Four things your accounting professional didn't tell you

It has happened so often now that I am no longer shocked when I hear from an entrepreneur that his accounting professional failed to bring any one of these four things to his attention.

1) In terms of the new Companies Act, if your company is doing less than about R400 million a year turnover, it doesn't need an auditor.

2) And it does not need an audit.

The auditing industry suffered very badly when the new Companies Act introduced these new requirements (or lack of them), so let's break it down. I'll assume that yours is not a company in the big league above. If it is owned by anyone other than the directors or by family trusts of the directors, it does need formal Annual Financial Statements that must be reviewed by a suitably qualified accountant (not an auditor), but again, most companies fall into the category of "owner managed", that is one whose directors and shareholders are one and the same.

An owner managed company does not even need formal Annual Financial Statements, a simple Balance sheet and Income Statement are quite sufficient for SARS and the Companies Act.

3) If your company does less than R20m a year turnover and a few other conditions are satisfied, then it can qualify as a Small Business Corporation for tax with a tax saving of up to R95 000 each  year.

4) If your company does less than R10m turnover and is less than 51% black owned, it is automatically Level 4 B-BBEE. There's nothing wrong with having more than one company doing less than the turnover limit as long as there's a sound business reason for this.

If it's turnover is less than R50m and it is at least 51% black owned it is automatically Level 2 B-BBEE and Level 1 if 100% black owned.

And yes, I am a Chartered Accountant and a Registered Auditor.


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