Accounting firm Pretoria

Back to basics: Internal Controls

What is internal control? 

It is the system of checks and balances to ensure the company’s financial records are accurate and reliable being the result of transactions that are carried out and recorded timeously, accurately and efficiently.

The effectiveness of internal controls is dependent on management’s attitude towards controls.

Indications of a strong internal control environment

  • Employees possess the necessary skills and competence required
  • Recruitment agencies or HR checks and verify the details in CVs properly.
  • Proper inhouse training to staff
  • Clear roles and responsibilities
  • Separation of duties are in place between functions of initiation, authorization, recording and reviewing.
  • Monitoring of staff performance

Strong document controls include:

  • Easy to understand designed forms
  • Sequentially pre-numbered documents to be able to track, record and reconcile documents.
  • Orders and Invoices approved by management
  • Payments approved by management
  • Physical verification and inspections are performed
  • Supporting documents accompany orders and deliveries
  • Information on documents comply with VAT requirements
  • Documents are filed regularly and in a logical manner

Strong Accounting and Admin controls include:

  • Reconciliations between accounting records and source documents – bank accounts, supplier statements, customer statements.
  • Overall review done by management.
  • Statutory requirements such as VAT returns, Payroll returns, Tax returns reviewed by management.
  • Filing are done in a logical manner i.e. monthly file for expenses and income.
Personal Income Tax

Back to Basics for Small Businesses

Tax Invoices 

What information needs to be on a Tax Invoice

  1. The word “Tax Invoice” must be clearly indicated.
  2. The supplier name, Address and VAT no
  3. Tax Invoice Number
  4. Date of Invoice
  5. Recipient name, address and VAT number of recipient (if it is a registered vendor)
  6. Description of goods
  7. Price per unit and quantity
  8. Total Sale value (Indicate the currency)
  9. VAT Charged (indicate the VAT percentage)
  10. Total value including VAT

For tax invoices below R5000

  1. The recipient details need not appear on the invoice
  2. There are no requirements to show the units or volume
  3. The description need not be full.

Value Added Tax (VAT)

Who should register for VAT?

Any person that carries on a business may register for VAT.

It is mandatory for a person to register for VAT if the taxable supplies made or to be made is, in excess of R1 million in any consecutive twelve-month period.

A person may also choose to register voluntarily if the taxable supplies made, in the past period of twelve months, exceeded R50 000.

VAT increased from 14% to 15% from 1 April 2018.

How to register for VAT?

The VAT 101 application for registration must be submitted in person at the SARS branch nearest to the place where your business is situated or carried on.

A registered tax practitioner can register your business for VAT on your behalf.

Registering For Employees’ Tax  [Pay-As-You-Earn (PAYE)]

Who should register as an Employer?

An employer must register with the SARS within 21 business days after becoming an employer, unless none of the employees are liable for normal tax.

What is Employees Tax?

Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. The process of deducting from remuneration as it is earned by an employee is commonly referred to as PAYE.

Monthly submissions to SARS by Employer

The amounts deducted or withheld must be paid by the employer to SARS on a monthly basis, by completing the Monthly Employer Declaration (EMP201). The EMP201 is a payment declaration in which the employer declares the total payment.

Employer Annual Reconciliations

Employers are required to submit their Employer Annual Reconciliations by 31 May to SARS, confirming or correcting payroll tax amounts which were declared in respect of the tax period.

Who should register for Unemployment Insurance Fund (UIF)

An employer who is registered or required to register with SARS for PAYE and/or Skills Development Levy (SDL) purposes, is also required to register with SARS for the payment of Unemployment Insurance Fund (UIF) contributions to SARS.