So you have the idea of starting your own company and becoming your own boss, reaching new levels. You have the idea, the concept, the business plan, the know-how on how to get the business off the ground, but not sure where to begin?
We encounter many business owners that started their own company, but didn’t follow some very important steps, which cost them a lot at the end. Let’s see how we can assist in preventing you from landing in that situation.
Firstly, you will need to have your company registered with CIPC.
Mistake: People don’t realize that, when a company is registered at CIPC, it is automatically registered for Income Tax with SARS as well.
Solution: Even before you start trading, you need to ensure that your taxes are filed and kept up to date with SARS. If you have not traded, you will submit zero-returns to keep your company compliant.
Open a bank account in the name of the company
Mistake: Many business owners don’t open a bank account for the company immediately and start trading with their own bank account. Apart from looking unprofessional to your clients, this will also cause problems with your accounting records and your tax figures, because you cannot submit bank statements in someone’s personal name to SARS, should they require supporting documents. You also don’t have proper control over the funds, because personal expenses go through the account as well.
Solution: Open a bank account in the name of the company as soon as it is registered, before you start trading. Make sure that it is a proper business account.
Make sure that you have the correct bank account for your business
Mistake: Business owners tend to open an account with the bank that they are banking with in their personal capacity. Sometimes the bank does not have the options that are required for your business, so the business ends up paying a massive amount in bank fees.
Solution: Find out different options from different banks. Get a business banker to explain it. Look at options that does not include transaction fees for each transaction, as this will run up the cost of not only your bank charges, but also your accounting fees, as it would cause an increase in the number of transactions that must be captured. Look at lower service fees and compare different banking options to find the best fit for your business.
Keep accounting records up to date
Mistake: Not keeping accounting records up to date when starting a business can cause problems with your SARS compliance down the line. This will incur additional costs in backlog accounting, penalties to SARS and it will cause delays if you need accounting records urgently.
Solution: Get an accountant to start capturing your accounting as soon as you issue your first invoice. This will ensure that you have access to up-to-date records whenever you need it, and it will assist in planning for your business.
These are just a few pointers to keep in mind when starting your business. For more information with regards to planning ahead and legal compliance, please contact us to have a discussion about your business and do it right from the start.