you cannot provide proof of business expenses in the form of the above records, your claims might be disallowed and this can result in an increased calculated net profit.

Taxation payable on this profit is also then increased. Additional penalties and interests can be added to the calculated net profit due to incorrect provisional estimates submitted.

All these additional taxes, penalties and interests have a direct impact on your business profit for the next financial year. It becomes a viscous circle and will end up depleting all your business profits.

To ensure you enjoy guaranteed business growth, it is vital for your business to implement proper record keeping principles from the start.

When you are ready to take the first step implementing proper record keeping for your business, schedule a FREE discovery session to help you implement solutions for guaranteed business growth. During this session you will also get a feel of what it is to work with a Virtual Accountant and how I help to determine your next steps in your business.

Because I am a heart-centered entrepreneur, passionate about helping other entrepreneurs build profitable online businesses, I created a 6-Step Roadmap to more clients, cash and confidence.

You can grab this free training here.

See you online!