You need to do annual financial statements for your company every year. This include private companies, close corporations, sole proprietors, non profit companies and partnerships.
When to do financial statements.
The financial statements have to be compiled after the financial year end of the company. The statements will include transactions for a period of 12 months. Except for the year in which the company was started, then it will only include for the number of months leading up to the first financial year end.
The majority of companies have February as a financial year end, but any month can be chosen when the company is registered. This option is not available for sole proprietors, and the financial year end will always be February.
What it comprises of.
There are some standards that have to be upheld when annual financial statements are compiled. The following must be included.
Taxpayers have 12 months from the end of the financial year end to submit their tax return(also called a ITR14) to SARS. The tax return is submitted using the details on the financial statements.
What else is financial statements used for.
When you want to apply for credit, the first thing the financial institution will ask you, is to supply the annual financial statements. In some cases, the financial statements must also be submitted when applying for tenders. It is also crucial, keep track of your profit/losses, and to ensure that the correct information is submitted to SARS.
It is also possible to compile financial statements for a period for less than 12 months. This is called financial statements, comprises of the same reports, and also have to be signed off by an accountant.
VAT is an additional tax that you pay on certain products you buy. The current VAT rate is currently set at 15% SARS. VAT is only payable when purchasing from businesses who are registered for VAT by SARS.
When should my business register?
It is compulsory for all businesses to register at SARS for VAT, if the company’s sales exceeded R1m for 12 consecutive months. This includes all business types, private companies, close corporations and sole proprietors. It is the responsibility of the company to apply for a VAT number within 21 days.
It is also possible to do a voluntary VAT registration. This can be done if the the total taxable supplies during the previous 12 months exceeded R50 000. Proof of this has to be provided to SARS.
What to do after the VAT registration
After the registration the company will receive written confirmation from SARS. This document will contain the VAT liability date, which is the date on which VAT must start to pay VAT. This document will also indicate in which months the VAT returns are to be submitted.
Before submitting your VAT returns, the amount payable or refundable must be calculated. This is done by deducting the input VAT(VAT paid on purchases) from your output VAT(VAT received on sales). Once this is done, the VAT returns can be submitted. Please keep in mind that there are products which are VAT exempt.
How to deal with a VAT audit.
Typically, VAT returns are randomly choose VAT returns to audit. This can also happen if the figures submitted differs drastically from previous periods. Also when a VAT refund is submitted. When the return is flagged for audit, the taxpayer will be notified by in writing. As soon as this happens, the taxpayer has to submit a copy of the VAT calculation, ie VAT report, together with sample invoices. The taxpayer will be notified when the VATaudit is finalized, or whether more supporting documents have to be submitted.
Why is my refund not being paid?
This can be due to an ongoing audit. There are also certain situations where SARS put a “stopper” on a VAT refund. This simply means that a request must be made in writing to remove the stopper, and the banking details of the company has to be confirmed.
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