Don’t take shortcuts to save money
MANAGEMENT AND DEVELOPMENT
SPECIALIST AND EDUCATOR
It is important to view your farming enterprise as the small business it really is and acknowledge that there are important administrative processes that must be managed regarding your day-to-day finances.
A scary statistic for start-ups or small enterprises is that most will fail within the first 18 to 24 months. Often poor financial management is a major contributing factor to this.
You might think that you are saving money by managing your cashflow yourself, but this aspect is often neglected and not everyone has the required skillset to do it. An accountant or bookkeeper has the expertise to correctly record the cashflow from different accounts, and track invoices for expense accounts and income.
ACCOUNTANT VS BOOKKEEPER
It is important to understand the difference between an accountant and a bookkeeper, as they are two related but distinct professions:
- Bookkeepers record a business’s day-to-day financial transactions, whereas accountants focus more on the big picture. Bookkeepers record and organise financial data, while accountants analyse, interpret and summarise financial information. Bookkeepers do not analyse these numbers or offer financial advice.
- Accountants have more training, experience and responsibility. Their experience in tax law, auditing and financial planning is invaluable, as they can offer more in-depth advice to businesses. They have the authority to audit, compile and sign off a business’s financial statements.
- Accountants can handle more important matters such as data management, financial analysis and the generation of financial reports. They also ensure that your company meets the South African Revenue Service (SARS) regulatory compliance.
- Bookkeepers handle financial administrative tasks. They are responsible for consolidating books, following up on overdue payments, processing payments for suppliers, and can even process the payroll and complete UIF/PAYE. The more work they do on your behalf, the more they will charge you per hour.
For basic financial and administrative tasks, it’s normal to start by hiring a bookkeeper since they charge a significantly cheaper hourly rate. Your bookkeeper will usually work in relationship with an accountant, or even in the office of an accountant’s practice.
IMPORTANT TO KNOW
- If you need to get funding for your business – and in some cases to open a bank account – you need to have financial statements. They present the business’s financial information in a structured way that is easy to understand.
- It is compulsory for small, medium and large businesses to submit signed financial statements to SARS with the submission of their ITR14 (company tax return). These are submitted via SARS e-Filing when the ITR14 is submitted and must be signed off by the public officer.
- The minimum requirement of the financial statements is that they contain a balance sheet, income statement and notes.
- The submission of financial statements is optional for companies classified as dormant, body corporates or microbusinesses (turnover less than R1 million).
Publication: August 2023