Cape Town’s water crisis – how it effects the economy

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The water crisis will not just affect Capetonian bathing habits or how much water there is in their swimming pools. Cape Town without water is set to have a catastrophic effect on its business landscape. According to ratings agency Moody, the city’s credit rating is under review for a downgrade due to the ongoing crisis. Furthermore, 94% of companies in the province have reported water as a direct risk to their operations.

Besides the obvious pool installers, plant nurseries and car wash businesses, some business sectors will be more affected than others.

 

Here are the sectors in for a dry spell:

 

The Agriculture Sector

The agricultural sector is set to be hit the hardest. The Western Cape’s farming sector is a major supplier and exporter of fruit and wines and is infamously water intensive. Recently it cut its water usage by 80 percent, which has had a serious impact on production. The reduced output will hurt export earnings and is set to further impact 50 000 seasonal labour jobs. Also… your favourite bottle of Cab Sav? Prepare for a possible price hike.

 

The Tourism Sector

News of Cape Town’s water crisis has spread abroad, and tourists are taking note. Prospecting visitors are increasingly cancelling visits to the city and who would blame them? The thought of a shower less holiday would deter the best of us. But this decline in arrivals is set to place the R38 billion tourism industry at risk.

 

Construction Sector

The water restrictions have had specific implications for the construction industry, forcing them to utilize treated effluent water available for industry operations. However, the far-reaching effects are yet unknown.

 

Property Market

Thinking of investing in that flat by the beach? Perhaps you should think twice, at least for now. According to new data released by Standard Bank, house price inflation in Cape Town slowed to 9,7% in the fourth quarter of last year. Consumer confidence has taken a dip and as a result demand for property is slowly declining.

 

Want to find out more? Visit:  http://www.capetown.gov.za/Family%20and%20home/residential-utility-services/residential-water-and-sanitation-services/make-water-saving-a-way-of-life

 

Article originally posted on:  http://www.icb.org.za

10 reasons to use a mobile accounting app

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Small business owners rarely sit down at a desk, so when are they supposed to do their invoicing and accounting? Mobile apps allow them to take care of those jobs from a smart device. See why that’s good for them, and for you.

Great for you and your client

Once you connect clients to a mobile accounting app, they can do things like invoicing and bank rec from anywhere. That makes it easier for you to process tax returns, monitor cash flow, and offer advice that could improve profitability.

We take a look at the many ways mobile accounting apps can make business better and life easier – for you and your clients.

Why your clients will love mobile accounting apps

1. Invoicing on the go
Invoicing has traditionally been a desktop job, but it’s often hard to find the time to sit down and do. With a mobile accounting app, clients can send invoices off their phone or tablet – from a jobsite, a vehicle, or a lunch spot. The sooner they invoice, the sooner they get paid.

2. Chasing debtors
Mobile accounting apps tell your clients when they’ve been paid, or when an invoice is past due. That makes it easy to stay on top of accounts receivable.

3. Keeping up with bank reconciliations
Accounting apps can take a direct feed from your client’s bank account, allowing them to review transactions every day. Now they can do a few minutes of bank reconciling each morning, rather than letting it pile up over a month, a quarter, or a year.

4. Photograph and store receipts
Free your clients from the burden of paper records. They can photograph receipts with their phone and a mobile accounting app like Receipt Bank or Hubdoc will push it to their accounting software.

5. Check cash flow anytime
You can set up a dashboard that allows clients to check money in and money out on their phone. It will help them see where their bank balances are at, and keep an eye on cash flow trends.

What’s in it for you, the advisor

6. More engaged clients
Clients that have round-the-clock access to their business accounts become far more engaged in the numbers. They’ll check metrics daily and become more invested in the trajectory of the business. That ultimately leads to a closer relationship with their accountant. Read more about how clients get hooked on online accounting.

7. Quick wins
Mobile accounting apps can be the single biggest fix for some clients’ cash flow. Business owners who used to sit at home one day a month to bash out invoices on a desktop can now do it from anywhere. Suddenly they can send invoices as soon as jobs are done. You can dramatically improve their cash position in a single move.

8. Get cleaner books
A mobile accounting app coupled with daily bank feeds does wonders for client bookkeeping. Because businesses can review and code transactions every day on their phone, bank reconciliation is much more likely to stay up to date. That helps you track and advise on business performance, and it makes financial year end far less gruelling.

9. Paperless office
Clients who get expense data into their accounting software just by photographing the receipt save you work. You don’t get a mass of documents at financial year end, and tax season becomes a lot less scrappy.

10. Better expense records
Clients can use mobile apps to attach expenses to jobs as soon as a purchase is made. That makes it a lot easier to find out the true cost and profitability of specific jobs.

Boost business value

Tighter bookkeeping and accounting are a vital cog in succession planning. Good records help owners demonstrate the profitability of their business and command a higher price from prospective buyers. Mobile accounting apps make it easier for business owners to deliver a clean and accurate set of accounts.

Getting clients onboard

There are a lot of reasons why you might recommend mobile accounting apps to clients. You’ll probably notice their eyes glaze over if you get too technical, so keep the pitch simple. Explain that mobile accounting saves time.

Help them visualise how it will transform downtime, and keep them from setting aside whole days at a time to catch up on accounting:

  • Waiting for a supplier to open? Check which invoices are overdue and send reminders.
  • Sitting down for a quick sandwich? Catch up on cash flow and upcoming expenses.
  • Grabbing a quick coffee? Run through and reconcile yesterday’s transactions.
  • Just bought supplies for a job? Add your markup and allocate those costs to the client’s next invoice now.
  • Finishing up a project? Send the invoice straight away, from the worksite.

Their data is safe

Online services, such as mobile accounting apps, are incredibly convenient. Some clients may worry that if it’s easy for them to access their data, it’s easier for others to see that data as well.

Assure them that a lot of sensitive data is safely kept online these days, including banking and financial information. Rigorous security is built into those systems. A mobile accounting app is no different. So long as clients have a sensible password policy, they have nothing to fear.

Get moving on mobile

Not all of your clients will be ready for mobile accounting apps, but the ones who are will be blown away. Moving invoicing and accounting off the desktop and out of the office is a game changer for small businesses. They can bite off accounting jobs during the workday rather than sitting down at a computer in the evening or on weekends.

And a happy client, with well-kept books and a better handle on business metrics, is good for your practice too.

Article originally published on: https://www.xero.com/

2018 NATIONAL BUDGET TIPS

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Whilst there remains uncertainty about the composition of the new cabinet of President Ramaphosa, there is far less uncertainty about the fact that the country’s Budget Speech will be delivered on Wednesday, 21 February 2018.

budget tips

The country needs decisive leadership at this time and even if there is unease still at the change in the Minister of Finance, the necessary leadership needs to be displayed or else the gains that the country has seen since the December election of Cyril Ramaphosa as President of the ANC will have been wasted.

The country cannot afford to continue spending more money than that collected by taxes.

A lot of time is given to setting budgets but the problem is the control to ensure that agreed upon budgets are met and that expenditure is in fact limited to the budget and spent on the budgeted items and not on unbudgeted expenditure.

We do not have sufficient controls in place as a country (and as a municipality) and the level of censure for exceeding a budget and spending unbudgeted expenditure, or even frivolous expenditure, is not in place to stop its continued recurrence.

The glib use of the term “unauthorised expenditure” in many audits of State Bodies, and the fact that little or no punitive action against departments or guilty officials seems to follow from this, is of great concern to taxpayers.  Unless the guilty parties are held accountable for irregular expenditure and wasting State resources, this practice will simply continue.

At the time of the Katz Commission I proposed that taxpayers be given a single tax number that was based on their ID number so that the completeness of the tax base could be looked at.  One could for example test the people aged between 35 and 55 who were not reflecting any taxable income.  For too many years we have heard about a tax gap due to non-disclosure but other than the Voluntary Disclosure Programmes there does not seem to be any real evidence of this being addressed.  Whilst revenue will benefit from the worldwide disclosures of information from Banks and other financial institutions, we need to do more to close the local tax gap.

It is probable that in order to fund the promises made by President Zuma on the eve of the ANC Elective Conference that the Minister is going to have to give consideration to either increasing the VAT rate or the Skills Development Levy or a combination of both of these.

It is also probable that bracket creep will raise a significant amount of tax from the middle class.

In order to mitigate against the impact that this will have on the middle class, it is important for the Minister to give consideration to the introduction of a limited tax deduction for the cost of private security and education in the same manner that the Minister provides a limited deduction for the cost of the medical aid on the basis that the State is unable to provide adequate medical facilities, schools and policing, which require the private sector to pay in addition to their taxes, amounts for medical aid, security and education.

Mister Minister please spend wisely, do not spend more than we have, spend locally to ensure that government spend benefits our economy and above all please minimise the wasted expenditure by implementing the necessary controls.

Mister Minister you have hard choices to make this year.

 

Article originally posted on: http://www.pkf.co.za/

Avoid Interest and Penalties! Submit your Provisional Tax Return by 28 February 2018!

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A provisional taxpayer must, during every period submit an estimate of the total taxable income which will be derived in that year of assessment. Provisional tax payments must be made by natural persons on or before 28 February and 31 August each year. The South African Revenue Service (“SARS”) also allows for a third “voluntary top up” or “additional” provisional payment, which must be paid on or before 28 September.

avoid tax penalties

In the event that the taxpayer also receives income in the form of a salary, the PAYE deducted during the year of assessment will be taken into account when calculating the estimated amount.

Provisional taxpayers are also entitled to a foreign tax credit in respect of foreign taxes paid on income from a non-South African source.

It is important for taxpayers to ensure that they meet the abovementioned payment deadlines to avoid unnecessary tax liabilities in the form of interest and penalties. In this regard, we highlight below the consequences of the late or underpayment of provisional tax.

Late payment of provisional tax

  • interest at the prescribed rate on late payment;
  • a penalty of 10% will be levied on any late payment in respect of the first
  • and second periods; and/or
  • SARS will consider the estimate income to be nil if four months has lapsed since the due date of the second provisional tax payment.

Underpayment of provisional tax

  • A penalty up to a maximum of 20% of the underpayment may be levied by SARS;
  • If the taxable income is more than R1 million, a penalty will be levied if the second period estimate is less than 80% of the actual taxable income;
  • If the actual taxable income is equal or less than R1 million a penalty will be levied if the second period estimate is below the basic amount and not within 90% of the actual taxable income for the year.

Capital gains during the year

There is also a duty on a provisional taxpayer to include in its estimated taxable income capital gains that arose or will arise during the year of assessment.

The due date for the second provisional tax payment, being 28 February 2018 is around the corner. All provisional taxpayers are urged to submit their tax returns correctly and on time.

 

Article originally posted on: http://www.pkf.co.za/

Get into freelance accounting with these 8 tips

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Everyone’s freelancing these days – accountants and bookkeepers included. And why not? You can now deliver high-end services at a fraction of the cost, from your home. The margins can be solid, and it’s a good way to start your own accounting firm.

Get into freelance accounting with these 8 tips

Freelancing is big

The gig economy is in full swing. Creatives have been freelancing for years. Project managers, too. More and more professionals are finding it easier to freelance because of:

  • online collaboration: broadband internet makes it easy for people to work together, without meeting in person
  • subscription software: independent contractors can use enterprise-level software for a small monthly fee (such as online accounting software)

What this means for freelance accounting

Accountants used to need a lot of corporate-level infrastructure. This included things like archive space for paper files, expensive software packages, dedicated servers, and meeting rooms. It also took a lot of human resources to do all the clerical work – entering data, filing documents, and maintaining journals.

And that was just to do the basics of tax and compliance. It required even more time, effort, space and people to offer payroll services or produce good business management reports. With online accounting software, a single home-based freelance accountant can now do all of this on their own.

A laptop and a dream

Accountants and bookkeepers don’t need to sink big bucks into infrastructure anymore. The overheads can be as little as a laptop and business insurance.

  • Accounting software subscriptions are nominal and the costs can be easily passed on to your client.
  • Some providers give you practice management software for free.
  • Data is secured in the cloud, with no need to do backups or archive paper files.

And because businesses that use cloud accounting software are far more growth-focused, a freelance accountant or bookkeeper can get set up and take off quickly.

You don’t need to hire

Because practically all business transactions are processed electronically, data entry doesn’t have to be a big cost anymore. An online accounting system can capture that data at source – be it from a bank account, an invoicing system, a POS system, an e-commerce system, or an expense app.

Now that it requires fewer human resources to complete these basic accounting functions, freelance accountants and bookkeepers are less likely to need hired help.

How to be a freelance accountant or bookkeeper

1. Get online
You’ll need a reliable internet connection and a laptop, along with a conferencing app that you’re happy with (many of which are free). You can also accept online payments with apps like Stripe or PayPal. That’s really handy if you end up selling a subscription accounting service (see 3. Create service bundles).

2. Connect to cloud software 
It’s much easier to work with clients when you can both log into their account at the same time. It’ll help you answer questions in context, while reducing the number of in-person meetings. Smart cloud accounting software allows you to do that. Plus it allows automatic data entry and daily bank reconciliation. It also makes payroll much easier.

3. Create service bundles 
Most small businesses want certainty around their expenses. Hourly billing doesn’t give them that. Try agreeing on a plan where you provide specific services for a monthly retainer. This often includes write-up work such as account reconciliations, day-to-day assistance posting transactions, managing bill payments, providing reports, and advising on business growth. See how Bean Ninjas set up their bundles and launched in one week.

4. Increase your revenue per client
After you get a few retainer clients onboard, think about how you can sell them more services. It’s often easier to get more revenue from existing clients than to find new ones. Leverage the goodwill you’ve built up from automating their basic accounting by offering to do the same with their payroll. Or pitch them on tax planning. Or use cloud software’s built-in reporting and dashboard functions to advise clients on strategic business decisions. There are a lot of options.

5. Get free referrals 
Being a ‘cloud accountant’ can be a draw. Many businesses specifically look for accountants who use online software. Go to the places where those prospects hang out. Start by listing on Xero’s advisor directory, which generates several thousand referrals a week for accountants and bookkeepers. Before you post a listing, however, read these tips on how to write a good one.

6. Build your digital presence 
There are probably a lot of potential clients in your local area, but there are millions more online. And as a freelance accountant with cloud software, you’re not limited by geography anymore. Use digital media to get the word out:

7. Don’t forget traditional marketing
Try these tips on:

8. Stay on top of your expenses
It’s really easy to track revenue through invoicing and payment apps, but expenses are often overlooked. Keep an eye on costs such as phones, computers and software. Don’t forget charges associated with website hosting, professional memberships, directory listings, advertising, or networking. If you’re not a tax pro, speak to a peer who is and make sure you’re claiming all the deductions you can.

You already have the tools to be a freelance accountant or bookkeeper

The gig economy is still taking off, and it’s a great time for accountants and bookkeepers to jump on board. All you need are a few tools, a good work ethic, and an entrepreneurial spirit. Online software are making it simpler than it’s ever been to get started as a freelance accountant or bookkeeper.

 

Article originally posted on: https://www.xero.com/

Your 2018 TaxCPD

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tax faculty

 

 

 

 

 

 

 

 

 

 

 

 

 

Take care of your professional development in 2018 by subscribing to one of our cost-effective annual subscription packages. Subscribers can enjoy even more flexibility with four packages to choose from – each option catering for the specific needs of professionals in the tax and accounting fields through monthly webinars and seminars.

Betty Bookkeeper answers your questions on easyfile and SARS

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Hi Betty

My problem is the following: At Tax year end I have imported my payroll file into easy file, requested my declaration and completed my declaration as I was about to submit I learned that the company had a consultant that took all the info as well from my payroll system and did the submission on his side, so I couldn’t submit my file. Now I have a problem as there is a few changes that needs to be made to 4 certificates for that period. The consultant doesn’t want to give us the easy file backup. Now I want to know whether I can use that file which I have imported which status is now only created and resubmit that file.

Regards,
Sheena

Hi Sheena

When it comes to SARS we don’t like to get involved as SARS has their own requirements and criteria. You will need to contact SARS directly for this query.

Hope that helps!

Don’t forget that I’m here to answer your questions about the ICBA, or just queries about your accounting at work. All you have to do is email me with a copy of your ICBA membership certificate. Not yet a member? Send in your application form!