New to company documentation? Avoid these 4 rookie mistakes.

Company registration isn’t the only thing you need. Avoid these rookie company documentation mistakes.

So, you’ve taken the leap and formally registering your first company and you’re ready to take on the world of contracts, tenders and bigger opportunities?

According to Ilana Steyn, the MD of Company Partners (a business that assists entrepreneurs with fast-tracked compliance services), newly-registered companies often skip-over vital tick-boxes. The reason being: common misconception on company documentation.

Here are the 4 rookie company documentation mistakes you should avoid:

1. Don’t assume you can’t get a B-BBEE (BEE) Affidavit – just because your company does not have 100% black ownership

According to new legislation, you don’t need a formal B-BBEE (formerly known as BEE) Certificate if your turnover is less than R10mil a year. Your business is considered an Exempted Micro Enterprise (EME). You need a B-BBEE Affidavit.

This simply means you need a formal letter, called an affidavit, to formally state how your company’s ownership looks like. There are three options: 100% black ownership, more than 50% black ownership or less than 50% black ownership.

Once this affidavit is stamped by a Commissioner of Oath, it serves as your legal B-BBEE certificate.

You can request a free B-BBEE Affidavit template HERE; simply talk to one of Company Partners’s B-BBEE experts.

If you have 100% Black ownership your company will receive a B-BBEE status Level 1; more than 50% Black ownership earns you a Level 2 and less than 50% gives you a Level 4.

When your company hits the 10mil. mark the process becomes much more complex. Then you’ll need to apply for a formal B-BBEE certificate.

Click HERE if you’d like an expert to assist you with a formal B-BBEE certificate. 

2. Don’t ignore PAYE, UIF and COID

According to South African law, all registered companies should comply with annual, bi-annual and monthly PAYE (pay-as-you-earn tax), UIF (Unemployment Insurance Fund) and SDL (Skills Development Levy) requirements.

If you employ someone you should be registered as an employer at both SARS (for PAYE and SDL) and the Department of Labour (for UIF).

There are only a few exemptions; here they are:

  • If an employee works less than 24 hours a month, UIF is not required.
  • If your yearly expense on salaries is less than R500 000 (that’s about R42 000 a month), SDL is not required.

If you need assistance with your business’s PAYE, COID or UIF, simply click HERE.

3. Don’t assume CIPC registration protects your business name

Simply registering your company name at CIPC does do protect it.

The only way to protect your brand name efficiently and that’s doing a Trade Mark registration at the CIPC. This gives you the legal power to use South Africa’s Trade Marks Act – if anyone ever tries to steal or copy your trademark.

It’s possible to defend your brand name without the additional Trade Mark registration. However, that would leave you fending for your brand using common law – which is really challenging in a court of law.

Trade Mark registration also allows you to add that famous small ‘TM’ to the end of your brand name. This helps to ward off the wolves.

Click HERE if you’d like to talk to our experts about Trade Mark registration. 

4. Don’t assume Directors and Shareholders are the same

A director can be a shareholder, but it’s not an automatic association; it’s two separate titles.

Shareholders are the legal owners of company shares, while directors are simply those individuals appointed to head the company management.

The original signed shareholder certificate serves as the shareholder’s the proof of ownership.

Here it’s important not to skimp on the formalities. It’s your company’s responsibility to issue share certificates to every shareholder.

The CIPC does not issue the share certificates upon your company’s initial registration. You only stipulate how many shares will be available for distribution within your company during the registration process.

It’s also a good idea to create a shareholder’s agreement. An agreement that’s specifically set up by a lawyer is ideal – especially when there’s more than one shareholder.

Our experts can assist you with formal Shareholder agreements, just click HERE for a FREE business consultation. 

To learn more about the company documentation you need for your business, click HERE for a free business consultation.

TAX

Tax Deadlines 2018 – and everything you need to know about accounting

No entrepreneur likes doing tax. It’s complicated and it steals valuable work-time you could’ve spent on growing or running your business.

Unfortunately, all registered companies, in South Africa, need to comply with SARS, or they could face late-submissions penalties.

We called in local tax expert and head of Company Partners’s SARS departments, Jack Liebenberg, to give us the low down on business tax and accounting 2018.

Jack has over 30 years experience with SARS. He also created a new Company Partners Tax and Accounting Service, after realising most local entrepreneurs don’t have the funds to hire a full-time accountant.

This new service, the Tax and Accounting service, allows all South African businesses to pay an affordable monthly fee and get professional Bookkeeping and Tax Returns all year round.

Jack answers the most frequently asked questions South African entrepreneurs have on tax and accounting:

1. What are the most important Tax deadlines for small business owners for 2018? 

Jack: Provisional Tax must be submitted during August and February and IT14 returns should be submitted within 12 months from the date on which their financial year ends.

2. For accounting purposes, is it better to declare dividends for yourself or to pay yourself a salary? 

Jack: It’s better to draw a salary.  Additionally, when your business is profitable – and you’d like to draw some of it, – you can decide whether you want to take an annual bonus, in line with your salary, or declare dividends.

You need to keep in mind that you can only declare a dividend if the company makes a profit.

After the company tax is paid, the dividend can be declared, and the company must pay additional dividend tax of 20% on these dividends.

3. Is it good for entrepreneurs to do their own accounting?

Jack: Entrepreneurs are not accountants. They have a vision and they’re equipped to build and grow a business, but most entrepreneurs don’t have the knowledge or the time to do the accounting as well – and to ensure the legal compliance of the company.

There are professionals who can assist you at a fraction of the price that you would pay if they have to appoint a full time professional.

4. Is accounting really necessary for companies who are just starting out?

Jack: There are various legal requirements, in terms of accounting and tax, that need to be adhered to by companies.

One of the requirements is: there must be sound financial records, and there must be annual financial statements compiled at the end of the financial year.

It is, therefore, advisable to have financial records since the start of the business, to ensure that all income and expenses are recorded.

Additionally, good bookkeeping can also assist your business’s growth.

Accurate financial records ensure that directors can gauge how the company is performing.

The available information can empower you to make informed decisions regarding your business’s strategy and its foreseeable future.

So there you have it, according to our Tax and SARS Expert Jack Liebenberg, it’s best to leave your tax and accounting to a professional. That way you can get back to conquering the world with your entrepreneurial skills.