By Ben Bierman
CAPE TOWN – Bookkeeping is a necessary evil for all businesses because without it there is a risk of hitting major cash flow crunches, financial red flags or wasting company money.
Good bookkeeping is also key to preparing and completing accurate tax returns.
Here are some tips for keeping your business’ books in order:
Maintain at least three sets of financial records – a cash book; sales invoice book; and a purchase invoice book to know your income and expenses. By law, businesses are required to keep their records for 15 years as the SA Revenue Service can ask to examine them at
any time, should something not add up or seem suspicious.
Keep all documentation such as receipts, invoices, cancelled cheques, deposit slips, etc., to support entries in your records and tax returns. File them in a logical order and store them in a safe place. The longer you are in business for, the higher your chances of a VAT or tax investigation are. Get used to keeping a piece of paper for every transaction as you go along rather than trying to find them years down the line. There are various online apps that can help you.
Open a separate account for your business to enable proper record-keeping and tax filing. Do not spend company money on personal purchases even if you own 100%. Only use the business account for legitimate business expenses.
Keep up to date with legislative changes that have taken place and those that are coming. This is particularly important in terms as any VAT and tax changes could have a financial implication on your company if they are not correctly and timeously implemented.
Get proper professional help to ensure that your affairs are in order. It is easier, for instance, to pay extra on consultancy to ensure that your taxes are paid up than the legal fees that may accompany a dispute with authorities. Failing to pay taxes is not only illegal, it can also lead to the closure of your business.
Ben Bierman is a managing director at Business Partners Limited.