A statutory requirement is that once every year, you fill in a tax return for your business, giving SARS details of all your business income and expenses.
For your own convenience, get into the habit of keeping accurate records of everything your business owns, the income you have made, the expenses you have incurred, and the your debtors and creditors.
There are many different ways to keep your records, from physical storage to a number of on-line or cloud solutions. Choose one that suits your business.
Record your income and expenses accurately.
Here are some things you need to record:
Records of Income
- Salary records
- Investment income
- Bank statements
Records of expenses
- Till slips
- Paid accounts
- Keep your invoices, till slips and other information together, because these will support the data that was captured.
- List the dates and amounts of items bought and sold.
- You should have a separate bank account so that your personal and business expenses don’t get mixed up.
Picture to be inserted with quote : Good records don’t only help you to manage your business more efficiently; they help you in other ways too.
LIST OF RECORDS
Your business records must include all of the following:
Records that show the following:
- Undrawn Profits
A register of fixed assets
Schedule of annual stocktaking
Detailed daily records of cash receipts and payments
These records must show the following:
- The date of transaction
- The nature of the transaction, including the amount
- The names of the parties to the transactions (except for cash sales)
Detailed records of purchases (goods and services) and sales.
These must show the following:
- The nature of the transactions
- The names of the people or businesses involved.
A small business that is registered for turnover tax must keep the following records:
- Amounts received during the year
- Dividends declared during a year of assessment
- Each asset at the end of a year of assessment with a cost price of more than R10,000
- Each liability at the end of a year of assessment exceeding R10,000
IMPORTANCE OF ACCURATE RECORDS
Good records don’t only help you to manage your business more efficiently; they help you in other ways too.
- Your records show what kind of income your business makes. The receipts will show whether your income is of a revenue or capital nature.
- Your records will help you pay the right tax. Without a record of expenses, you might overlook them when filling in your tax return. This means you pay more than you should!
- Your records show how much is paid in salaries or wages. Employers must record the employees’ tax deducted from the salaries and wages paid.
- Your records help explain what is on your Income Tax Return SARS might ask your to validate what you have captured on your Income Tax Return . If you have accurate records, backed up by sales slips, invoices, receipts, bank deposit slips and other documents, you’ll be able to answer all their questions.
REMEMBER, YOU MUST KEEP YOUR BUSINESS RECORDS FOR FIVE YEARS. IF SARS REQUESTS THEM, YOU MUST BE ABLE TO MAKE THEM AVAILABLE.