Bookkeeping in South Africa

Bookkeeping is very much a task oriented job that will routinely and very systematically record a companies day-to-day financial transactions. So think of it as being the really tedious and exacting role within the accounting system. But what does that mean? Well, a bookkeeper may or may not have had formal training in accounting, but a bookkeeper should have a basic knowledge of the double entry system which ensures that financial transactions are entered correctly.

It is also the job of the bookkeeper to classify transactions into the correct ledger accounts that have been determined previously by the accountant, together with business owner (s).

A final check of all transactions can also be undertaken by the bookkeeper, and this is known as preparing a trial balance. This summary makes sure that everything has been recorded correctly. It is at this point that the bookkeeper will normally hand over their work to the accountant so that they can perform the most important aspect, the business analysis, reporting and recommendation to the business owner (s).

The Accountant in South Africa

So what’s the big deal then? Why do you pay your accountant in South Africa the big bucks, whereas you only pay your bookkeeper what seems like a small amount of money? Lets have a further look into the role of your accountant.

Qualifications

The accountant in South Africa generally has 3 qualifications, beginning with a B Comm accounting degree. They would then normally study for another year whilst studying for their Certificate in the Theory of Accounting (CTA) and finally doing a 3 year learnership in order to specialise in a particular field – this could be auditing, financial management or the like.

Role of the accountant

The accountant is there to do several roles for the business. Some of these include:

• Recording the financial data
• Analysing the financial data
• Interpreting the data and
• Reporting on the financial data

The accountant is there to look at the larger picture then. They’ll organise the overall structure and design for both the financial information capturing and also the financial reporting  function. The accountant in South Africa is there to not only look at the data from the bookkeeper and see it is correct, but to then take this data and analyse it for the company and to interpret this analysis into a full report for the company so that the company can make informed decisions within the future.

This is a critical part of the success of any business and should not be under valued or under estimated as to its importance or even how long this may take to complete.

Another important role of the accountant is to submit all necessary documents to the South African Revenue Service and any other statutory body in a timeous manner. This could be submitting PAYE, UIF, Tax payments and even VAT payments for a company.

Conclusions

So we can see that the major difference then between Bookkeeping in South Africa and your Accountant in South Africa are that you bookkeeper focuses on the day-to-day financial record keeping (which requires a basic understanding of good accounting principles and a double ledger system) whereas your accountant is there to make sure that your company succeeds and is profitable by taking the financial data and analysing the strengths and weaknesses of the company. The accountant can then recommend ways to the company on how to move forward. But the accountant is also there to assist in the business anlysis to potentially prevent the business from failing, this can however not be the fault of the accountant if the business does end up by failing. But at least with all of this extra data a business owner can make a much more accurate and informed decision as to the actual state of the business. Would you trust this type of decision to any old monkey, or would you want someone with the expertise to assist and guide you? That’s why you pay your accountant in South Africa more money than you do your bookkeeper.

If you have any comments or additions to the above post please feel free to make them below, or if you would like some help in anyway please get a hold of your professional accountant in South Africa

What are the 3 parts to the Accounting Function

Ok everyone, Friday 13th can mean a lot of things to different people. At the end of the day it depends on how superstitious you are. But why is it that so many people have

OMG - Great news for you

the absolute horrors when they think about their professional accountant or their bookkeeper in south africa? How many times have you gone out for dinner with your friends and it comes to the bill and everyone frowns. Then some bright spark turns to you and says “hey, aren’t you an accountant? won’t you just add up everyone quickly, thanks.” A word to the wise, but most accountants in south africa aren’t actually mathematicians! So get your cell phone out and start computing your bill yourself, because your accountant friend at the end of the table is probably doing the same thing. But there are a lot of myths associated with accountancy. So let’s see if we can’t dispel some of them now.

Accounting Myth #1: Accountancy is all about the Maths

Yes it’s true that you have to use maths when calculating a salary, or the person’s paye payable but an engineer, a sales person, a marketer or even a hair dresser often use maths in their daily job. So although accountants do use maths in it’s basic form to do their jobs the real job of an accountant is actually figuring out a puzzle, or story telling. Yes, that’s right. Think if it this way. Your professional accountant actually sees all those numbers on your income statement or balance sheet etc as a puzzle, and it’s their job to figure out the best ways, according to the tax laws in South Africa, to reduce the amount that you, the client, need to pay – your tax liabalility. So it’s really about the analytics of the numbers in front of you, not about the maths that goes into figuring out the puzzle.

Accounting Myth #2: Accounting is for men only

It is a complete fallacy nowadays to believe that women are not quickly become executives and that more and more women are working in areas that were once thought of to be a mans job.

We can already understand that in today’s environment it is often necessary for both sets of parents to work and earn an income. It has also been widely known that because women have been used to looking after the family for so long they’re often better at managing their work load and still managing the family! Yes, that’s right. Most men just can’t get the hang of it, although this is quite a generalisation I admit – but it’s mostly true. Companies are seeing this and have been taking note for quite sometime, hence the reason why there are more and more women being employed in executive positions. The same is happening in the field of professional accountants. So, all you men out there, don’t think that your gender guarantee’s you a job in your field. You’ll now have to work at it.

Accounting Myth #3: Accountants are boring & don’t like people

Your tax specialist deals with people all the time – clients, employees other clients’ customers etc, so it’s really impossible to do the job of an accountant without interacting with people. I suppose with everything though it depends on how social a person you are. Accountants have to deal with numbers and stories all the time, but they need to relay these to their clients too. So they can help them to understand what all the numbers mean and to teach them what they mean for their business.

But at the end of the day most accountants are the same as you are, they have families or loved ones, they go holiday, they have parties with their friends and most of them have a heck of a good time at University!

Accounting Myth #4: Accountants will cost you a fortune!

Sure this will be true, if you go to the big name firms around town. But isn’t it more important to find a professional accountant that you get a long with, that you can speak to like a friend, someone that won’t be afraid to tell you if you’re being an idiot. After all, your accountant is going to be your partner in business, they are the person that will help you to grow your business, and the person that will help you to get more money, in the form of loans, if you need it from the banks.

So check out the accountant first, look at their qualifications, assess if they are keeping up to date with the latest accounting policies and tax laws, have a look at how their offices are run and speak to some of their clients to see what they think. Remembering that if you fail with this you may also be able to use the internet to see if the accountant has been rated and what people think about them.

All of this has a price attached to it, but at the end of the day it’s important for you, the business owner, to decide on how valuable you see your accountant to your business. If you’re a start up or a small business then ask the accountant if their fees can be lowered accordingly to help out – after all, there’s no harm in asking.

Accounting Myth #5: I don’t need an accountant, I have Pastel / QuickBooks

Does the thought of your Taxes feel like this?

This is often said to people in our business. Pastel, QuickBooks or any of the major accounting softwares are excellent and are used by most professional accountants anyway, but they still do not take away the need for an accountant.

Most people that use QuickBooks and similar software don’t know how to fully utilise them, also forgetting to depreciate assets properly, remembering to book refunds correctly so at to take further advantages of tax deductions that may be available. So it may be a good idea to ask your accountant for training, so that you can learn the system properly so that you can take full advantage of all the tax deductions that you can.

But all of this still doesn’t give you the story. The real reason why you need an accountant. Remember Myth #1? All the figures in the world don’t mean anything unless you know how to interpret them into how they affect and what they mean for your business.

Conclusion

It’s often a thought by business owners that their need for a professional accountant is not greater enough to justify the hiring of one, but at the end of the day this can be a very short sighted approach that may often lead to the business having to be sold, or even having to close down. There are many accounting myths out there and people just need to be told a bit more truth so that they understand the value of what an accountant can offer them. After all, if you can’t see the value in learning how your businesses figures affect the business and your personal life then you probably shouldn’t be in business in the first place. Feel free to comment below or share this article, or if you’d like some more help why not contact us directly.

any deductions that may be taken from the employee’s salary. But in accounting terms payrollis slightly different. In accounting terms payroll means the amount that is

Payslip Example 2012 in South Africa

paid to employees for any services that they have provided during a certain period of time. This could be a month, a week or a day etc.

How does payroll affect a company?

Payroll plays a very important role in any company, no matter what the size of the company. In any company payroll affects the net income by way of taxes paid and payroll is also subject to certain laws in the country. Speak to your professional accountant to find out what laws there are.

But business revolves around its most important asset – its staff. Payroll can enormously affect the morale and productivity of a business, as all employees can feel either very negative or positive in response to possible payroll errors or irregularities. To create a good company morale with the employees it is vital that the company Payroll Department pays the employees accurately and timeously. This doesn’t matter how small or large a company is. Part of this exercise for the Payroll Department is also to make sure that the correct deductions are taken from the employees salary but they these deductions are also remitted in a timely manner too. This would include any salary payments, tax withholdings and any other deductions that may come from a paycheck.

Frequency

Most companies pay their employees at regular intervals, so that the regular income stream will help to benefit the employee in the form of their own monthly financial management plans. However, the intervals of payment may vary from company to company, industry to industry or even from the seniority of the employee concerned. The most common payroll frequencies are: daily, weekly, monthly, semi-monthly and some companies pay their employees very quarter.

Outsourcing

Payroll can often be a time consuming activity for companies, so to get around this they often outsource their payroll activities to a specialist payroll company or even their professional accountant.

Picture of a possible Payroll department

This can often lead to a reduction in the cost of a company managing their own payroll. Why is this though? Simply put, you can save on the cost of a fully trained payroll employee, and software that might be needed to process the payroll. Often taxes may need to be filed consistently and accurately to different regulatory agencies – depending on the companies industry. This may add to the complication of the payroll department. An example of this could be the difficulties a payroll  department may have in working out the sales employees salaries when they are paid via a commission structure.

With the changing tax laws it is also often difficult for companies payroll departments to continually monitor these changes and make the necessary changes timeously. Hence another reason to outsource the payroll needs of a company.

Conclusion

Payroll means the sum of all the financial records of salaries for an employee. Payroll can affect morale of a company drastically if it is not done so in a timeous and accurate manner. This could lead to possible employees working inefficiently too. It is for this main reason and due to complicated payroll processes that many companies decide to outsource their payroll needs to their professional accountants or a payroll management company.

For more information or to add to this article please comment below or on our Facebook page.

Is your Tax Bill your biggest Burden in life?

Some of the tax proposals that were given in this years budget were:

• Implementation of medical tax credits
• How the National Health Insurance will be funded in the future
• Increasing Household savings
• Reducing debt within Businesses in South Africa
• Incentive schemes for the building of affordable homes and such things as
• The increase in Relative Capital Gains Tax to be paid

With all of this news though it’s often necessary for us to get some professional advice from someone that actually knows what they’re talking about. Speak to your professional accountant today or even your tax specialist and find out how you can reduce your tax liability.

See all of the proposed tax changes below:

Tax Proposals for 2012 in South Africa

With only 4 out of 10 adults being employed in South Africa, it’s easy to understand why we have too many people and not enough jobs – too few employers. So, it’s up to the government of South Africa to try and create jobs with their annual budgets and their tax reforms. But, has this actually happened with the new budget in 2012? Let’s take a look shall we.

Business Tax Rates

An interesting stat to be seen is that corporates in South Africa are paying the 2nd highest effective tax rates in the world if compared to the top 60 countries in the world (2009/2010 tax statistics data from the National Treasury.)

How high is the Effective Tax Rate for Companies in South Africa

So what does this mean? We’re trying to create more jobs each year, thereby reducing our unemployment rate for the country. This in turn will mean that the South African Revenue Service (SARS) will hopefully receive more tax money, as there is more taxable income. But, the businesses in South Africa are having to pay high effective taxes. This in turn may stifle job creation. Simply put, businesses that have to pay higher tax may not have enough money to increase its production and/or efficiency, thereby reducing the ability to hire more staff.

Together with this we see that the government of South Africa is trying to increase the number of jobs and in turn trying to increase the number of entrepreneurs the country has. It’s an interesting point to debate just how this will be possible when for the last 8 years South Africa has been one of only 3 countries that has had an effective corporate tax rate of over 5% of GDP (Gross Domestic Product.) How are businesses going to start, create jobs and help grow the economy when they have to pay such high tax rates? I suppose we’ll just have to wait and see what the government’s latest budget will actually do for the country and its economy in 2012.

Are we changed to our money?

Your Tax Specialist is there to help you with all of your tax needs, but sometimes we need some extra advice and a few tips from these professional accountants. At the end of the day we need to make sure that we are compliant so that we do not get penalised because we either don’t know or haven’t been given all the advice we need from our tax specialist.

So lets have a look at some tips that we can actually use.

What deductions can you claim from if you earn a salary?

• Medical (normal medical and disability deductions)
• Retirement annuity contributions
• Income Protection Insurance and
• any Interest Exemptions

But there are some other areas that you are allowed to also claim, namely:

1. Rebates – The very first amount of tax that is required can be deducted up to allowed limits by the South African Revenue Services. Also, for all taxpayers over the age of 65 in South Africa you will get a further rebate that can be deducted from the first amount of tax that is to be paid.
2. Commission earners – If you earn over 50% of your salary each month via a commission you are entitled to claim back expenses that you may have incurred in order to actually make that total income. For example, if you earn a basic salary of R10 000 per month and you also earn in excess of R10 000 per month via commissions that get paid to you, then you can claim the expenses that you have incurred to be able to get that total income.
3. Travel Allowances – Often people get a travel allowance as part of their salary structure and forget to keep an accurate logbook of their travel and their travel expenses. If you do this you run the risk of not  being able to claim for such expenses. So make sure you don’t forget to keep that logbook up to date with your travel and your expenses incurred.

At the end of the day though these are often the things that we forget about and are often not told about by our professional accountants  or our particular tax specialist. This is the reason why it is so important to make sure that you are comfortable and completely happy with your accountant. Speak to a tax advisor to assist you today.

The Skills Development Levy (or SDL as it is commonly referred to) is determined as follows:

1.   If you are a Director of a company, your SDL will be on the same basis as PAYE. This means that you will have to pay SDL.

2.   As from 1st April 2001 the levy payable for SDL is calculated at 1% of the employees taxable income. This is paid by the employer, not by the employee.

3.   From 1st August 2005 any employer that pays annual salaries of less than R500 000 do not have to pay the SDL.

4.   Any employer paying salaries over R500 000 are obliged to register with SARS and pay the necessary fee’s each month.

5.   SDL is to be paid at the same time as your PAYE and UIF payment. No later than the 7th of every month.

At the end of the day you’re probably thinking, Why should I bother? How am I going to benefit from paying this levy? We all understand in today’s market we need to make our business and our employees more efficient. This will naturally entail a degree of training. As long as you, the employer, does this training in your workplace and you pay your SDL every month you are entitled to:

1.   Skills Development grants from the government and

2.   Substantial tax allowances when you implement Learnerships.

Speak to your tax specialist to get more advice on this levy or on how you can get something back from SARS (The South African Revenue Service) or feel free to comment or contact one of our professional accountants in South Africa.

It’s the 22^ndof Feb 2012 and the Finance Minister is about to deliver his budget speech later today in South Africa. He’ll be delving into lots of issues surrounding new tax schemes, increases in fuel levies, new medical aid restrictions on employee benefits and lots more.

Pravin Gordhan

But how is it actually going to influence you and me? Well, we know that the budget will determine a lot of our personal finances for the next 12 months. How much imported goods will cost – like car prices going up, the big 3D TV etc or even the small things like the price of flour going up as a result in the possible increase of the fuel levy. The more expensive the transport costs, the more the flour will cost; and I’m sure it will be us that will foot this bill.

Importantly though we must not be worried about this news today, but rather embrace it and see how we can benefit from it. That is what your accounting officer should be doing for you. Making sure that with all the expected changes that you, your company and your employees are NOT going to loose out from what’s said in the budget.

Having a good accountant in South Africa is a necessity, not a grudge purchase. It is he or she that can make or break your business and give you the correct business tax advice that you need to grow your business, or increase your profits or just to give some good 3^rd party advice.

What to remember for your tax?

Along with this advice, it is now time to remember a few things for your tax.

1. Log books have been a requirement since 1^st March 2010. If you use your car for business or have sales reps out there, they and you need to be keeping an accurate log book. What happens if you don’t have this though? Just send through your closing mileage for 29^th Feb 2012 and you opening mileage on 1^st March 2011 and your professional accountant will try and “re-construct” the log book – with your help of course.
2. All businesses that trade in stock or that need to do a stock take on a regular basis must do an end of year stock take on the 29^th Feb 2012. This will help your accountant figure out how much Rand value stock you had at the beginning of last year and how much you now have at the end of this financial year. This can all help to reduce your tax payment. So don’t delay with it.
3. By the end of February 2012 your professional accountant will also need:
   1. Total amounts of what money is owed to you by customers – known as your Debtors
   2. Total amounts of what money you owe to people – known as your Creditors
   3. Details of any assets that you have bought from 1^st March 2011 to 29^th February 2012
   4. All petty cash details from 1^st March 2011 to 29^th February 2012
   5. If you are using an accounting package then remember to save all of your work and then balance forward.
   6. Make sure all of your salaries and wage records are up to date. Your accountant will need this information. Remember, the more you give the accountant, the less tax you might be paying, so rather spend the extra time and get it all to them.
   7. If you do your own VAT payments, then your accountant will need records of all of these too.
   8. Lastly, don’t forget that provisional tax is due by the 29^th February 2012. If you delay it then you will probably get a penalty, 20% for under paying and 10% for all late payments.

If it’s all getting too much then simply contact your professional accountant for help. After all, that is what you pay them for.

So what are these fringe benefits we speak about?

• Does an employee use a company owned vehicle?
• Do you, the employer, make payments to a medical aid on behalf of the employee?
• Do you give holiday accommodation to any employees?
• Do you have long service or bravery rewards for your employees?
• Do you have any interest free or any low interest loans?
• Any subsistence allowances?
• Do you pay for or give housing to any employees?

So a fringe benefit is the cash equivalent of any taxable benefit that you, the employer, may give to an employee.

If all of this confuses you too much and you’re just unsure as to how to proceed then speak to your tax specialist or contact the professionals.