Business compliance is an ongoing process for business owners, as a business owner you should make sure your business is compliant with legislation. Failure to take care of business compliance could lead to closure of your business and in most cases a loss of income. The big questions are, how to get started and how keep your business compliant?
Keeping your registered business legal – annual returns
The starting point of compliance is keeping your registered business legal. Yes, you registered your business in 2007 but to keep the registered business active your business needs to pay an annual fee. This fee is called annual returns and is an amount of R100 for a PTY LTD and Closed Corporation. Failure to pay annual returns includes a penalty of R50, more importantly your business may be deregistered. This pricing applies if done by the business directly on the CIPC website, using external parties may include additional fees.
To pay your business annual returns you will need to have a customer code with CIPC and follow the process annually to keep your business active. Here two links which include user guides from CIPC to get started:
Financial compliance – South African Revenue Services (SARS)
Every business is obligated to pay tax to SARS, there are many categories of tax for business owners and depend on the annual turnover of your business. A link with more information to each category will be included to provide information directly from SARS. These links are extremely useful and provide a quick overview. Generally business entities will need to register for:
Value Added Tax (VAT)
Pay as you Earn (PAYE)
Unemployment and Insurance Fund (UIF)
Skills development Levy (SDL)
Turnover tax is tax paid on the annual turnover of your business. To get a better understanding of turnover tax review the information provided on the SARS website: https://www.sars.gov.za/ClientSegments/Businesses/SmallBusinesses/Pages/default.aspx
VAT, depending on your business turnover you may also need to register for value added tax (VAT). This is not compulsory if your business turnover is less than R1 Million per annum, there is also a voluntary option for vat registration. Read more about VAT on the SARS website: https://www.sars.gov.za/ClientSegments/Businesses/SmallBusinesses/Pages/Small-Businesses-and-VAT.aspx
PAYE, as you will be required for employees of the business. Remember that as the owner of the business you are also employed by your business. Additional information is available on the SARS website: https://www.sars.gov.za/TaxTypes/PAYE/Pages/Registering-for-PAYE.aspx
UIF, is paid to provide employees with financial support if retrenched or in the case of not been employed and is the responsibility of the business. Read more about UIF on the SARS website: https://www.sars.gov.za/TaxTypes/UIF/Pages/default.aspx
After reading the last few paragraphs you are most probably feeling overwhelmed with information. The idea is for us as business owners to understand the importance of compliance. So just how serious is compliance? More specifically financial compliance, well over the past 10 years we have seen many businesses been blacklisted by SARS due tax evasion or failure make tax payments.
Starting your business financial compliance includes a few options:
Option 1: visit SARS offices in your local area and consult with a SARS official, this may be time consuming due to the number of people visiting SARS offices daily. Depending on your knowledge of taxation and finance you could consider using the SARS online platform to register and submit all your tax.
Option 2: set up an appointment with an accountant and tax practitioner to help you get your business financial compliance in order. This will include a fee for the services, try to find a company that specializes on the size of your business and your business turnover. In most cases this will be the simplest way to get your finances on track as you will have experts dealing with your business finances.
Irrespective of the option you choose, ongoing learning is important for business owners. Keep yourself up to date with changes in legislation, read books on business finance, attend workshops on finance and taxation and network with experts in the industry.
Industry specific legislation
Different industries and professions have compliance regulatory organisations supported by legislation. Medical professionals like Doctors would need to register with Health Professions Council of South Africa (HPCSA). Industry specific legislation is in most cases linked to legislation in South Africa, always ensure you have follow the correct processes to keep your business compliant. In most cases your business will be provided a licence or registration number.
Financial institutions will require information from your business as well as the shareholders, members or directors. The information required includes ID documents, proof of address and financial records this legislation is FICA (Financial Intelligence Centre Act). FICA is focused on preventing and combating financial crime. This means your bank is responsible for reporting suspicious or unusual transactions on your business and personal bank accounts. FICA verification for your business is updated annually, the bank will contact you to provide updated documentation. Failure to provide documentation will lead to temporary closure of your business bank account which means you cannot access funds or bank accounts.
Compliance is not a once-off process
As business owners we should remember that compliance is an ongoing process in business. Government legislation can change at any time and this means we as business owners need to make immediate changes to stay compliant. Keep a network of legal and financial professionals in your circle of advisors to help you stay up to date with changes. Remember to pay annual or monthly payments if required to keep your business compliant. Keep records of your compliance documentation and a back up copy using cloud storage.
Continue learning more about compliance and keep an eye on government information. Visit the Department of Labour website for updates and additional compliance http://www.labour.gov.za/DOL/
Business owners in most cases deal with client information which includes personal details of clients. Take time to understand and implement protection of client information in your business, read more regarding the Protection of Personal Information Act, https://www.gov.za/documents/protection-personal-information-act