The Seriously Lighthearted Guide to Basic Compliance for Small Businesses!: The Seriously Lighthearted Guide Series, #2

By Derryn Brigg

A practical guide to what you probably don't know but should know about compliance for small businesses operating in South Africa. This book will take you through a series of steps to get your business on the right track to becoming compliant in order to avoid nasty and unneccesary legal complications and expenses.

• Language: English
• Publisher: Derryn Brigg
• Release date: Nov 6, 2019
• ISBN: 9781393021728

Book preview

A NOTE FROM THE AUTHOR

So now that you have taken the decision to start your own business or perhaps you have already begun, you need to know just exactly what is expected of you in terms of compliance.

Record keeping for your business is an integral part of running a business in terms of accounting, tax and legal requirements. Not only are you obligated keep these records for compliance purposes but many of the records you keep will allow you to track the progress of your business. You cannot manage your business effectively without using proper systems to record information.

When you start your own business it’s not good enough to just be an expert in your particular field, you have to become a Jack-of-all-trades and learn to perform a vast variety of duties which includes all sorts of administration. Some of you may be rolling your eyes, but unless you have the luxury of a giant trust fund, you probably won’t be able to afford to employ people to perform these duties for you initially.

Which in essence, means that you need to read this book and get au fait with what you need to do, regardless of whether you do it yourself of get someone else to do it for you. You, as the business owner have the responsibility of ensuring that your business is compliant and you won’t know if someone else is doing it correctly if you don’t understand what it is that they should be doing in the first place!

Knowledge is power so you need attend to the matters of accounting, human resources, tax, general business admin etc. and ensure that it all matches up with the type of entity you are using to operate your business.  What’s good for the goose in not necessarily good for the gander when it comes to different business vehicles – there are different rules in some areas.

Please note that legislation changes from time to time or amendments are included, so at the time of writing, the information contained herein was in accordance with the current legislation. For example, every year SARS publishes updated tax tables, changes to tax thresholds etc. so you will need to continuously update your knowledge or speak to an expert in the relevant field. The book will explain the basic compliance requirements that you should know and adhere to, and which generally remain the same but the finer details, figures and percentages may change over time.

So, lets get your business up to code. I will show you the way if you are willing to travel with me on this journey, ukuhamba kukufunda!

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*See the glossary at the end for explanations of South African terms used throughout the book.

CHAPTER 1 – LEGAL ENTITY

Let me ask you something... what car do you drive and how did you come to the decision to buy it? Were you walking past a dealership one day and thought to yourself Gee, I need a car and that red one looks quite nice, I think I’ll buy it! I’ll bet my last boerie roll that you didn’t. Instead, I’m pretty sure you did a considerable amount of research on what cars are available in your price range and compared all of the options before buying anything. It is a big decision after all – both financially and emotionally. Now imagine your business is a car – you should be doing the same amount of research (if not more) before committing to it for the next foreseeable years. Not doing your homework beforehand could lead to you being stuck on the side of the road or worse, but we won’t go there. Your business is the same and it comes with varying forms of legal, regulatory and compliance requirements that if not understood or adhered to correctly could lead to your business sliding off the gravel road straight into the vynbos.

Before we get into the nitty gritty of compliance, it’s important to first establish what the best legal form will be for your new business. So, let’s first look at buying a car and the factors that influence our decisions:

Which car will be the most reliable?

What does the car cost?

Which car is safest for me and my family?

Which car is the easiest to maintain?

Which car is the cost-effective to maintain?

Which car offers all the features I need?

Can we agree that these are all important factors that need to be carefully considered when buying a car? Now let’s use the same questions for evaluating the type of legal entity you plan on using for your business:

Which entity will be most reliable – how penetrable is the entity?

What does the entity cost - setup and registration costs?

Which entity is the safest for me and my family – how liable am I in my personal capacity and how will my family be affected if the business fails?

Which entity is the easiest to maintain – what are the ongoing compliance requirements?

Which entity is the cost-effective to maintain – what are the tax implications?

Which entity offers all the features I need – credibility, accessibility, cost, practicalities?

Most of us only keep our cars for a few years but the intention is to keep our businesses for much longer, so we need to put considerable effort into deciding what entity is best for us. Luckily, you can change your business structure just like you can upgrade your car but changing them costs money, time and requires some paperwork.

So, let’s look at