The sooner you start planning for the tax year ending February 2025, the easier it is going to be to have everything you need to submit your returns on time. Picture: Supplied
March is the start of a new financial year for many SMEs, which also means the start of a new tax year.
The sooner you start planning for the tax year ending February 2025, the easier it is going to be to have everything you need to submit your returns on time.
Importantly, you need to make sure you have enough money set aside to pay your business and personal taxes. The last thing you want is having to pay penalties and interest on outstanding amounts just because you haven’t planned properly.
Even if you have an accountant to help you, it is wise to invest in a software package that simplifies and speeds up this arduous task.
That still means you need to get your financial house in order and that you have the following available to file when the time comes.
For starters, make sure you have saved all your supporting documents, such as bank and credit card statements, client and supplier invoices, receipts, as well as any payments that provide a VAT rebate.
You’ll also need to maintain a travel log so you can track business travel.
Even if you’re a sole trader, it is wise to have a separate business account and business credit card – this makes it easier to separate your personal and business expenses, particularly if you are claiming these as deductions on your tax return.
Remember you need to keep receipts, till slips and the like for up to five years in case you are audited and you need to keep your till slips for possible auditing purposes as well as payroll records, an inventory reconciliation and your 2023 tax returns.
Get into the habit of keeping these documents together in a secure folder and store them online and ensure everything is backed up in-case your system crashes or your computer gets stolen.
Do you have the following in place?
– Balance sheet
– Income statement
– Cash flow statement
Are you up to date with these SARS commitments and, if you have any penalties, have you paid them?
– Income tax from the previous year
– VAT
– PAYE (Pay-As-You-Earn) taxes deducted monthly from your employees’ income - or your own income if you are still employed in addition to running your own business
– Provisional tax - payable in August and February.
– Any regulations specific to your industry
– Health and safety regulations
– Labour laws
– Take stock of the 2024 financial year ahead
The end of the financial year is not only tax time, it’s also the end of a trading period. This provides the ideal opportunity to reflect on the 12 months that have just ended.
Did you achieve your business goals? What worked and what did not and is there anything that you need to change to achieve a better outcome?
This could include increasing fees, investing more in marketing so you can increase your sales, or even looking at other opportunities to supplement your income.
To help you, make an honest list of your strengths and weaknesses, while listing how you can boost the former and make up for the latter.
Then, list your clients and the industries they are in, where relevant (if you are selling to consumers this does not apply).
Undertake desktop research on them to see if there are any opportunities or cautions in the year ahead that could affect your revenue and financials.
Being an SME often means wearing many hats. Financial management is one of them. It’s also the least understood – yet entire businesses depend on it.
Try to carve out time to get all your financial ducks in a row every month, and plan for the period ahead. You’ll thank yourself come February 2025.
*Mmasetena Nyatlo, Product Head: SME Banking at TymeBank.
**The views expressed here are not necessarily those of IOL or of title sites.