Article by: Midrand Chartered Accountant: AUDREY MUVEZWA
THE ABC's OF GOOD BUSINESS PRACTICE
What you need to know:
Every great entrepreneur will tell you that if you fail to plan you plan to fail. This is true more so with running your own business. It is not something that happens by chance. That's why you should not leave compliance to a game of chance.
The biggest problem most entrepreneurs will confirm facing them is finance. Whether it is start-up capital or capital to invest, or to expand. Whatever the reason for the capital, it is important. Equally important is how you intend to manage and use that capital. Now imagine what an investor looks at when they consider investing into your business. And you are sure to receive questions around compliance and the risks associated therewith.
Receiving the funding you require for your business is as equally important as understanding what to do with it because if compliance was not in your plan, you may find yourself under financed and most of your cash has been used on compliance related matters.
Not smart at all and that's why the ABC of good practice require understanding and implementation of compliance. Compliance should not be seen as a risk but rather as an opportunity. An opportunity to critically analyse your business and/or business plan.
In that plan you should have an entire section dedicated to compliance with all regulatory requirements. A mouth and mind full of legislation, rules and regulations. It is best to become conversant in the terminology early, as well as the concepts and rules. There are some strict penalties for non-compliance including jail time.
That's why special care must be given to exactly which laws are applicable to you and what requirements you as a business must fulfil.
The first step to being compliant is being empowered:
Firstly, know what type of business entity you will operate as. Are you an incorporated company, or a sole proprietor, a section 21 company or a company that’s not for profit?
With regards to all incorporated entities those ending in (Pty) Ltd, Ltd and NGO’s, the Companies Act and King Code will apply off the bat. And if you intend having employees, all labour legislation will apply to you. If you are professional or highly skilled business, you would need to be registered with industry regulatory body for your profession.
We may be born free but we are taxed to death. All the more reason to be concerned because there could still be so much uncertainty around tax compliance, VAT, PAYE and more.
Then there is FICA and the Competition Act as well. Which we have seen both the Competition Commission and the Financial Intelligence Centre take serious action against certain companies that breached its rules. The penalties of which were very steep.
At the end of the day you would need to be prepared for the challenges that come with doing business in South Africa. The regulatory framework is there to ensure compliance and promote open, transparent and fair business.
By now, you should be seeing the bigger picture. That business in South Africa demands transparency, efficiency and open dealing with government and your customers. And by now you can also see that compliance should be a huge component from inception of any business. In the next part we will go into depth about how to implement a compliance plan and some good business practices.
To contact Audrey: firstname.lastname@example.org or tel: +27 (0)61 581 7010