Colin Timmis – Xero Country Manager for South Africa, shared some tax compliance tips with BusinessTech Africa, to aid Small Businesses in unlocking benefits and incentives for greater growth.
“As an entrepreneur or small business owner, you may often consider the broader role that tax plays in your business”. “Navigating the intricacies of business tax can be difficult but this is why working with a financial adviser or tax expert to understand the basics of business tax is so crucial for entrepreneurs to plan, comply with, and benefit from tax accordingly” says Timmis.
Here are some tips he offers to help small businesses when it comes to dealing effectively with their tax:
- Work with an advisor to plan ahead: Work with an advisor to help you plan for the end of the tax year. They’ll be able to advise on the taxes you are liable for, any opportunities or incentives to be aware of, and estimate your taxable income for the year so you’re prepared for what’s to come. They can help you understand what you need to do throughout the year to prepare and even provide a checklist, so you don’t miss any crucial steps or deadlines.
- Be aware of changes in legislation: Tax legislation is constantly changing and evolving and it’s hard for business owners to stay up to date with the changes, especially as a lot of the changes are subject to interpretation, so this is where a tax advisor can help. It’s a good idea to try and be aware of any changes by reading the news and make sure to keep in regular communication with your accountant so you can ask questions about these changes and stay organised.
- Create good habits: Streamline your processes for collecting and recording financial information. It’s also a good idea to regularly update your books and keep track of expenses to avoid last-minute scrambles. Cloud technology makes record keeping easier as it is accessible anywhere at any time. Having all your financial data in a cloud-based system provides small businesses with real-time insights that enable them to make more informed business decisions and collaborate more easily with their accountant.
- Find a decent data management tool: Hubdoc is a great tool for getting into good habits with record keeping. It lets you easily upload and store receipts, and it automatically extracts the data and sends it to your accounting software. This not only saves time but also keeps your records neat, tidy, and accessible.
- Review your numbers regularly: Checking your numbers should not be something that you do once a year. It’s so important to review your profit and loss statement to track your profit and identify any anomalies that you need to look into. Reconcile your balance sheet regularly, including bank, credit cards and loans, debtors, creditors, and inventory.
- Monitor cash flow often: Another good habit to get into to make tax time less stressful is to keep a close eye on your cash flow. This doesn’t just mean the cash amount in your bank account. Cash flow is the money going in and out on your profit and loss statement and balance sheet. Reviewing this regularly means you can avoid surprises and ensure you have enough funds to cover your tax obligations. You also want to be looking at forecasting your cash flow.
- Do regular expense forecasts: Having a forecast of your expected income and expenses over the next 12 months can help you determine whether you can get another staff member or whether you raise or drop your prices.
“Understanding business tax is essential for compliance and effective financial management. While this overview provides a simplified guide, consulting with an accountant or tax professional to ensure full compliance with the current tax laws is crucial for success”, according to Timmis
