5 tips every entrepreneur needs to know The financial year-end is an important and busy time for SMMEs as they complete the year on a high and build a solid foundation for growth in the following year. However, this process often proves to be a juggling act for many entrepreneurs as they complete their tax returns, financial statements and prepare for the new financial year, all while running the day-to-day business functions. Tashline Jooste, CEO of ICT enterprise development initiative, the Innovator Trust, says that development programmes can play a key role in upskilling entrepreneurs in areas such as financial year-end management. “Entrepreneurs need practical guidance in order to successfully manage and grow their companies, especially during critical periods such as financial year-end. SMME’s are able to achieve this through mentorship and incubation support.’’ says Jooste. Zumurrud Rinquest, founder of Curious and Creative, as an SMME on the Innovator Trust Programme based in Cape Town – has valuable advice for SMMEs when it comes to financial year-end processes. Rinquest has been running her digital design agency for three years and believes that cash flow management is one of the biggest problems for small and medium businesses. “The challenges I faced when starting out were not unique to my business, which include access to funding and financial management, among others. However, there is no single formula for success and I have made mistakes along the way. Being part of the Innovator Trust, I have received bespoke financial support, mentorship, and training which has ensured a smoother year-end process,” adds Rinquest. Rinquest offers the following five tips for ensuring a strong year-end process:
The financial year-end period is often used as a time for SMMEs to reflect on their financial performance over the past year and plan their budget for the next year. Entrepreneurs, newcomers to veterans, often need financial assistance in the first few years of the business. The first, and most crucial step for SMMEs getting off the ground is through funding. One of the most important aspects to a business securing funding is its ability to accurately portray its finances to potential financiers. Applications for funding require a business to demonstrate that their accounting process is of a high-quality and that they have met compliance standards. To achieve this, it is vital that an SMME maintains quality accounting practises throughout the year, which will assist at financial year-end.
2.Financial statements and investments
Unfortunately, some entrepreneurs – due to a lack of accounting and financial management expertise – tend to grossly under value their investments in their businesses. If an entrepreneur is not fully confident in these areas, they should develop relationships with their accountants to build confidence in the company’s financial management, especially when closing off the year for the business.
3.Remember the annual CIPC renewal
It is compulsory to register a business with the Companies and Intellectual Property Registration (CIPC) and this can be done through an accountant which also requires an annual renewal fee. When a company registers with CIPC, it must declare a date for its financial year end and all relevant processes must be completed by that date. SMME owners must ensure they comply with CIPRO rules - in the case of a company that has failed to comply, been fined, and continues to contravene the Act, the Commission or Panel may apply to a court for an order dissolving the company. For those who like to take ownership and do it themselves, the renewal can be completed online via the CIPC customer portal.
4.VAT threshold and Tax management
According to SARS regulations, as companies prepare to submit their paperwork for the financial year-end, the same documents and information can be used for tax processes. Again, this highlights the need for thorough accounting and compliance processes being followed throughout the year. Furthermore, a thorough review of tax processes should also be undertaken by SMMEs at financial year end in order to identify any compliance issues that may arise. Thankfully, SARS also provides a handy Tax Guide for Small Businesses to help SMMEs navigate tax processes which could prove invaluable to ensuring they are tax compliant. All employee registration information and physical documents can be obtained from the offices of the Department of Labour.
SMMEs need to take ownership of their finances and this refers to surrounding themselves with experts and hiring people they can trust to contribute positively during financial year end processes. By engaging with qualified accountants and bookkeepers, entrepreneurs can assess output against the targets for that year. Rinquest says that these tips will help ensure a smoother financial year-end for SMMEs, but that each process must be thoroughly adhered to throughout the year to avoid last-minute panic. “At Innovator Trust, developing, supporting and the empowering SMMEs is placed at the top of our philosophy and we are committed to encouraging an environment which nurtures the growth of the ICT sector,” Jooste concludes. About the Innovator Trust The Innovator Trust was formed to grow small black-owned businesses in the information and communications technology (ICT) sector and to help develop competent SMME’s through training, skills sharing and infrastructure support. As such, the company has partnered with other incubators who have experience and knowledge in this field, to help grow SMME entrepreneurship and make a real impact in the ICT SMME sector over the next 5 years. The Innovator Trust’s mission is to provide a tailored development programme for selected, established small businesses in the ICT sector. Through training, mentorship, networking and infrastructure support the Innovator Trust is helping to create ICT leaders of the future. For more information please visit http://www.innovatortrust.co.za/, or find the Innovator Trust onTwitter and LinkedIn.