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Chapter 13 - Small Business Law
Administration skills for small businesses
Keeping accurate financial books and records is important from a legal and tax point of view, as well as for running an efficient business.
Bookkeeping means keeping daily records of business financial transactions. These records include a daily cash sheet, accounts receivable and accounts payable Bookkeeping should be done daily and these records are kept for three main reasons:
- To keep track of your business' money, particularly if you are in a business where large amounts of cash are involved on a day-to-day basis.
- To keep track of your business' daily, weekly, and monthly financial performance, and to see whether this performance is meeting your expectations, projections, and goals.
- To provide your accountant, if you plan to use one, with the necessary information to quickly and accurately prepare your income tax returns and to produce financial statements as required under tax laws.
Payroll and personnel records
Most businesses will have employees besides the owners. As an employer you have to collect various levies, including, Unemployment Insurance deductions, personal income taxes and skills development levies.
To keep track of the employee payroll, you will need the following:
- A log book to record the hours your employees worked, their gross pay, and the amount of deductions that you made. You can find these types of payroll books at most stationery stores.
- The correct forms that you have to complete on a monthly basis as well as tax tables for deducting SITE/PAYE.
See Registrations as a new employer.
See Income tax.
Other important records
There are other important records that may be kept depending on the type of business you are running. These include customer service records, inventory records and business safety records.
Customer Service Records
Customer service is an important part of your business. Customer service records will show you whether you are keeping your customers satisfied or not and wehre you can improve things. Customer service records could include the following:
- The number of customer complaints (or compliments) per week/month/year
- The nature of the complaints (were they product or service related?)
- The number of returns (and of which particular items)
- The number of repairs made under warranty
Stock control records
If you operate a small business, you need to keep control of your stock. This involves knowing how much and what kind of stock you have on hand.
Business safety records
It is important to keep a record of the number of accidents that take place on your business premises. This will help you to take the correct action and ensure that you are complying with all health and safety laws.
- Open a bank account and ask the bank for a cheque book.
- bank statements
- copies of invoices given to customers
- invoices for things that are bought for the business, such as supplies, machinery, cars and petrol used for business trips
- salary slips
- copies of papers sent to the Receiver of Revenue, Department of Labour and so on
Filling in forms
- Fill in forms in block letters in pen, not in pencil.
- Fill in forms in the name of:
- the sole proprietor or partners, if the business is a sole proprietor or a partnership.
If the business has a name, add t/a and the name of the business.
- the CC, with CC behind it, if the business is a CC
- the company, with (Pty) Ltd behind the name, if the business is a company
- Try to make a copy of all forms. If the original gets lost in the post, you can prove that it was sent. Keep a file for copies of forms filled in.
- Keep separate files for papers for PAYE, VAT, and so on.
- When you write to a government department, always include the registration number that department has given the business. For example, if you write to the Department of Labour about UIF, use the UIF registration number that the Department gave the business. This will help the department find the business's file.
Writing out cheques
If you plan to pay PAYE, UIF, and other levies with a cheque it is important that the cheque is properly filled in. If the cheque is not properly filled in, then someone can steal the cheque, take it to the bank and cash the cheque. These are rules for filling in cheques:
- Write on the cheque in blue or black pen. If you use pencil, the pencil can be rubbed out and changed.
- Date: put the date in.
- Pay: Never write 'CASH' on a cheque because anybody can steal the cheque and cash it.
Always make the cheque out to the government department or to the supplier.
- Cross out the words 'or bearer' and/or 'or order'. This means no-one but the name you have written next to 'pay' can get the money.
- Amount: write the amount in words.
- R: write the amount in numbers. The bank will not pay a cheque where the words and the numbers are not the same amount, in case someone has tried to change the amount.
- Make two parallel lines somewhere on the cheque. Write ‘not transferable’ between the lines. This means the cheque must be deposited into the bank account of the person that the cheque is for and this person cannot sign the cheque over to anyone else. So, this is a safer way of paying than cash or a cheque without ‘not transferrable’ on it. The bank will not accept any form of liability unless "not transferrable’ is on the cheques.