Read more about the article How You and Your Business Can Benefit from SARS’ Solar Tax Breaks
Tax

How You and Your Business Can Benefit from SARS’ Solar Tax Breaks

“The lack of reliable electricity supply is the biggest economic constraint… I am pleased to announce two tax measures to encourage businesses and individuals to invest in renewable energy and increase electricity generation.”(Finance Minister Enoch Godongwana – Budget 2023)

In the 2023 Budget, the lack of a reliable electricity supply was highlighted as the country’s biggest economic constraint. South Africans have been subjected to loadshedding every day of 2023, often at stage four, five or six. Recent research by the Bureau for Economic Research revealed more load-shedding in the first two months of 2023 than in all of the previous four years. It is a situation expected to deteriorate even further as demand rises with the winter months approaching.

To encourage businesses and individuals to invest in renewable energy and to increase electricity generation, government announced two tax measures in the 2023 Budget in February. The first will provide R5 billion in tax relief to companies through an expansion of the renewable energy incentive, and the second will provide R4 billion in tax relief for households that install solar panels. Both entail a number of conditions and requirements, as well as tight timelines, which are summarised below.

The expanded tax incentive for businesses

To encourage rapid private investment to alleviate the energy crisis, this is a temporary expansion of the existing tax incentive Section 12B of the Income Tax Act, which provides for capital expenditure deductions for assets used in the production of renewable energy.

It originally allowed businesses to deduct 50% of the costs in the first year, 30% in the second and 20% in the third for qualifying investments in wind, concentrated solar, hydropower below 30 megawatts (MW), biomass and photovoltaic (PV) projects above 1 MW, and provided an accelerated capital allowance of 100% in the first year for solar PV energy projects of less than 1MW.

This incentive has now been temporarily expanded as outlined below.

Highlights of the expanded incentive

  • Under the expanded incentive, businesses will be able to claim a 125% deduction.
  • Moreover, that deduction can now all be claimed in the first year.
  • Businesses will be able to reduce their taxable income by 125% of the cost of renewable energy assets used for electricity generation.
  • The adjusted incentive will only be available for investments brought into use for the first time between 1 March 2023 and 28 February 2025.
  • The deduction applies to all renewable energy projects.
  • There will be no thresholds on the generation capacity size of the projects that qualify.
  • The expanded incentive is only available for two years from 1 March 2023 to 28 February 2025 to stimulate investment in the short term.

Example: business renewable energy tax incentive

For businesses with a positive taxable income, the deduction will reduce tax liability. For example, a renewable energy investment of R1 million would qualify for a deduction of R1.25 million against taxable income.

Using the current corporate tax rate (27%), this deduction could reduce the corporate income tax liability of a company by R337,500 in the first year.

Tax rebate for individuals

This is a new tax incentive available for a very limited period to encourage individuals to install rooftop solar panels to increase electricity generation and reduce pressure on the grid. Individuals can claim the rebate against their personal income tax liability.

Highlights of the individual tax rebate
  • This incentive will be available for one year between 1 March 2023 and 29 February 2024.
  • Individuals who install rooftop solar panels will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000 per individual.
  • The rebate can be used to reduce tax liability in the 2023/24 tax year. PAYE taxpayers can claim the rebate on assessment during the 2023/24 filing season, while provisional taxpayers can claim the rebate against provisional and final payments.
  • There is no ownership limitation, so installations by either landlords or renters are eligible, but only the party that pays for the solar panels can claim the rebate.
  • The rebate applies only to new and unused solar PV panels with a minimum capacity of 275W per panel (design output), installed as part of a new system, or as an extension of an existing system, which must be connected to the mains distribution of the residence (i.e. no off-grid installations qualify).
  • The rebate is only available for solar PV panels (excluding portable panels), and not for other components of a system such as batteries, inverters or fittings. Installation costs do not qualify.
  • The solar panels must be purchased and installed at a private residence used mainly for domestic purposes (i.e. dual-use residences such as a guest house or Airbnb used more than 50% for trade, will be excluded).
  • A certificate of compliance for the installation must be issued between 1 March 2023 and 29 February 2024 and the certificate must confirm the date the solar panels purchased were brought into use for the first time.
  • To claim, taxpayers will need a VAT invoice that indicates the cost of the solar PV panels separately from other items, along with proof of payment.
  • There will be no recoupment if the residence is sold after claiming the rebate, but there will be a claw-back if the panels themselves are sold within one year.
  • SARS has issued draft third-party regulations for comment that will require solar installers to report to SARS the complying installations they have completed together with the details of the purchaser.
  • Like other rebates, it may only be claimed against tax payable and only to reduce the tax payment to nil. If the tax payable is less than the rebate, the balance is forfeited.
Example: tax rebate to individuals

An individual who purchases 10 solar panels at a cost of R40,000 will be able to claim 25% of this R40,000 cost – or R10,000 as a rebate. This means that the individual’s personal income tax liability that is payable for the 2023/24 tax year can be reduced by R10,000.

Another individual who buys 20 panels at a cost of R4,000 per panel, will have invested a total of R80,000. The calculation of 25% of R80,000 amounts to R20,000, but only R15,000 can be claimed against income tax liability for the 2023/24 tax year, as the deduction is limited to R15,000 per individual. If the tax payable is less than R15 000, the rebate is reduced to the amount of tax payable. The balance of the rebate is thus forfeited.

Given the many conditions and requirements, as well as the tight timelines, professional tax advice is recommended before installing solar power or renewable energy alternatives, to ensure the full benefit of these time-limited tax incentives can be realised.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 25, 2023
Read more about the article Affordable Ways to Reap the Benefits of Engaged Employees
Business

Affordable Ways to Reap the Benefits of Engaged Employees

“Always treat your employees exactly as you want them to treat your best customers.” (Stephen R. Covey)

Gallup describes “engaged employees” as those who are involved in, enthusiastic about, and committed to their work and workplace. Numerous studies over many decades have confirmed the benefits of engaged employees especially to smaller companies, where they are often required to take on many diverse responsibilities.

Many studies have also identified employee engagement strategies that have proven most meaningful to employees and are therefore most effective. In these difficult economic times, business owners and managers will be pleased to find that some of the most effective employee engagement strategies do not require a substantial cost.

The many benefits of engaged employees

This isn’t just hype. Studies have confirmed that –

  • Engaged employees often go beyond the call of duty.
  • Employee engagement is positively correlated to company growth rates.
  • Improved employee retention and loyalty.
  • Lower absenteeism rates.
  • Higher productivity – some studies have found engaged workers to be up to 21% more productive.
  • Improved customer satisfaction.
  • Improved company reputation and overall stakeholder value.
  • Reduced incidence of internal theft and fraud.
  • Reduced safety incidents.
Some effective employee engagement strategies
  • Employees have a good understanding of the business’s values and mission, and clear expectations about their role in achieving these.
  • Employees have the necessary equipment, resources and authority to do their jobs well.
  • Regular employee performance and progress catch-ups with good quality, authentic and genuine feedback.
  • Good relationships with superiors who are truly concerned for employees’ wellbeing and willing to provide support.
  • Opportunities for employees to voice opinions and contribute ideas.
  • Genuine and meaningful recognition, given publicly and timeously in front of superiors and peers.
  • Peer-to-peer recognition has been found to have twice the impact of recognition from managers.
  • Flexible work schedules and remote working options that allow employees to meet family obligations.
  • Onsite employee programmes addressing, for example, health and wellness, or personal finances.
  • Onsite family day care facilities and/or onsite food services.
  • Having friends at work significantly improves employee commitment and satisfaction, by as much as 50% according to some studies.
  • Volunteering unites employees towards a common greater good.
Implementing employee engagement strategies on a budget

When looking at the employee engagement strategies listed above, it is encouraging that most don’t involve high costs. What is crucial is to ensure that any strategies implemented add real value to your employees and impact their work and personal lives in a meaningful way. The best way to do so would be to ask your employees directly, perhaps at a team meeting or via an anonymous online survey.

Perhaps an employee-of-the-month program with rewards such as breakfast with the Boss or gift cards could yield great results. It may be that a Friday afternoon off once a month or paid leave on an employee’s birthday are top choices. Celebrating national holidays or sporting events as a company, or providing paid time off for volunteering together, will create opportunities to build friendships and create a sense of belonging.

Especially in small businesses, such employee engagement strategies can create a happier, more productive and faster-growing company.

While most of the employee engagement strategies discussed are not part of formal compensation packages, employee relations are always subject to intricate labour and tax laws as well as a host of practical business considerations. Be sure to run any employee perks you are planning to offer by your accountant to check there are no unintended outcomes.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 25, 2023
Read more about the article Setting Up Your Finances in a New Business
Business / Financial

Setting Up Your Finances in a New Business

“A house built on granite and strong foundations, not even the onslaught of pouring rain, gushing torrents and strong winds will be able to pull down.” (Haile Selassie, Former Emperor of Ethiopia)

When starting a new business, few things are as important as establishing your finances and making sure they are right. Building the foundation for stable, accurate financial reports and tax filing will see you in good stead in the future and establish the practices that will lead your company to success. Here are the top seven tips.

1. Set up a deadline calendar

Whether you use a large whiteboard in your office, or a digital reminder service like Google Calendar, it is vital that you track which payments are due and when. Whether it’s your staff salaries, business loan payments or accounts payable, you need to know exactly when each amount is due in order to plan your cash flow accurately. Not having the cash on hand when a payment is due not only hurts your business credit rating but can also cost you more in fines or late-payment fees.

2. Monitor your accounts receivable

Just because you have invoiced a client doesn’t mean that money is immediately coming in. Check the terms of each client’s contract to understand exactly when they are likely to pay. If a client pays on a 60-day cycle it is unreasonable to expect the money will come in before that and you therefore need to plan other ways to have cash on hand to meet payments. For each invoice make a note on when it is likely to be paid.

3. Track your inventory

Inventory on hand is as much a part of your finances as the actual cash in your bank. Are you ordering too much and letting things rot on the shelves, or are you ordering too little and being forced to pay for rush deliveries to meet your orders? Tracking inventory will allow you to make better purchase decisions and streamline the operations of your business thereby reducing costs and stress.

4. Consider opening two business bank accounts

Account 1: It is vital that you be able to track all expenses you are incurring in order to make accurate business decisions and monitor your business spending. To do this you will need one bank account in the name of the business dedicated to the daily running and expenses of the business. This will allow you to accurately reconcile the account at the end of the month and see whether more money is coming in than going out. Don’t have more than one daily operations account, and don’t use your personal accounts to pay business expenses – if you do, monitoring your cash flow, income and expenses becomes that much harder.

Account 2: The second account you should think of opening is a savings account, into which you will deposit a percentage of each month’s income to cover the taxes at the end of the year. The last thing you want to do is arrive at year-end unable to afford what you owe to SARS. Ideally, you should pay more than you owe on taxes alone into this account to also build a cash reserve. This cash reserve will see you through difficult times or cover unexpected expenses.

5. Get a bookkeeper

Whether you get a bookkeeper or download bookkeeping software, it is vital that you keep track of all your incomings and outgoings. QuickBooks, Wave, Zoho Books, Xero, and FreshBooks are a few examples of the best apps for small business owners. Apart from making the issuing and tracking of invoices easier, knowing exactly which jobs have been invoiced, which have been paid and which are still owing as well as to whom, and how much you owe, will help you to plot payments, make cash flow decisions and price your product more accurately. Moreover, come tax time, you will have all of the paperwork necessary to give to your accountant to ensure as favourable a tax season as possible.

6. Download a receipt scanning app

Now that your bookkeeper or bookkeeping software is tracking your invoices and accounts, you need to also track and accurately record your expenses that are made independent of your monthly suppliers. Fortunately, there are many receipt scanning apps that will help you to quickly and accurately record each business lunch receipt and stationary purchase, and then add them to an online database. Exactly which one you download will depend on your exact needs, but here are a few to get you started: Zoho Expense, Expensify, Wave, QuickBooks Online and Evernote Scannable.

7. Download an app to record business travel

While you can get digital logbooks that you plug into your computer, it is far easier these days to simply download an app that will record each of your journeys automatically in the background on your phone. MileIQ, for instance, is great, because with a simple swipe after each journey you can record whether it was for personal or business reasons, and at the end of the year can print out a full record of all your travels and the related expenses.

Setting up your business foundation is essential for the health of your business. Once you have done all of the above, and accurately tracked your expenses and income for the year your accountant will have an easy time saving you money, ensuring you only pay the taxes you owe and not a cent more.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 25, 2023
Read more about the article Happy Tax Freedom Day!
Tax

Happy Tax Freedom Day!

“In 2022 South Africa had the 12th highest income tax burden, the 9th highest company income tax burden, and the 14th highest non-resource tax burden worldwide.” (Garth Zietsman, South Africa’s Tax Freedom Day statistician)

 Tax Freedom Day marks the day in the year when South Africans stop giving all their money to their government for the year and finally start working for themselves. In 2023, Free Market Foundation statistician Garth Zietsman has worked out that this day will be the 14th of May, two days later than in 2022, which in turn fell 10 days later than predicted in 2021.

In 2023, the average South African taxpayer has had to work for a predicted 133 days to pay their taxes. Back in 1994, South Africans took 101 days. The usefulness of the metric is now clear – South Africans are now spending a full month longer every single year working for their government.

According to Zietsman, the actual date may be far worse: “The prediction is based on the intended level of tax collection for central government mentioned in the Budget Speech. Typically, the actual figure, which is the general government revenue as a percentage of GDP from the Reserve Bank Quarterly, turns out to be 30% more than the intended figure for central government”.

The Freemarket Foundation is a Johannesburg based, classical liberal think tank, who have adapted the concept of Tax Freedom Day from Florida businessman Dallas Hostetler who developed and trademarked the idea in America in 1948.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 25, 2023
Read more about the article Your Tax Deadlines for May 2023
Tax Calculator with Red Button
Tax

Your Tax Deadlines for May 2023

  • 5 May – Monthly Pay-As-You-Earn (PAYE) submissions and payments
  • 30 May – Excise Duty payments
  • 31 May – Value-Added Tax (VAT) electronic submissions and payments & CIT Provisional payments where applicable.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 25, 2023
Read more about the article Why (and How) to Submit Skills Development Reports by 30 April
Word taxes 2022 near alarm clock on blue background. The concept of paying the tax. Payment time. Reporting period. Deadline. Income annual. Top view. 3d render
Business

Why (and How) to Submit Skills Development Reports by 30 April

“We need to give importance to skill development because this way we can end unemployment.” (Narendra Modi, Prime Minister, India)

Since 1999, the Skills Development Levy (SDL) has served to fund skills development in the country. It encourages a planned and structured approach to skills development so employers, employees and the economy can benefit from a better skilled and more productive workforce.

All South African companies with a payroll exceeding R500,000 per year (that’s just under R42,000 per month) – including salaries, wages, overtime payments, leave pay, bonuses, fees, commissions and lump sum payments, and with certain specific exclusions – are required to pay SDL of 1% of the total amount paid in salaries to employees each month. It is declared and paid by employers to SARS with the other monthly employee taxes (PAYE and UIF) via the Monthly Employer Declaration (EMP201) and is then paid over to the relevant SETA by SARS.

Employers can claim back more than half of the levies paid each year, but most miss the opportunity by not meeting the stipulated requirements. Depending on the size of a company’s payroll, this could be a substantial amount. There are also other benefits that can be unlocked by meeting the requirements for claiming back the levies paid.

We briefly summarise below the benefits of claiming back the SDL paid, as well as how to do it in the most efficient way.

Benefits of claiming back levies paid
  • Claiming ensures valuable revenue is not forfeited – up to 70% of SDL paid to SARS in the financial period can be claimed back through the mandatory grant and other avenues.
  • 20% of the levy paid can be claimed via the mandatory grant, paid by the Seta every quarter, which is accessed as follows:
    • Appointing and registering a skills development facilitator (SDF)
    • Timeously submitting an approved Workplace Skills Plan (WSP)
    • Timeously submitting an Annual Training Report (ATR) based on the WSP.
  • 50% of levies paid can be claimed in discretionary grants for learnerships, skills programmes, apprenticeships, workplace experience placements, internships and bursaries, and organisations can apply using the same requirements for claiming the mandatory grant.
  • By offering SETA-accredited training, for example, mandatory training and registered learnerships, further tax rebates can be accessed.
  • Successful submission of the required reports will earn your company points for the Skills Development priority element under the revised B-BBEE Codes.
  • The WSP and ATR reports contain similar labour demographics information as the Employment Equity reports, facilitating improved employment equity management in the workplace.
  • Skills development initiatives positively promote a better skilled and more productive workforce, as well as proper succession planning.
  • Submitting the reports provides important sector information to the SETAs (Sector Education and Training Authorities), which informs the development of the SETA’s sector skills plan (SSP) and ultimately the National Skills Development Plan.
How to claim back levies paid
  • Appoint a suitably qualified and registered SDF to facilitate the training needs within the organisation and liaise with the SETA.
  • Companies with 50 or more employees need to establish and consult with a Skills Development Committee before the submission of the skills report.
  • Submit the Workplace Skills Plan and Annual Training Report for the period 01 April to 31 March via a registered SDF to the SETA with which the business is registered.
    • Workplace skills plans detail a company’s skills needs and the skills development interventions to address these needs, providing access to mandatory grants.
    • Annual training reports reflect the actual training data of the previous year, showing how priority skills defined in the Workplace Skills Plan have been addressed.
  • Keep records of all training provided, including attendance registers, invoices and all certifications.

Ask your accountant for help if you are uncertain about anything.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article 5 Business Plan Mistakes to Avoid
Business

5 Business Plan Mistakes to Avoid

“Proper business planning demands that you focus on the self-interest of the customer at all times.” – (Brian Tracy, Author and Speaker)

Writing a business plan can feel like a daunting process, and making mistakes is part of the package, even if you follow the online guides and templates.  To make this process simpler, we have made a short list of common errors that somehow keep creeping into these vital documents.

Making it too long

As Amazon founder Jeff Bezos once said, “You know the business plan won’t survive its first encounters with reality. It will always be different. The reality will never be the plan.” He did, however then go on to stress that writing a business plan is essential to understanding what will make your business tick. It’s important to realise that your business plan will never be able to cover every contingency and every possible incident that can occur and should rather be focused on revealing the core business. Once you understand your core business implicitly, you will be able to write it down in a much more succinct fashion. A long business plan is therefore only evidence that you don’t yet understand what’s going on.

Understand your target market

No product is for everyone. Understanding who you are selling to and what will motivate them to buy is the first thing any investor will look for, and the most fundamental thing you will need to understand to be successful. It will shape who you hire, what your marketing looks like, and even what your startup’s logo will be. Simply believing you will market to everyone is putting your business on the path to failure.

Ignoring competitors

It is extremely common for companies to exclude business competitors from their business plan. Many believe that their new product is so superior, cheap or well-supported that competitors won’t stand a chance once it is marketed correctly, or simply don’t have as much understanding of the market they are entering as they think they do.  Having a sound, realistic competitor analysis shows investors you understand the market and know where your unique differentiators lie.

Neglecting a financial forecast

Many business plans ignore financial forecasts as they either don’t have the experience necessary or don’t believe they are important – of what use is guessing things that don’t exist? The truth is that a good financial planner or accountant should be able to help with these forecasts which need to include profit and loss, but also, essentially, cash flow and balance sheet. This area of the business plan will reveal to potential investors whether your plan has been carefully thought out, and takes realistic rates of growth into account, or whether it’s simply pie in the sky. No investor is going to work with someone who believes they will sell a million items in the first three months.

Being too strict

The business plan should always be viewed as a guide and not as a set of hard and fast rules. Any business plan that locks a business into a specific course of action is a bad one. You should always have the ability to pivot and make changes as necessary based on the latest feedback. Your ability to research new information and change direction will make it much more likely that your business will meet its long-term goals and needs.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article UDZ Tax Incentive Extended: Could Your Business Benefit?
Architects working on plans at office
Business / Tax

UDZ Tax Incentive Extended: Could Your Business Benefit?

“…governments internationally have increasingly used tax measures to support efforts aimed at regenerating urban areas.” (SARS Guide to the UDZ Allowance)

The urban development zone (UDZ) tax incentive, provided for in section 13quat of the Income Tax Act (the Act), was introduced 20 years ago in 2003, as an accelerated depreciation allowance for property investments in certain central business districts. It aims to promote investment by the private sector in the construction or improvement of commercial and residential buildings, including low-cost housing units, situated within demarcated UDZs.

In the most recent 2023 Budget, this incentive was extended for another two years, to allow for the completion of a review of the incentive, which has yielded some successes, by motivating investment in South Africa’s cities. We briefly overview below what the tax incentive entails and the criteria that must be met, where it applies and other issues to take note of when deciding if it could benefit your business before it expires at the end of March 2025.

What the UDZ tax incentive entails

Individuals and companies investing in residential or commercial property in South Africa’s urban zones from which to carry on a trade, should carefully consider the UDZ tax incentive before deciding where to buy.

This tax allowance, when deducted, can substantially reduce the taxable income of a taxpayer, and – because the allowance is not limited to the taxpayer’s taxable income – can create an assessed loss.

However, five specific criteria must all be met before the allowance is granted. In addition, only certain costs can be considered for the purposes of the allowance. These are listed below, along with the UDZs listed by SARS, and some further issues to take note of.

Five criteria to be met
  1. Building requirement – The building must meet certain requirements, and only the cost of the erection, extension, addition to or improvement of the building, covering either the entire building or a floor area of at least 1,000m2 qualifies. Land costs are excluded.
  2. Urban development zone requirement – The building must be located within a UDZ.
  3. Trade requirement – A taxpayer will qualify for the allowance only if the relevant commercial or residential building or part of the building is used by the taxpayer solely for the purposes of trade, and only once the building has been brought into this use.
  4. Owner requirement – The building or part of the building that was erected, extended, added to or improved must be owned by the taxpayer deducting the allowance. Where the building or part of a building was purchased directly from a developer within three years after completion, an allowance may be deducted, provided the developer did not deduct any allowance, among other criteria.
  5. Date requirements – There are specified dates to which the allowance applies, including a commencement date requirement and a trade date requirement.
Costs that may be considered – and those that are not
  • Construction work
  • Architect and approval fees
  • Sidewalks
  • Parking for the building
  • Landscaping as part of the development (including earthworks, greenery and irrigation)
  • Drainage
  • Security (fences, cameras and surveillance equipment)

Costs specifically excluded are the purchase price of the land, VAT and transfer duty, financing charges, agent’s commission and transfer and related legal costs.

Where does the UDZ tax incentive apply?
  • Buffalo City
  • City of Cape Town
  • Ekurhuleni
  • Emalahleni
  • Emfuleni
  • eThekwini
  • Johannesburg
  • Mangaung
  • Matjhabeng
  • Mbombela
  • Msunduzi
  • Nelson Mandela Bay
  • Polokwane
  • Sol Plaatje
  • Tshwane Metro

Source: SARS

Other issues to take note of
  • Depending on the type of development involved – new, improved or low-cost – the allowance is calculated at a different rate of depreciation, providing for 20 – 25% of the costs allowed to be deducted in the first year, and the remainder over one to ten years
  • When purchasing a building or part of a building from a developer, 55% of the purchase price of a new building, or 30% of the purchase price of a building improved will be allowed as costs for purposes of the UDZ incentive
  • The UDZ incentive is an accelerated depreciation allowance, and not an additional tax allowance. A taxpayer claiming a UDZ deduction may not claim any other deductions on that building or part of the building.
  • For each building or part of a building on which the allowance is being deducted, you will need the necessary UDZ forms (UDZ 1, 2, 3 and 4 forms), as well as a location certificate and, where applicable, a certificate of occupation.

Taking advantage of this tax incentive, if it applies to you, could mean a difference of millions of rands to your future tax bill. However, this is a very complex tax incentive and there are many issues to be considered.

It is highly recommended that business owners consult with their accounting and tax practitioners to find out if they would qualify for the maximum allowance when investing in a UDZ, and to do so while still ticking all the compliance boxes.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article Tips for Generating Customer Trust as a Start Up
Business

Tips for Generating Customer Trust as a Start Up

“Consumers don’t just buy products and services anymore; they buy experiences. This demands a new approach to marketing, sales, and services; one that hinges on winning customer trust.” (Ben Jackson, Author “The Future of Commerce)

With customer trust being the most important element in attracting sales, contracts and clients, gaining that trust is an important step for any new start up. How can you make sales if you have no way to prove you are good at making sales? These tips should help any start up build that all important trust and make their first sales.

Make top level products

It may seem obvious, but whether you are offering a service, or selling products online, the first, and most critical thing you can do to develop as a company is to make sure your product is as high-quality as possible. Products that are easy for a customer to use, and that fulfil the client’s needs will always win their loyalty.

Price your product accurately

Pricing a product isn’t as easy as adding profit to cost. You need to price your product in such a way that you are covering all costs, making a profit, and pricing yourself correctly within the market. Getting this right will be crucial to finding, developing and retaining customers. Your accountant can help ensure no one feels cheated while you are also operationally effective.

Provide top level service in every way

The first few weeks and months of operation are absolutely critical when it comes to customer service. It may feel like nothing is coming in, but the day you receive an email it would be extremely wise for you to answer as quickly as possible. Handling enquiries politely, quickly and thoroughly will translate in the customer’s mind to a business which is caring and paying attention.

Show them your humanity

The first inclination for any customer is to mistrust brands – they are money-making machines. We do, however, want to trust new people we meet. Because of this, it’s a great idea to reveal the human face of your business early. Use the About Us page to introduce yourself and the team right from the start. Let people know your story, and how you came to establish your company. This allows you to imbue your brand with the real-life values you believe in and so establish the human connection in a way that only small brands really can.

Offer a free sample

People view free things as being risk-free interactions, and so are generally likely to take you up on the offer. By trading free samples or an hour of your work at no cost, in exchange for nothing but an email address, you give clients the chance to try your product or service and potentially even leave a review. You also get their email address, which is a good way to communicate with them and establish a genuine relationship.

Use testimonials

Whenever anyone compliments your business, you should think about asking them for a testimonial. According to studies, people these days trust online reviews and testimonials almost as much as they trust recommendations from friends. So, every review could be the difference between success and failure. If possible, make these videos. Video is increasingly important online, and the humanity showcased by a video of someone is a very strong incentive.

Have an easy return policy

If there is one thing that will make a customer take a chance on an untested brand, it’s the knowledge that should something go wrong they can get their money back. A strong returns policy also sends a clear signal to potential customers that you believe in your product.   Your returns policy should be clearly defined and easy to find on all of your media channels.

Handle all your reviews

Your reviews will influence new buyers’ desire to interact with your company, so do not ignore them. Answer every one. It’s easy to thank people for leaving good reviews (and you should), but it’s how you handle the bad ones that will give people the most confidence. Apologise for problems openly and reveal what you will do to fix them. This gives new customers a clear indication that while problems do happen to everyone, you go out of your way to resolve them.

Offer a loyalty program

According to Annex Cloud, 65% of a company’s revenue comes from repeat business from existing clients.  Harvard Business Review says it can be up to 25 times more expensive to sell to a new client than a returning one. It’s therefore a great idea to do everything you can to retain good customers. A loyalty program is a proven way to reward these clients and also give them an incentive to stick around. The Yotpo study on brand loyalty 2022 revealed that 83% of global respondents said belonging to a loyalty program influences their decision to buy again. Starting a worthwhile loyalty program will therefore impact the future performance of your company.

Promise only what you can deliver

It may be tempting as a newcomer to do everything you can for your customers, even if it’s not part of your business or your core ideals. The worst thing you can do though is over promise and then not deliver. This can be the start of the business developing a bad reputation that it would be difficult to recover from.

Eradicate the trust eroders

Many small things can erode trust: a lack of social media, spelling mistakes on your website, a longer than necessary purchasing process, hidden costs, or a lack of information about the product. Ask friends to go through your website, buy a product, or call your service centre and mark down a list of snags, or things they are concerned about. Points that come up more than once must be attended to as a matter of priority.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Your Tax Deadlines for April 2023
Tax

Your Tax Deadlines for April 2023

  • 1 April – Start of the 2022/23 Financial Year
  • 6 April – Monthly Pay-As-You-Earn (PAYE) submissions and payments
  • 26 April – Excise Duty payments
  • 28 April – Value-Added Tax (VAT) electronic submissions and payments & CIT Provisional payments where applicable.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Budget 2023: How It Affects You and Your Business
Business / Economy / Financial / Tax

Budget 2023: How It Affects You and Your Business

“This is not an austerity budget. It is a budget that makes tough trade-offs in the interests of the country’s short and long term prosperity.” (Finance Minister Enoch Godongwana – Budget 2023)

Finance Minister Enoch Godongwana’s second Budget contained no major tax proposals, thanks to an improvement in revenue from higher collection in corporate and personal income taxes, and in customs duties.

Instead, the focus of Budget 2023 was firmly on the current energy crisis, which has resulted in a State of Disaster being declared. It announced that government will take over R254 billion of Eskom’s debt over the next two years, subject to stringent conditions.

Of the tax relief amounting to R13 billion to be provided to taxpayers in 2023/24 announced in the Budget, R9 billion is earmarked to encourage households and businesses to invest in renewable energy. More specifically, R4 billion in relief is provided for households that install solar panels and R5 billion to companies through the expansion of the existing renewable energy incentive.

These incentives are briefly detailed below, along with some of the other announcements that will impact individuals and businesses.

Budget announcements that will impact you personally
  • A new tax incentive to install rooftop solar panels: For one year from 1 March 2023, individuals will be able to claim a rebate of 25% of the cost of installing rooftop solar panels, up to a maximum of R15,000, to reduce their tax liability in the 2023/24 tax year.
  • The personal income tax brackets will be fully adjusted for inflation, increasing the tax-free threshold from R91,250 to R95,750.
  • Medical tax credits per month will be increased by inflation to R364 for the first two members, and to R246 for additional members.
  • The retirement tax tables for lump sums withdrawn before retirement and at retirement, will be adjusted upwards by 10%, increasing the tax-free amount at retirement to R550,000.
  • Revised draft legislation on the ‘two-pot’ retirement system will be published, including the amount immediately available at implementation from 1 March 2024. Withdrawals from the accessible “savings pot” would be taxed as income in the year of withdrawal.
  • Social grants will increase in line with CPI inflation. The R350 grant will continue until 31 March 2024.
  • Increases in the excise duties on alcohol and tobacco of 4.9%, in line with expected inflation. This means that the duty on:
  • a 340ml can of beer increases by 10c,
  • a 750ml bottle of wine goes up by 18c,
  • a 750ml bottle of spirits will increase by R3.90,
  • a 23g cigar goes up by R5.47,
  • a pack of 20 cigarettes, rises by 98c.
Budget announcements that will impact your business
  • Expanding the existing section 12B tax allowance for renewable energy, businesses will now be allowed to reduce their taxable income by 125% of the cost of an investment in renewables for two years from 1 March 2023. There will be no thresholds on the size of the projects that qualify. According to National Treasury, where a renewable energy investment of R1 million is made by a business, that business will qualify for a deduction of R1,25 million, which could reduce the corporate income tax liability of a company by R337,500 in the first year of operation.
  • The existing Bounce Back Loan Guarantee Scheme will be updated to become the Energy Bounce Back Scheme, to be launched in April 2023. Government will guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis.
  • The research and development tax incentive will be extended for 10 years and will be refined to make it simpler and more effective.
  • The urban development zone tax incentive will also be extended, by two years.
  • Manufacturers of foodstuffs will for two years (from 1 April 2023) also qualify for the refund on the Road Accident Fund levy for diesel used in the manufacturing process, such as for generators, to ease the impact of the electricity crisis on food prices.
Budget announcements that will impact all
  • Providing tax relief of R4 billion, the general fuel levy and the Road Accident Fund levy will not be increased this year. However, the carbon fuel levy will increase by 1c to 10c/l for petrol and 11c/l for diesel from 5 April 2023.
  • The health promotion (sugar) levy will remain unchanged for the following two fiscal years.
  • The brackets of the transfer duty table will also be increased by 10%, allowing properties below R1.1 million to avoid any transfer duty payments.
How best to manage these changes and their impact?

In addition to the announcements detailed above, there were other technical amendments proposed in the Budget review that will require professional advice.

As tax collection remains government’s main source of income, you and your business would do well to rely on the expertise and advice of tax professionals as you determine the impact of the Budget 2023 announcements on your tax affairs.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Budget 2023: Your Tax Tables and Tax Calculator
Tax

Budget 2023: Your Tax Tables and Tax Calculator

The big Budget Speech 2023 tax news was the introduction of tax incentives for investing in rooftop solar and renewable energy. The Budget also detailed tax relief in the form of adjusted tables for tax and rebates for individual taxpayers, adjusted tables for retirement tax and transfer duty, and the expected increases in ‘sin’ taxes. How will these changes affect you directly?

To better understand the impact of the Budget on you and your business, here is a selection of official SARS Tax Tables, then follow the link to Fin 24’s Budget Calculator to do your own calculation.

Businesses – corporate tax rates unchanged*

Source: SARS’ Budget Tax Guide 2023

Individual taxpayers – tax tables adjusted

Source: SARS

Source: SARS

Source: SARS

Transfer duty table – adjusted 

Source: Budget 2023 People’s Guide

Sin taxes raised

Source: Budget 2023 People’s Guide

How much will you be paying in income, petrol and sin taxes?

Use Fin 24’s four-step Budget Calculator here to find out the monthly and annual impact on your  income tax, as well as what you will pay in future in terms of fuel and sin taxes, bearing in mind that the best way to fully understand the impact of the announcements in Budget 2023 on your own and your business affairs is to reach out for professional advice from your accountant.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article How To Prepare a Reliable Disaster Recovery Plan
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Business

How To Prepare a Reliable Disaster Recovery Plan

“The time to prepare for disasters is before they happen” (Stephen Matheson, Vice President of Product at BridgeHead)

Given how reliant we all are on our IT infrastructure, it will come as no surprise to learn that one of the worst things that can happen to a business is for a failure to occur in that department. Whether it’s fire, floods, or hacking, being taken offline can spell a serious period of trouble for most organisations. In the time it takes to get back up and operational projects can be delayed, the quality of work can suffer, or worst of all, everything is put on hold for months while data is recreated. All of this can lead to strained relationships with both customers and suppliers and potentially the end of the business.

A Disaster Recovery Plan is the pre-planned process a company will turn to when disaster strikes to ensure that a short-term problem does not become a permanent one.

Here are five simple tips for what you need to consider when drawing one up.

  • Have a response checklist
    The response checklist is a detailed breakdown of which employees should be contacted and what they should do in the event of a disaster. These should cover everything from who phones your IT support company to who puts out the fire or organises the evacuation drill. Ideally, these responses should be practiced. It’s no good telling someone they have to turn off the building’s water in the event of a flood if they don’t know where to do that.
  • Have a data backup plan
    All company data needs to be backed up, as regularly as possible. How this is done will depend on how vital that data is to the operational capabilities of your business but should happen at least once a day. Look at your company carefully and decide which information is vital and which can safely be lost. You don’t need to back up all your client emails if you also keep other records of their projects for instance.Data is a business asset and has real value. The more important the data, the more strictly and safely that data needs to be backed up. Can you do it yourself on a hard disk that the secretary takes home, or do you need a full-scale external, cloud-based solution?
  • How are you going to tell your clients?
    While it’s usually a good idea to keep drama and difficulties far away from your clients, in this instance it may be important to tell them what is going on to explain any delays they may be about to experience and how you are planning to meet their orders.  In addition, provide them with any alternate contact details.Your plan should detail exactly how that is going to happen. Having pre setup and approved email addresses and telephone numbers organised will save a lot of time and frustration until your company is back on its feet.
  • Cost considerations
    Your plan should also take into account the cost considerations of setting things up anew. Will you need to buy new servers? Do you need to bring in IT experts to recover data? The money for this should be set aside and available as every day you delay your recovery is another step closer to bankruptcy.Speak with your accountant as to how you can finance this fund, or whether insurance options may be a financially viable option for your company.
  • Vital document and data storage

On top of all of this, your Disaster Recovery Plan should also detail where copies of all the most vital information will be stored and how they can be retrieved. This should be a safe and secure offsite location. Keys and access codes need to be kept in a third location as well.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Five Essential Bookkeeping Tips for Small Businesses
Accounting / Business

Five Essential Bookkeeping Tips for Small Businesses

“Making good judgements when one has complete data, facts, and knowledge is not leadership – it’s bookkeeping” (Dee Hock, Founder and CEO of VISA)

When running a small business, it often feels like you are doing everything yourself, and some important tasks can slip under the radar. One aspect that should never be forgotten though is bookkeeping. While intimidating, keeping your finances in order need not be as hard as it sounds. Here are our tips for ensuring your accounts remain ordered and your peace of mind intact.

  1. Ask your accountant
    If you want to keep things as simple as possible and guarantee you never run foul of the law, getting your accountant in to do your bookkeeping is the safest and most efficient way to do your books. Apart from being able to manage your finances, an accountant would be able to help save on taxes and advise you on areas of the business that may be streamlined.
  2. Keep your personal and business accounts separate
    It may not seem like much, but mixing up which account pays for what can lead to hundreds of extra hours of work over the course of a year working out which deductions and expenses relate to your business. Rather keep personal and business accounts and banking separate.
  3. Set up reminders for important deadlines
    Using an online calendar, it’s now easy to set up reminders for all those important tax and other deadline dates so you know when things are becoming urgent.
  4. Keep receipts
    Be sure to keep all receipts to build a verifiable audit trail. Whenever you pay anything out to a supplier it’s important to get an invoice and file it away. Keep all your receipts for all business expenses and purchases. You never know when you may be hit with an audit and need to prove everything you have said.
  5. Keep reports
    Every month generate a one-page document detailing all your income and expenditure. Ask your accountant to set up a simple monthly one-page report that, in addition, compares actual income and expenses to your budget. It doesn’t have to be detailed but should give you an idea of just where the money is going and what is coming in. As well as making bookkeeping easier, it will also help you track the growth and health of your company.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Effective 1 March 2023: New Earnings Threshold and National Minimum Wage
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Employment and Labour Law

Effective 1 March 2023: New Earnings Threshold and National Minimum Wage

Employers and employees need to keep an eye on the annual increases in both the National Minimum Wage and the Earnings Threshold, summarised below for your convenience. Both are effective from 1 March 2023.

The National Minimum Wage increase

The National Minimum Wage (NMW) for each “ordinary hour worked” has been increased by 9.6% from R23-19 to R25-42. Workers who have concluded learnership agreements in terms of the Skills Development Act are entitled to a sliding scale of allowances.

Domestic workers

Domestic workers were brought into line with the NMW in 2022, and assuming a work month of 21 days x 8 hours per day, R25-42 per hour equates to R4,270-56 per month. The Living Wage calculator will help you check whether or not you are actually paying your domestic worker enough to cover a household’s “minimal need” (adjust the “Assumptions” in the calculator to ensure that the figures used are up to date).

The Earnings Threshold Increase

The annual earnings threshold above which employees lose some of the protections of the Basic Conditions of Employment Act has been increased by 7.6% from R224,080-48 p.a. (R18,673-87 p.m.) to R241,110-59 p.a. (R20,092-55 p.m.).

“Earnings” (for this purpose only) means “the regular annual remuneration before deductions, i.e. income tax, pension, medical and similar payments but excluding similar payments (contributions) made by the employer in respect of the employee: Provided that subsistence and transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration”.

Some employees enjoy only limited BCEA protection even if they earn below the threshold – notably any “senior managerial employee” (“an employee who has the authority to hire, discipline and dismiss employees and to represent the employer internally and externally”), any “sales staff who travel to the premises of customers and who regulate their own hours of work” and any “employees who work less than 24 hours a month for an employer”. Take specific advice for details.

The threshold also impacts on some of the protections provided in the Labour Relations Act –

  • Employees earning less than the threshold, if contracted to a client for more than three months through a temporary employment service (“labour broker”) are deemed to be employed by the client unless they are actually performing a temporary service.
  • Fixed-term employees earning below the threshold are deemed to be employed indefinitely after three months unless the employer has a justifiable reason for fixing the term of the contract.

Turning to the Employment Equity Act, employees earning over the threshold can only refer unfair discrimination disputes (other than disputes based on sexual harassment) to the Commission for Conciliation, Mediation and Arbitration (CCMA) with the consent of all parties. Otherwise, they must go to the Labour Court for arbitration.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Your Tax Deadlines for March 2023
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Tax

Your Tax Deadlines for March 2023

  • 7 March – Monthly Pay-As-You-Earn (PAYE) submissions and payments
  •  30 March – Excise Duty payments
  •  31 March – End of the 2022/23 Financial Year
  •  31 March – Value-Added Tax (VAT) electronic submissions and payments & CIT Provisional payments where applicable.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Ignoring an Online Review Could be Catastrophic for Your Business!
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Business / Uncategorized

Ignoring an Online Review Could be Catastrophic for Your Business!

“Your most unhappy customers are your greatest source of learning” (Bill Gates)

If you have founded a business then there is little less certain than that at some point in the future, you will get a bad review. It’s simply impossible to please all of the people all of the time, which is why many business owners say they don’t worry too much about reviews and try to keep on doing their best. The sad part is, they really should be worrying about their reviews, both good and bad.

A series of recent reports suggest that there is little as damaging to a modern business as bad reviews that go unanswered. With 91% of all 18 to 34-year-olds saying they trust online reviews as much as recommendations from a friend and as many as 93% of all customers saying they check reviews before buying, the impact of a company’s online reviews is obvious. But there’s more – you should respond to all reviews, both good and bad. According to the BrightLocal Local Consumer Review Survey 2022, 57% of all consumers say they would be ‘not very’ or ‘not at all’ likely to use a business that doesn’t respond to reviews at all.

Under this climate it might seem that, while a good review could gather new customers, getting a bad review could be a death knell for your company. Fortunately, all kinds of reviews are good opportunities to show off your company, turn experiences around, and even gather customers. Assuming you do the right things. Here then is how you should be handling your online reviews.

Track your reviews

The first step is to make sure you know when and where a new review has been written about your company. How can you possibly respond to something you don’t know exists? Once you know a review is up, you need to react quickly. It’s no good responding years later.

Two different sites will help you to track and respond to reviews across the internet and may become valuable tools for managing your reviews as well.

First is Google my Business which not only allows you to manage and track your online reviews but can also help with sending information to clients and promoting your business. All it takes is a free account and you can help potential new customers find your business and ensure they get the information they need. Having positive Google Reviews can often be critical when it comes to customers making buying decisions.

In South Africa, Hello Peter has established itself as a core place to review companies and for companies to respond. While it can be more expensive to respond as a business, there are definite benefits and keeping tabs on your Hello Peter reviews will help you to know exactly where you stand.

Professional accounts on other sites like Trust Pilot or Media Tool Kit can also help you to track and interact with customer reviews. If you are a new company this may seem like an unnecessary or unwarranted expense, but as already seen, it can also be one of the most valuable tools you can use. If you are battling to find the space in your budget, it is highly recommended that you speak to your accountant about how to streamline and maximise your finances to ensure it can be afforded.

Respond to all reviews, good and bad

As already established, it’s absolutely vital that you respond to reviews, whether they are good or bad. According to the Local Consumer Review Survey 2022, 89% of consumers are ‘highly’ or ‘fairly’ likely to use a business that responds to all of its online reviews.

For a good review, you should of course thank the customer for their kind words (see some tips on how best to do that here), and you can also ask them if they would be open to you using what they said in future marketing. A bad review takes a little more finesse. While most sites give you the option to turn off reviews, avoid the temptation to do so. The worst thing you can do is censor your customers. According to Oberlo, 62% of customers say that they won’t buy from brands that censor reviews.

It’s not necessarily about what they said

For a bad review you may be tempted to reject what the reviewer is saying. Do not do this. The person reading your reviews is much more likely to side with the person leaving a review, even if they are being unfair or wrong. Instead, take this as an opportunity to show how good your customer service is. Those reading the review will understand that sometimes things go wrong and want to see how you react when they do, or how you react to unfair or mistaken criticism.

Customers who write reviews are desperate to be heard and understood. It is therefore vital that your response to a bad review does more than simply apologise. You need to show the customer that you are listening. This is done by looking into their particular experience, responding directly to that and clearly acknowledging how they are feeling. Ultimately, nothing is going to make this customer more upset than ignoring the way they feel or trying to invalidate their emotions.

Instead, take a minute to express their feelings are valid – “I am sorry for how you feel”, then back that up with what you are going to do to fix it. Describe the facts of their case, and show you know whom you are speaking to, then explain what will be done to correct their unhappiness. Conclude by asking if there is anything else you can do.

If it looks like the review process is going back and forth online, ask the customer for their contact details so you can respond personally. Never ask them to contact you. Asking them to contact you elsewhere suggests you are simply trying to hide your response while giving them the personal attention of a phone call makes them feel like they have been heard.

What to do with fake reviews

There is a third kind of review, one that can be even more damaging than a really bad review and those are reviews written by bots or fake accounts. Usually, these reviews are damaging simply because they tend to use much more emotive language. The reviews are never casually negative, but rather fumingly angry and as there will never be a response from the complainant, can make it look like you never resolved the problem.

Fake reviews are easy to spot. Usually, the reviewer will have no personal information, and their reviewing methods will be inconsistent. Additionally, their reviews are far more likely to link out to third-party products or websites. Often the review they left for you will be repeated on other sites and for other brands as well, so do a Google search to determine if this is the case.

Luckily handling them is simple, but it must be done. Simply find the administrator contacts for the review site and alert them to the fact that you have been fake reviewed with whatever evidence you have on hand. This should be enough to get those reviews taken down.

Ask for reviews

The final and best way to handle a bad star rating for your company is to ask happy clients to post positive reviews. If someone sends you an email or letter thanking you, why not pop them an email with a link asking them if they would consider leaving a formal review? WordStream has some more tips for you here. According to the Local Consumer Review only 3% of consumers will even consider using a company that has only 1 or 2 stars from reviews, down from 14% in 2020, so ensuring you keep that star rating up is going to be critical to your future success.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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April 4, 2023
Read more about the article Maximise Your Business Travel Tax Deduction
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Tax

Maximise Your Business Travel Tax Deduction

“Without a logbook, you will not be able to claim a travel deduction.” (SARS Travel Logbook 2022/23)

Even while recovering from the economic impact of COVID and facing the challenges of power blackouts, businesses and their employees are also contending with the costs of travel that have reached historic highs. Thankfully, expenses related to business travel can be deducted from taxable income – reducing the tax liability for taxpayers, including businesses, employees, commission-earners and independent contractors. All these taxpayers should prioritise maximising the available tax deductions by ensuring they can claim for every actual business travel-related expense.

This is increasingly important given the rapidly rising costs of travel, fuel and vehicle ownership. Fuel prices have more than doubled over the last five years and continue to set new records. In addition, Wesbank recently reported that the monthly cost of vehicle ownership for an average entry-level vehicle is 33% higher than five years ago and has increased 32% between November 2021 and November 2022.

To claim any business travel expenses, it is compulsory to keep an accurate and up-to-date SARS-compliant logbook for each vehicle. In addition, there are other tax implications related to travel expenses, travel allowances and travel reimbursements, some of which are briefly highlighted below.

Claiming the business travel deduction – fast facts
  • Businesses can claim business travel expenses incurred in the production of income.
  • Employees who receive a travel allowance can claim a deduction for the use of their private vehicles for business purposes.
  • Employees may also be entitled to claim a reduction on the fringe benefit in respect of business kilometres travelled in a company car.
  • To claim any travel deduction, an accurate, up-to-date logbook detailing all business kilometres travelled is required. SARS accepts electronic logbooks.
  • There is no deduction allowed for private travel, which is any travel not for business purposes, such as travelling between home and work.
  • In addition to a logbook, taxpayers who want to claim actual travel expenses should keep accurate records and proof of all travel expenses, such as fuel and maintenance, incurred during the year.
  • A separate logbook and records must be kept for each vehicle used for business purposes.
  • SARS reserves the right to query and audit the content or information recorded in any logbook by the taxpayer.
  • Logbooks and other records must be kept for at least five years as taxpayers may be required to submit them to SARS for verification of travel claims.
How to claim a business travel tax deduction
  1. Record the vehicle’s odometer reading on the first day of a tax year (1 March for individuals and also for companies).
  2. Maintain the logbook all year – SARS requires the following minimum information for every single business trip: date of travel; kilometres travelled; and travel details including where the trip started, the destination and the reason for the trip. It is not necessary to record details of private travel.
  3. Keep records of all related travel expenses such as fuel, oil, repairs and maintenance, car licence, insurance, vehicle tracking costs, wear-and-tear, and finance charges or lease costs to claim the actual travel costs incurred.
  4. Record your motor vehicle’s closing odometer reading on the last day of the applicable tax year (end of February for individuals and also for many companies). The difference between the opening odometer reading and the closing odometer reading equals the total kilometres (business and private) travelled for the full year.
  5. Calculate the total business kilometres for the year using the detailed logbook.
  6. The travel deduction can then be calculated in one of two ways:
    • Use the cost scale table supplied and updated annually by SARS, if you have not kept an accurate record of all travel expenses – the table simply provides a rate per kilometre based on the value of the vehicle, or
    • Calculate the claim based on actual costs incurred, determined by the accurate records and proof of all business travel expenses during the year, in addition to the logbook.
Tax implications to beware of
  • If an employee receives a travel allowance as part of his/her remuneration, 80% of the travel allowance must be included when calculating PAYE. This percentage is reduced to 20%, where the employer is satisfied that at least 80% of the motor vehicle use during the tax year will be for business purposes.
  • However, if there is any underpayment of PAYE on the travel allowance due to incomplete or incorrect information, the employer is liable for any shortfall, so obtain professional advice before providing travel allowances and ensure employees with travel allowances keep detailed logbooks.
  • Fuel costs can only be claimed if the employee pays the full cost of fuel used in the vehicle, and similarly, maintenance costs can only be claimed if the employee carries the full cost of maintaining the vehicle, for example, if the vehicle is covered by a maintenance plan.
  • Where a travel allowance or advance is based on the actual distance travelled by the employee for business purposes (reimbursive travel allowance), it is non-taxable (i.e. no  employee’s tax must be deducted) provided that two criteria are met: the rate per kilometre is not higher than the rate published by SARS, and no other compensation in the form of an allowance or reimbursement (except parking or toll fees) is received in respect of the vehicle.
  • If the two criteria mentioned above are NOT met, the reimbursive travel allowance is taxable and employees’ tax must be deducted from any amount that exceeds the prescribed rate per kilometre.

To maximise the tax deductions related to business travel, make sure that an accurate and up-to-date SARS-compliant logbook is kept current for each vehicle and each employee with a travel allowance, and that you consult with your accountant to understand the many tax implications for all concerned before making decisions regarding business travel.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article Loadshedding: Survival Tips for Small Businesses
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Business

Loadshedding: Survival Tips for Small Businesses

“We want to assure business that by the time you get back to work in January, we will have a much more stable situation.” (Public Enterprises Minister, Pravin Gordhan, December 7, 2018)

With loadshedding now a constant reality in our lives and Eskom and the government offering no signs of any form of short-term recovery, small business owners are being forced to increasingly adapt in order to survive. Here are our top five tips that might help, beyond simply “buy a generator/inverter”.

Adopt work from home

Those who are single will have heard the advice to date someone on a different loadshedding schedule, and this tip can be liberally applied across a company. By allowing staff to work from home, most businesses can be reasonably assured of having someone online and capable of handling client calls and enquiries at any given time.

At the very least companies need to be looking at offering flexible work hours, so they don’t find employees sitting in the traffic caused by all the traffic lights being out, only to arrive at work to sit in the dark. Allowing staff to do the work when and where they want could do wonders for productivity. Perhaps you can even negotiate with a local coffee shop for discounts when your staff come to work there?

Move to cloud-based solutions

If you aren’t already using cloud-based solutions now is the time to adapt. Storing everything you do on the cloud with storage and backup solutions such as Dropbox or Microsoft’s OneDrive will mean your data can be accessed from anywhere and is much less likely to be lost should servers or computers become damaged by the power cuts. Set computers to do regular saves and backups so nothing gets lost.

Use mains-free tools

If your tools can come in a battery-operated version, then now is the time to start trading out of plug reliant technology. PCs should be traded in for laptops, electric cookers and fridges can be traded in for gas and everything from power tools to hairdryers have battery operated versions. Move your company’s main number to a cell phone or to a VoIP solution and make sure all key personnel cell phones are permanently charged.

Unplug equipment

The second the power goes down it’s time to unplug all the expensive equipment. Don’t take the risk of the surge destroying your vital machines, assembly lines and computers when the power comes back on. If you can, invest in insurance, but make 100% sure that it covers loadshedding damage, as some companies have removed that protection from their contracts.

Ensure that your, and your key employees’ Wi-Fi connections are attached to a UPS system.

Use more than one payment system

Using two or even three different network options will ensure you are always able to take payments whenever your equipment is charged, even if the power is off. Don’t lose a vital sale or shut up shop simply because you have a contract with one network service provider whose tower always goes down when the power is off.

And of course, get solar, install an inverter and/or buy a generator – there are tax incentives for some solutions that your accountant can help you with.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article How the New Assessed Loss Tax Limitation Works
Tax

How the New Assessed Loss Tax Limitation Works

“People who complain about taxes can be divided into two classes: men and women.” (Unknown)

The assessed loss rules have always allowed companies to deduct from their taxable income each year any assessed losses from previous years. The remaining assessed loss balances could be carried forward indefinitely. This meant that a company would only pay income tax once it made a taxable profit and all previous assessed losses had been deducted from the taxable income.

These rules have changed and may affect your next income tax bill.

What’s new?

Under the new rules, assessed losses brought forward from a previous year of assessment can only be offset against a maximum of 80% of the current year’s taxable income or R1 million, whichever is higher.

This means that many companies will now pay income tax on up to 20% of the taxable income for the year if it exceeds R1 million, even if the assessed loss balance carried forward from previous years far exceeds the taxable income. Adjust your cash flow forecasts accordingly. 

What you should know
  • The new rules apply to any year of assessment that began on 1 April 2022 onwards and that ends on or after 31 March 2023.
  • The new limitation applies to a company’s assessed loss balance as at 1 April 2022, and not only to assessed losses accumulated after this date.
  • Companies do not lose the balance of an assessed loss that could not be utilised in one tax year, it is just carried forward to the next tax year.
  • If a company does not trade for a full year of assessment and no income is earned from such trade, the assessed loss balance will be lost.
  • Further complex rules may apply in certain circumstances, for example, the 3-out-of-5-years rule and the ring-fencing of losses if a business carries on one of the listed “suspect trades”, which means professional advice is essential when deducting an assessed loss against taxable income.
Will your tax bill be affected?

Some companies will not be affected immediately, for example:

  • Companies that made a loss during the year and therefore have no taxable income to reduce;
  • Companies that do not have an assessed loss balance brought forward; and
  • Smaller companies with a taxable income below R1 million are not affected by the new rules and can still deduct the full balance of an assessed loss against 100% of their taxable income. 

However, the changes will have tax cash flow implications for other companies. The examples below illustrate this.

Both the old and the new rules are complex. In addition, some of the wording in the legislation still needs to be clarified, so speak to your accountant about the impact the new rules will have on your next tax bill.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article Budget 2023: The Minister of Finance Wants to Hear from You!
Economy / Tax

Budget 2023: The Minister of Finance Wants to Hear from You!

“Finally, we pay tribute to the millions of South Africans, whose resilience and courage during these times of pandemic and economic hardship, is an inspiration to all of us who have the privilege to serve in the public sector.” (From the 2022 Budget Speech)

Finance Minister Enoch Godongwana has invited the public to share suggestions on the 2023 Budget he is expected to deliver on Wednesday 22 February 2023.

Go to National Treasury’s “Budget Tips for the Minister of Finance” page and fill out the online form.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article Your Tax Deadlines for February 2023
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Tax

Your Tax Deadlines for February 2023

  • 7 February – Monthly Pay-As-You-Earn (PAYE) submissions and payments
  • 27 February – Excise Duty payments
  • 28 February – Value-Added Tax (VAT) electronic submissions and payments & CIT Provisional payments where applicable.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article Start 2023 Strong with the “Fresh Start Effect”
Uncategorized

Start 2023 Strong with the “Fresh Start Effect”

“We change our tools and then our tools change us.” (Jeff Bezos)

Every January, individuals and businesses have an opportunity to take advantage of what is called the “Fresh Start Effect” – referring to research evidence that shows people are more likely to make positive changes at times that mark the start of a new time period and represent a new beginning, most notably the start of a new year. 

With the right tools, businesses can maximise this Fresh Start Effect to begin the new year on a strong footing. Three business tools, in particular, are indispensable to achieve this: a business review; goals and a plan for the year – including a budget; and ways to measure progress in achieving goals and executing the plan in the months ahead. Fortunately, these tools are not expensive or difficult to use, and your accountant will be able to assist you to set your business up for great results in 2023.

  1. A business review 
    A comprehensive review of business operations is a simple but powerful business tool.It enables business owners and managers to analyse performance in achieving goals and meeting key performance indicators (KPIs), and to identify problems and spot trends timeously. Most importantly, an effective review will reveal what is working and what is not, so the team can celebrate successes and build on what is working, and also change what is not working to get better results.Some of the business areas that need to be reviewed may include:
    • Business plan, sales, marketing and branding strategies.Total income to total expenses, cash flow statement and debtors’ reports, actual vs budget spend, and the balance sheet.Internal resources including the company’s people and processes.Client base, client processes and customer satisfaction.Statutory and regulatory compliance.Fees, contracts and costs.
    The best way to do a business review is to involve your entire team and to call in professional assistance for a clearer understanding, particularly of the financial aspects of the review.
  2. Goals and a plan for 2023, including a budget 
    The business review will provide invaluable information and insights, creating a baseline from which goals can be set for the next 12 months. This enables planning for the year ahead, incorporating the necessary changes to get better results, as well as enhancing or duplicating the processes already generating good results.Goalsetting, as well as planning and budgeting to achieve these goals, are great tools for establishing the direction of the business for the next year, focussing the team’s attention and efforts, and improving the chances of success.SMART goals are always the most effective – these are goals that are Specific, Measurable, Achievable, Relevant, and Time-Bound. That is because SMART goals are clear and quantifiable and can be broken down into a plan that details the specific steps or milestones to be completed – and the budgets within which to do so.
  3. Measuring progress during the year ahead
    Measuring progress ensures both better management and greater motivation. What is measured can be managed, and progress on all business goals can be measured through, among others, regular and up-to-date financial reports, (KPIs) and project management tools.

    KPIs, for example, are like scorecards that track performance against business goals and can be an effective tool for keeping team members motivated during the year. Experts suggest that smaller businesses should start by measuring only a few KPIs in the crucial business areas of income; customers; employees; and processes; but your accountant will be able to provide invaluable advice for your specific business.  

Similarly, there are different project management tools for various types of projects or management approaches. Benjamin Franklin’s advice may be helpful here: “The best investment is in the tools of one’s own trade.”

This January, take advantage of the “Fresh Start Effect,” by reaching out to your accountant for advice and assistance in using each of these business tools to set your business up for a great 2023.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article The Financial Steps You Need to Take Before You Open Your New Business
Business

The Financial Steps You Need to Take Before You Open Your New Business

“Good fortune is what happens when opportunity meets planning,” – Thomas Edison

You have your idea, you have your mission statement and perhaps you even have an idea of who your first customers will be, but there are still a few things you should consider doing before you launch your company. When it comes to your finances doing these five things in advance will ready you and your business for success and allow you to focus more on the company and less on the necessary financial administration.

Deal with your personal finances

For some entrepreneurs starting a company is seen as a way to get themselves out of financial trouble. Unfortunately, if this is the case, the company will be starting off on the back foot. If your motivation for starting a business is as a way to repay your own loans or debts, then you won’t be making the best decisions for the company. Ideally, your finances should be clean with debts paid off and taxes up to date. This will allow you to focus on the company for what it is, rather than on what you need.

Ideally, you will be starting your company with your own personal finances sorted for the first six months at least, and with no debt.  If you are in trouble, or don’t have any savings, then it is important that you get any loans and debts under control and reshape your personal expenses in line with leaner times before you take your first new business step.

Consolidate any debts you may have and arrange for lower monthly payments. Cancel any unnecessary services and costs and try to get your monthly outgoings as low as you can before you quit your job or start your company. You are going to have tough months and it’s important that you are ready to weather them if you hope to succeed.

Open a business account

Many new businesses begin as extensions of the owner. Sometimes the owner’s finances are used to pay for business expenses and these costs get lost along the way in the search for success. It is therefore important to decide on a vehicle for your business (ask your accountant to advise you on whether you will be best off with a company, trading trust, or sole tradership) then open a business banking account to more accurately keep track of exactly what is owed by your business to you, or you to your business. All relevant business expenses are tax deductible, but this can’t happen if they aren’t accurately tracked and accounted for in the business. Opening an account will help you not only look more professional but also track your income and outgoings more effectively.

Get your taxes up to date

Your personal taxes are an important aspect of business leadership. If your taxes are not properly filed and up to date when you have a job, the chances are they are only going to get worse. Ask your accountant to look at your personal situation and ensure everything that is owed is paid and signed off.

The good news is that at the same time you can also ask your accountant to look at your business and advise you on how best to structure things to get the most from the money you are earning. In the early days, every cent is going to count, and you will want to wring every benefit possible out of the company to get it launched. You don’t want to be paying more tax than you are required to.

Take a basic finance course

Everything these days can be learnt online. Whether you take a formal course or watch a series of YouTube videos, it is highly advised that you learn the basics of finance, especially if you have never worked in that department before. While working with your accountant is an important step when starting any new endeavour, it is also important that you understand the basics of what is going on day-to-day when it comes to pricing, sales, expenditure, profit and loss. Without this knowledge you won’t be able to make the important decisions that can make or break a company.

Set up automatic invoicing

Many small business owners opt to use Word and Excel invoice templates when starting out, but these require manual entries, can be time consuming and are difficult to track. A recent study also revealed that 39% of invoices are paid late and 61% of late payments are as a direct result of invoicing errors.

Do you know which invoices have been sent out, which have been paid and which are outstanding? There are many automated invoicing systems, which will take the worries out of invoicing and allow you to track payments and due dates. This in turn helps you to keep track of cash flow and ensure that you always have the money necessary to pay your expenses.

Invoice automation systems can also offer automatic reconciliation, generate recurring invoices and even capture data on expenses from photographs of receipts. Importantly you can also generate automatic reminder emails to chase up payments and make your monthly payments automatically, too. The time and stress savings are enormous and at the end of the day you will be able to hand over organised and presentable books to your accountant, enabling them to file taxes and notice potential areas for savings more easily.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article The Importance of Maintaining Your Tax Compliance Status in 2023
Tax

The Importance of Maintaining Your Tax Compliance Status in 2023

“Being tax compliant… is not just good for you, but also contributes to the positive growth of our country’s economy which in turn benefits all South Africans.” (SARS)

Businesses are often required to provide, confirm or share tax clearance information to another entity. This is because proof of tax compliance is an indicator of a company’s good standing in terms of its legal obligations and how well it is managed. There may be instances when an individual, another company, or a government entity needs to verify your tax compliance status, for example, during a prequalification as a supplier; for a tender application or bidding process; to confirm good standing and that your tax matters are in order with SARS; or for foreign investment allowances.  

Tax clearance information is no longer confirmed via Tax Clearance Certificates – these have been replaced by SARS’ Tax Compliance Status (TCS) system, which verifies your tax status online and in real-time, and makes it very important to ensure you and your company are always compliant.

How it works now

Instead of a manual tax certificate being issued as in the past, SARS’ new system allows individuals and businesses to obtain a TCS PIN (personal identification number).

Your accountant will be able to assist with the process of applying to SARS to obtain this PIN through eFiling which requires, for example, activating the TCS for the business or individual, merging all the tax types into one registered profile, completing the Tax Compliance Status Request and selecting the correct type of TCS: good standing, tender, or – for individuals only – emigration and foreign investment allowance. 

If all your tax affairs are in order, your PIN should be issued immediately via SMS or email. A unique PIN is issued for each TCS request submitted to SARS.

This PIN, along with your tax reference number is then sent to the third-party that requires confirmation of your or the company’s tax compliance status. To verify tax compliance status, the third-party will go to eFiling and submit your tax reference number and PIN under “New Verification Request.”

Your current tax compliance status will appear and will be colour-coded, indicating if your tax affairs are currently in order or not:

 – green indicates that all tax affairs are in order and the taxpayer is tax compliant;

 – red means the taxpayer is not tax compliant.

Click here to see full size screenshot

Source: SARS

It is important to note that the PIN is valid for a year and will reflect the current tax status at the date and time the PIN is entered into the TCS system (not the compliance status at the time the PIN was issued).

This means your tax compliance status on the system can change during the year in line with your tax behaviour, which might include, for example, an inadvertent late submission or missed payment. For this reason, it is crucial to continuously monitor your tax compliance status to ensure a non-compliant tax status does not impact business and other opportunities.

What is required to be tax compliant?

SARS says that the compliance status displayed reflects the following compliance requirements:

  • Registration for all required tax types
  • Submission of all required tax returns on time
  • All tax debt settled on time
  • Relevant supporting documents submitted.

To meet these requirements consistently across all the relevant tax types over the tax year, taxpayers should consider professional assistance.

Why it is so important to maintain compliance all year round?
  • Remember that a TCS PIN is valid for a year and third parties with whom you share the PIN will always see your current tax compliance status, so it is crucial to ensure that status is continuously monitored and is compliant at all times during the year, to avoid a negative impact on reputation and opportunities.
  • A non-compliant status can affect the confidence of potential clients, stakeholders and investors, as well as competitiveness in the market.
  • Continuous compliance does involve costs or resources but will never be as expensive as the costs associated with non-compliance, which generally involve both penalties and additional fees to rectify.
  • Non-compliance exposes taxpayers to wide and harsh collection or enforcement measures such as the confiscation of property, business closure, garnishee orders and agency notices. Some tax offences are also subject to custodial sentences.
  • Ongoing and consistent compliance all year means that when there is an instance of non-compliance, SARS will likely be more accommodating, because a taxpayer’s track record is one of the factors SARS considers when making determinations.
  • Maintaining a compliant tax status prevents tax surprises and enables lawful tax planning as well as the ability to take advantage of relevant rebates and incentives.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article How to Know if You Need an Office for Your Business (and How to Make the Most of a Lease if You Do)
Business

How to Know if You Need an Office for Your Business (and How to Make the Most of a Lease if You Do)

“In business, you don’t get what you deserve, you get what you negotiate,” Chester Karrass, Founder of Seminar group Karrass.

At some point, around halfway through the pandemic, experts began to whisper that office space was dead. “No one will be using an office by 2023,” they said. And yet, while it’s true that office space use has declined steeply in some parts of the country, many companies are still finding a use for a dedicated environment in which to conduct business.

Do you need an office for your business?

Remote work has proven that the humble office we remember is not essential, but there are still several functions an office can serve. For many employees, an office can serve simply as a distraction-free environment in which to work, while for others it may cement team relationships. For others, it can be a way to separate work and home lives. Employees also often need physical meeting spaces, a place to pore over designs and showcase physical models. Moreover, introducing new employees is easier in a formal physical office space, as is hosting company celebrations.

Despite this, remote work has seen a decrease in demand in many parts of South Africa and given this there has never been a better time than now to negotiate for that dedicated office space if you find that your company needs it.

These tips will help you get what you need.

Get the right amount of space

Here’s a quick guide to getting the space you need and no more:

  • Conference room (15 to 30 people): 75 to 90 square metres
  • Small meeting room (2 to 4 people): 30 square metres
  • Large meeting room (4 to 8 people): 45 square metres
  • Manager’s office: 25 square metres
  • Senior Manager’s office including private meeting table: 50 square metres
  • Server room (1 to 4 racks): 12 to 40 square metres.

In addition, you will need roughly 30 square metres of space per employee. This may adjust upward dependent on the kind of work you do (do your employees need to spread plans out on their desks for instance?) or downward if employees are hot-desking and not expected to be in the office each day. Finally, remember your future expectations. If the plan is to hire more people shortly, then they should be catered for as well. No use incurring the cost of moving in a few years if you can avoid it. For a more accurate picture that includes what you need, try this office space calculator.

Consider also the “hive” or “shared office space” alternatives on offer in some cities.

Other facilities

When renting an office, you may want to consider a variety of factors that don’t include size. How easy is the office to travel to? Is there traffic and easy access to public transport? Does the block have a generator or solar for loadshedding? Do you need access to printing shops or mailing? What sort of hours will you be open, and will employees need night security and parking? Will your employees need food stores nearby, or are you catering for them?

The rent is only a part of the cost

Most people will want to exclusively look at the price per metre in rent, but remember, while important the monthly rental is only part of the cost. What will you pay for water, lights, security and internet? Can you afford the phone charges? What is included in the rental? Are you responsible for building maintenance or renovation? Is there an allowance for any renovation that might be needed before you take occupation?  Refuse removal costs? What about the cost of furnishing a new building? Will you need to change the carpets or put-up signage on the building? Now is the time to bring in an accountant to help you work out the true cost of your office.

Negotiate

Do not assume that the rent or the terms of the rental agreement are set in stone. These days there is a lot more supply than demand so those who are leasing have the option to ask for rent decreases and favourable terms and conditions.

At this stage, it may be wise to bring in a professional to look at the terms of the contract and negotiate for you. Remember, the party that wins in these situations is always the one who is prepared to walk away.

The ongoing level of rental (and agreed rates of escalation) are likely to be your focus when negotiating the best deal but other negotiation points could include:

  • Maintenance of the building – who is responsible for what?
  • Length of the term – if you plan a long-term rental, many landlords could be open to lowering the initial rental, perhaps even granting an initial rental holiday, and/or to carry some of your other costs beyond rental.
  • Amenities (such as internet, water or electricity) might be included in the bill.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 4, 2023
Read more about the article Your Tax Deadlines for January 2023
Clock with"Taxes" folder on busy office desk.
Tax

Your Tax Deadlines for January 2023

  • 6 January – Monthly Pay-As-You-Earn (PAYE) submissions and payments
  • 30 January – Excise Duty payments
  • 31 January – Value-Added Tax (VAT) electronic submissions and payments & CIT Provisional payments where applicable.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© CA(SA)DotNews

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April 3, 2023

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