Accounting services are multi-faceted offerings that fulfil the role of assisting individuals with their personal or business-related financial affairs. These affairs range from income tax, financial statements, UIF and VAT, to name only a few. Our highly personalised accounting services are in place to ensure the smooth running of all financial matters of a business or individual. In just a few minutes of reading, gain a basic understanding of some of the different accounting services offered and what they can do for you as an individual or business owner.
Accounting services assisting with income tax returns
A tax return takes the shape of form(s) filed with reports of income, expenses and other relevant tax information. In doing so, tax payers are able to calculate their money owed, also known as tax liability, schedule tax payments, tax audits, as well as request refunds where overpayment has occurred. Income tax returns must be submitted annually on both an individual and business basis, including provisional tax submissions if the business or individual is registered as a provisional tax payer. Accountants ensure that these submissions contain all pertinent categories and facets to make for a seamless submission to SARS.
Personal tax with accounting services
Accounting firms also offer assistance with an individual’s personal income tax affairs and tax return submissions. This includes assistance in registering oneself for income tax, submitting your income tax return, compiling all necessary documents for the above. These include income tax certificates from various institutions such as medical aids, banks, investment companies and pension funds to name a few, and submitting them to SARS (South African Revenue Service) on your behalf, in an efficient and timely manner.
Tax consulting as part of accounting services
Tax consulting is where you as a taxpayer approach a firm or your accountant at the end of the year. An accountant helps the client prepare their tax and establish how much they owe the government at the end of the year based on the expenses they have paid or how much income they have earned.
Further, they assist the client in saving as much as possible. They may also help a business with their taxes in terms of pointing out certain deductions or exemptions for which they are eligible, but only if they are actively claimed. A tax consultancy will tell you which exemptions are available and what can be claimed back from SARS.
Financial and business planning
A business plan helps a company strategise and plan out the year, or the business as a whole, helps them plan on their goals, step by step basis, target market, and what they plan to spend. Firms advise how to manage your money, a service of presenting your figures for the year and helping you prepare these figures accurately. This includes investment advice, one of the many other accounting strategies provided in this category. Similarly, clients will be advised on wise decision-making regarding how, when and where to invest their money.
Drafting annual financial statements
Drafting annual financial statements is one of the many solutions offered as part of our accounting services. Financial statements are written records that exhibit business and financial activities for every tax year. This includes the company’s financial performance as a whole. Working with an accountant ensures accurate and fluent reporting. Financial statements comprise:
- Cash flow statement
- Balance sheet
- Income statement
- Accounting policies and Notes to the financial statements
- Tax Computations
Services offered by accountants also include bookkeeping. A bookkeeper will record certain transactions throughout your business activities. If you make a purchase, the bookkeeper will record that purchase in the company’s books, and summarise any and all transactions on a monthly basis. At the end of the year, they will record all of this into a trial balance which will be sent to SARS, and will be used to prepare financial statements.
Tax registration with SARS
Every new company must be registered with SARS in order to pay income tax should it be required. In enrolling accounting services, your accountant can, on your behalf, complete the application online. In doing so, they will register you for all necessary taxes and benefits, taking the burden off of your shoulders.
Every employee of a business receives their payment through the payroll department. Payroll accounting offers payroll calculations, which includes the filing and tracking of employee compensation such as income withholding, taxes and benefits. They ensure the correct filing of information so that payroll departments can refer to the documents and take action to make certain that employees receive their proper earnings when all is said and done.
Payroll related entries are filed in general ledgers in order to provide a full scope and overview for all those concerned. The following are some aspects which need to be included in payroll accounting:
If you have a company, you need to register all employees with UIF (Unemployment Insurance Fund). In doing so, should the need arise, your employees will be provided with short-term financial relief. Each month, 2% of the employee’s salary must be submitted to the UIF, 1% of which is provided by the employer, and the other 1% by the employee. When you enlist accounting services, you will be assisted in the registration process with the UIF, as well as the correct and timely submission of payments so as to avoid financial penalties imposed by SARS.
Accountants may also assist in the pay as you earn system, also known as employees tax. This is the tax that employers need to deduct or withhold from the income of their employees. This includes tax on salaries and bonuses, which are paid over to SARS each month. Making use of professional accounting firms increases the likelihood of accurate deductions as well as detecting whether your company is permitted any refunds.
SDL (Skills Development Levy) ensures that every business is legally bound to pay 1% of their annual payroll, if in excess of R500k, by way of a levy to SARS. The fund is then utilised to develop skills in South Africa. Companies will need to register with a relevant SETA (The Services Sector Education and Training Authority) and if they train their staff, can then claim back from this SETA. The registration procedure can be taken care of by your accountant.
VAT accounting services
Commonly referred to as VAT, Value-Added Tax can be explained as an indirect tax on the consumption of goods and services. When certain businesses register for VAT, they serve as vendors for collecting tax on behalf of the government. Charged at every stage of the production and distribution operations, it now stands as 15% as of April 2018.
This means that if you dine at a restaurant and the bill theoretically comes to R270.00 without tax, an extra R40.50 will be required. Usually, businesses automatically include tax to the final charge. Every tax-paying business is legally required to charge 15% extra for all goods, and every business with a 12-month period turnover exceeding R1 million is required to pay VAT to SARS in South Africa.
Employing an accountant also comes in handy when an individual or company wishes to legally reduce VAT bills. Many businesses are unaware that they fall under certain exemptions or deductions, and in failing to recognise this, can leave the former unclaimed.
Accountants also assist with deregistration from tax, UIF, VAT, SDL and PAYE in the event of a business closure.
Accountants also offer secretarial services, which include obtaining a company name and registration number from CIPC (Companies and Intellectual Property Commission) and all the paperwork this undertaking requires, such as registering directors of the company and their details, or amendments to members of a pre-existing close corporation (CC).
Once the company is registered, these details are then used and submitted to SARS, who need this information if you are to apply to SARS to register the company for income tax, VAT, PAYE, UIF, SDL if needed, as well as workmen’s compensation. Secretarial services also include the drafting of minutes for meetings and resolutions, obtaining supporting documentation from the client, and submitting the Annual Return which is required by CIPC. They also attend to the deregistration of the company from CIPC.
Companies are legally required to register for workmen’s compensation, another task offered through accounting services. For example, if your company makes use of a crane on the property, and an employee is injured while operating the crane, Workmen’s Compensation will pay for their medical bills and salary compensation if they are laid off or unable to continue working for the company due to injury.
A company is responsible for paying a certain amount of money for each employee to Workmen’s Compensation. This amount does not get deducted off the employee’s salary and is submitted annually. The company does this to ensure the financial and medical protection of their staff while on the job.
Another part of accounting services in this regard is the assistance with the annual workmen’s compensation submission and payment to ensure the client is compliant.
Tax clearance certificates
One of the most sought-after accounting services are those related to tax clearance certificates. It is an application submitted online to SARS which requires proof that a company is paying their income tax, paying their PAYE as well as their UIF, for example. The accountant can apply for this on your behalf, to obtain the tax clearance certificate to prove that your company is tax compliant.
Business Valuation Services
Most accountants provide business valuation services to their clients. The business valuation gives the company owner an idea of what their business is worth – should they wish to sell their interest. There are various methods to value a business, for example, asset valuation.
Why make use of an accountant as a small business?
Accountants specialise in many services that are arguably complicated and require great effort and time. This is not always ideal for the busy businessman or businesswoman. While it is not always economically viable for a company to employ a full-time accountant, many businesses make use of accountants for specific services such as payroll and preparation for annual financial statements.
Company leaders must often make this decision with the realisation that the certain tasks mentioned above are taking too long, and may not be such a good use of their time.
Company’s often need advice about their own legal structure, as there are various types determined by certain factors, for example, whether a company can be registered as a small business or not. Accounting services may assist small and large business owners in both understanding and establishing the most suitable legal structure for the company. It is challenging to keep up with the ever-evolving business legislation, which is why qualified and practising accountants are reliable and sought-after service providers.