SARS. This four-letter word can strike fear into the heart of even the most organised business owner. But it doesn’t have to be that way, says Cheron Roggen, owner of Canvas Compliance. She has been working as an accountant since 2007, helping small and medium-sized businesses with services ranging from bookkeeping to audit reporting, company registrations and expense analysis. While many founders are fearful of doing accounting and tax, if they prioritise their compliance, their business will grow, says Cheron. Here are six helpful tips to help you do just that.
People open up businesses like candy, without doing the compliance, says Cheron. “The knowledge gap from opening a business to compliance is very big. It’s easy to start, but it’s the next steps that people really struggle with.”
When you register at the Companies and Intellectual Property Commission (CIPC), you get a tax number. “That tax number is now alive. It’s a living, breathing number,” explains Cheron. Even if your business is new, and not making a profit yet, or not even operating, you still need to submit your eFiling return. The landscape has changed a lot for business owners recently, with SARS pursuing penalties for provisional tax more than they used to. Cheron’s advice is, it doesn’t matter what size you are. Don’t delay.
A common mistake is that owners will put money into the business, to buy stock or pay bills, for example, but use cash out of their own pockets or swipe their personal cards. But then it’s not recorded anywhere and it’s difficult to pull together. “Rather use a business bank account for everything you do that’s for the business, so it becomes the history of the company, and it’s traceable.”
Another tip that will stand you in good stead is to entrench good habits and systems early on, advises Cheron. Once you’re busier, you won’t have the time to set up these systems. The most important processes take time, and it’s easier to create the habit now rather than a year down the line.
Perhaps get into a weekly rhythm of recording your earnings, even if it’s on an Excel sheet. Anything could happen to a slip, especially if you’re not saving them properly or scanning them in. So keep bank statements or take photos and save them on Google Drive.
And if you’re at the level when you need to invest in bookkeeping software, what does Cheron suggest? “Your entry level is always Sage Accounting. It’s quite simple. And then Xero is a more powerful reporting system, which can also integrate into stock records easily.”
“Tax is a different language,” says Cheron. So, as you do with your health or your plumbing, go to a professional with expert knowledge who speaks that ‘language’. “Have that meeting with the accountant who’s going to explain it to you. Take the fear of SARS out of it from the get-go.”
What’s a small, simple thing to do that can make the biggest difference for business owners? “From an accounting perspective, always put your sales first and collect your money,” suggests Cheron. “Whatever your day has in store for you, the first thing you need to do is make the money.” Some people are very creative or great at connecting with suppliers, and they might not enjoy the admin side of the business, but it’s important. “Make that phone call, do the quote, send out your invoices, collect the cash. Cash inflow is imperative, because once that gets stuck, everything unravels,” Cheron says.
Paperwork can slip through the cracks, and time moves fast when you’re a busy business owner. But is it ever too late for a business to sort out its finances, start processes, and get up to date? Is there a stage when you should just give up? The answer is reassuring: “There’s always time,” says Cheron. “You can always get things in order. The worst I’ve ever seen was having to do financials for the previous 11 years. But there’s always time.”
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