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South Africa




Accounts and record keeping

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Accounts and record keeping

Paperwork considerations prior to starting your company.

This has got to be the least popular part of starting and running your own business - the paperwork. Small business owners are seldom trained accountants and so this area of the company is often neglected. Let's start with some basic guidelines.

The simplest form of business start up is what is known as a "sole proprietor". This is nothing more than an individual who trades (sells products or services) using his/her own name. There are no formal registration requirements, you can simply begin trading. However once you do, you'll need to do the following:

  • You will need to open a bank account in your own name (if you don't already have one).
  • Register with SARS (South African Revenue Service) for income tax purposes.
  • You may also want to register with SARS for VAT, but if  your turnover is low, this may not be necessary.

If you are going to employ people you will then also need to register for:

  • UIF (Unemployment Insurance)
  • PAYE (as an employer)
  • Workman's Compensation (now called COID)
  • Skills Development Levy

Already the load becomes significant doesn't it? In addition you may have some special industry related licenses that you need to register for (eg: selling alcohol).

If you choose to rather form a close corporation (cc) or company (Pty Ltd), then you need to register these with the department of Trade and Industry as well as completing the above. We have a short table that summarizes the differences between a cc, pty and a sole prop on our faq page. Scroll further down this page to see what paper work is required once the business is up and running.

Have a look at the Department of Trade and Industry web site: 
and the South African Revenue Services link: 

Further links can be found on our resources page.

Keeping records of what's happening in your new business.

Whenever your company provides a service or sells a product, you will generally be required to issue your customer with an invoice. This is simply a document addressed to your customer and contains your company information such as name, address, contact numbers, registration number and VAT number as well as information about the sale such as quantity and description of goods or service, price and the VAT amount. If you are supplying goods on account, you can use an invoice as a delivery note which means that your customer signs the invoice when the goods are delivered and this becomes proof that they were delivered. Your invoices must follow a numerical sequence. To start off you can buy invoice books from your local stationery shop, otherwise most accounting software packages will generate invoices automatically for you.

If you are going to let your customers buy on account, then you will need to provide them with a monthly statement which is simply a document with your company details that provides information on the most recent month's transactions with the customer. It should include any previous unpaid balance, all the invoiced amounts and any payments made within the last month. At the end of the document it must show how much money is owed by your customer to you.

Each company should also have fax cover forms, order or purchase forms, goods received notes, goods returned notes and possibly delivery notes, but these are not essential for very small businesses as much of the work is done verbally or on the invoice.

Each month you will need to fill out and submit the following forms if you are an employer:
The South African Revenue Service has recently made this task a bit easier by allowing all three of the above to be completed on their EMP201 form which needs to be completed and paid for by the 7th of each month.
Don't forget that as an employer you are also required to provide your employees with wage or salary slips that explain exactly what you are paying them and what any deductions are for.  In terms of UIF you will also need to advise the Department of Labour of any changes in the details of your employees such as pay rates, resignations, new employees, etc.
Every alternate month you'll also need to submit your VAT return and pay across the VAT due if you are VAT registered.
Employers will also have to fill out workman's compensation forms on an annual basis.

Each month you should also try and work out your income statement, balance sheet, cash flow, debtors ageing and creditors ageing. These can be done with most simple accounting packages or manually and will help you to understand how well or badly your company is performing.

Further links can be found on our resources page

Administration hassles faced by existing enterprises.

Once your company is up and running there are very few additional administration issues that are critical or gazetted. What will change is that more and more time will be required to chase customers for outstanding money, handling queries on payments, invoicing the extra customers, calculating the extra wage slips, etc. This is probably when you will need to employ an accounts clerk or sub contract the accounting / book keeping functions so that you can spend more time on running the business and generating sales.

In reality you will find additional administration items even though they are not critical. Examples would be: staff medical aids, company insurance, pension funds, disciplinary matters, hiring matters, dispute resolutions amongst many others. Even with brokers these still require monthly admin work that can be tedious and time consuming - so be aware.

If you should ever decide to start employing accounting clerks please also refer to our "staff and management" page. These are people you will be trusting with some critically important tasks and they will have to be trusted with your money and the temptations that go with it. Try and have some form of background knowledge in accounting. There are various courses available and this will enable you to run regular and random checks to help prevent you from becoming a victim of fraud.

As your business grows (in terms mainly of number of staff), you will be required to consider further legislation and the administration side of it. Examples include employment equity, shop stewards, safety officers and the like. This however is beyond the scope of small business information and into the realm of medium and big business.

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