SMALL BUSINESS FRAUD AND TRUSTED EMPLOYEES
Small businesses are more likely to become victims of fraud and theft than larger companies. These business owners take considerable pride in being able to offer family members, friends and friends of a friend employment based on their mutual trust of one another. Likewise, long serving employees are regarded “like family”. Unfortunately, that same trust that might propel a business to great success can also be its undoing. Business fraud can and often does occur with trusted employees.
As outsourced accountants providing businesses with internal control advice and services in the prevention of employee fraud, we have found that the typical employee thief does not fit the criminal stereotype, has worked at a company for anything from 4 years and upwards, is in good standing and is usually a first time offender.
When employees are faced with personal financial stress, even the most trusted employee might succumb to temptation to take the business’s money with the idea of either paying it back, which they never manage to do, or they might justify the takings as a form of entitlement for more money for their loyalty and hard work. Business owners, on the other hand, believe that employees will never violate their trust.
Unfortunately, this belief can see thousands, and even millions of rands over several years disappear, as fraud usually grows over time. It would take many more years to generate the income to recover the theft, if the business can continue to survive at all. In this month’s BAN Bulletin, Monique Sharland provides tips on what small business owners can do towards protecting their business against employee fraud, the incidents of which Business Accounting Network and our legal alliance partners have seen increase substantially due to the challenging economic climate.
Visit our Newsletters tab and click on the BAN Bulletin – July 2017 to read the full article.
TRUSTS – DO THEY HAVE A FUTURE?
The new regulation to curb tax avoidance in trusts came into effect on 1 March 2017 by way of section 7C of the income tax act. This could have a significant effect on the pockets of connected persons or companies to a trust where an interest free or low interest loan or credit has been advanced to the trust.
In this month’s BAN Bulletin, Monique Sharland, CEO of Business Accounting Network, unpacks who are affected by this new legislation, the exemptions, the nature of the tax to be imposed and examples of how to calculate the tax liability so that you are well prepared for the financial consequences on 28 February 2018 when the tax becomes payable, as well as possible restructuring solutions.
Visit our Newsletters tab and click on the BAN Bulletin – June 2017 to read the full article.
WHY FORMING A COMPANY COULD BE YOUR WORST MISTAKE
Seasoned business owners trading in companies for many years know and understand the implications of the Companies Act and accept that they often require professional guidance and services that they are either not competent to perform themselves or that which does not warrant taking their valuable time away from what they do well, working on their business.
These business owners understand the importance of compliance of the Companies Act for the benefit of their business as a whole and are comfortable trading in these structures and have been successful in doing so for a long time.
As accountants, we have seen a common mistake that start-up businesses make by forming a company when their situation does not warrant this structure initially and their business does not make sufficient gross profit to afford to factor in essential professional fees, thereby falling foul of the Companies Act and exposing themselves to the dire consequences of potential criminal offences.
The truth is that the cost of operating in a company structure is far higher than operating as a sole proprietor or in a partnership.
In our May 2017 issue of the BAN Bulletin, Monique Sharland, CEO of Business Accounting Network, shares some of the reasons why costs of a company structure are high in comparison to a sole proprietor that newbie business owners don’t know, nor even some seasoned company owners!
Visit our Newsletters tab and click on the BAN Bulletin – May 2017 to read the full article.
RESTRAINT OF TRADE – FROM A BUSINESS PERSPECTIVE
Despite the common belief that restraint of trade agreements are not legally enforceable, the position in South African Law is that the sanctity of a valid contract overrides the right and freedom to trade [1984 – the Appellate Division in the Magna Alloys case]. And on that basis, restraints of trade are deemed valid and enforceable, unless they are contrary to public policy, in which case they will not be enforced.
Restraints of trade are therefore deemed enforceable unless the former employee, franchisee or business partner who alleges that the contract is against public policy, is able to prove so. The courts will therefore interfere with restraints of trade only where the restraint is unreasonable in relation to the employee’s freedom to trade.
For that reason, the best form of protection of a business’s interests from exploitation by a former employee, franchisee or business owner is a restraint of trade agreement. It is therefore necessary for businesses to periodically assess which employees are privy to customer connections and or confidential information and most importantly, to seek legal advice and engage a specialised attorney to draw up a well-considered, well-constructed and precise restraint of trade agreement.
In the April 2017 issue of the BAN Bulletin, Monique Sharland discusses restraints of trade and non-solicitation agreements from a business perspective and when businesses should consider protecting their interests through restraint agreements.
Next time, Business Accounting Network’s alliance partners, Robyn Hey Attorneys Inc. will discuss restraint of trade agreements from a legal perspective.
Visit our Newsletters tab and click on the BAN Bulletin – April 2017 to read the full article.
WHY REGISTERING A TRADEMARK IS IMPORTANT
Brands and trademarks are at the heart of every successful business and are amongst a company’s most valuable asset. A brand or trademark is the principle means that a business can distinguish its services or products from its competitors and build up its own unique “brand image” that communicates directly to their target market, building up a loyal and valued customer or client base.
Yet, the majority of small and medium business owners do not register a trademark as many lack the understanding of how to go about it or allude to cost, which in actual fact is not significant when relating cost to safeguarding the investment you have already made in your business.
Click on the link below which will take you to our short article on “Essential Advantages of a Trademark Registration” in this month’s March 2017 issue of the BAN Bulletin by David Bernstein, a trademark and copyright attorney specialist at de Chalains, a national patent and trademark law firm, who expels the myths around trademark registration and provides business owners with insight to the advantages.
Visit our Newsletters tab and click on the BAN Bulletin – March 2017 to read the full article.
IS A GROUP RETIREMENT ANNUITY THE ANSWER TO YOUR COMPANY’S RETIREMENT PLANNING?
A recent Survey shows that South Africa is facing a dire retirement crisis, with 51% of our pensioners not able to pay their monthly bills and 33% unable to cover their medical expenses. Due to lack of discipline and/or procrastination by individuals, the onus to provide for retirement often falls on employers, with a large portion of retirement savings contributions being made through company sponsored schemes.
Visit our Newsletters tab and click on the BAN Bulletin – February 2017 to read the full article.
THE REGULATION OF THE ACCOUNTING PROFESSION IN SOUTH AFRICA
A good and competent accountant is an invaluable asset to a business. Their training in accounting, financial reporting, company and tax law enables them to adopt a pragmatic and objective approach to solving issues. This is a valuable asset to business owners, particularly in small and medium enterprises where the professional accountant is often the only professionally qualified person.
Visit our Newsletters tab and click on the BAN Bulletin – January 2017 to read the full article.
ACCOUNTANTS AND BOOKKEEPERS REQUIRED TO BE REGISTERED AND QUALIFIED
Would you trust your life in the hands of an unregistered or unqualified medical doctor? No! Then why would you trust your livelihood that your business generates for you in the hands of an unregistered or unqualified accountant or bookkeeper? Just as every business owner needs good marketing strategies and sales, equally they need good tax compliance and proper, accurate financial records if they are to survive.
Unqualified, cut-rate and shoddy bookkeepers who in the past would illegally tailor a client’s SARS returns according to the client’s orders, or promised the client “tax refunds”, have effectively been taken out of the market place along with those bookkeepers who created legal nightmares for business owners due to lack of tax knowledge and skills.
In our quest to educate business owners and non-profit companies, particularly in the smaller business sector, on better understanding the role and responsibilities of your freelance accountant or bookkeeper, this month the national accounting franchise group, Business Accounting Network (BAN), addresses what you need to know about the rules before you outsource your bookkeeping and accounting function to ensure that the person you hire is registered and legitimate.
Visit our Newsletters tab and click on the BAN Bulletin – November 2016 to read the full article.
ACCOUNTANTS PROFESSIONAL STANDARDS BENEFITS YOU, YOUR BUSINESS AND PUBLIC INTEREST
As accountants we have identified the need to educate business owners and non-profit companies, particularly in the smaller business sector, on the role of a professional accountant, as this awareness is an important step to understanding the rules and regulations governing the accounting profession as prescribed by law and The Professional Controlling (Accounting) Body that ultimately protects you, your business and other stakeholder’s interest.
Beginning with internal Quality Control standards within the accounting profession and how it benefits business and stakeholders, this will be the first of several future educational articles by the accounting franchise group, Business Accounting Network, which every business owner ought to know about good and competent accountants and the invaluable asset they can be to you and your business.
Visit our Newsletters tab and click on the BAN Bulletin – October 2016 to read the full article.
CUTTING COSTS IN TOUGH TIMES WITHOUT DAMAGING YOUR BUSINESS
Many smaller businesses are led to believe that cutting costs, particularly in tough economic times, should be top priority for survival. The thing is this; many smaller businesses run too lean to cut costs in any event, whether in boom or gloom times, and are often too lean in critical areas such as marketing, hiring good talent, employee training, accounting, professional advice, technology and capital equipment maintenance and replacement, all crucial expenses for a healthy business existence irrespective of economic ups and downs.
So where can you save money without cutting costs that can damage your business? Just as we are all conscious to not waste precious commodities such as water and food, as business owners, we need to change our mind-set from focusing on the cost of paperclips and electricity to reducing waste in our business. This is where the real savings can be found. In this month’s September 2016 BAN Bulletin, Monique Sharland, founder and CEO of Business Accounting Network, shares some ideas that you might not have thought of to waste less and save more in your business.
Visit our Newsletters tab and click on the BAN Bulletin – September 2016 to read the full article.
BUSINESS FINANCIAL BUDGETING IN TOUGH ECONOMIC TIMES
With tougher economic times ahead for South Africa, smaller businesses that do not prepare a financial plan (also known as a budget or forecast) are setting themselves up for failure. Businesses need to financially forecast future commercial results and cash flows to determine how best to navigate economic uncertainties and still achieve growth and long term objectives. This is good business practice, despite the economic environment
In the August 2016 issue of our BAN Bulletin newsletter, Monique Sharland shares more insight into what is a financial plan, what its purpose is and how it can support your business’s continued existence through difficult financial stretches.
Visit our Newsletters tab and click on the BAN Bulletin – August 2016 to read the full article.
BUSINESS SURVIVAL STRATEGY IN TOUGH ECONOMIC TIMES
During periods of financial turmoil, smaller businesses face a unique set of challenges. By employing certain strategies, many of which is good business practice regardless of market conditions, can see your business thrive during these tough times.
The South African economy has taken several hard knocks since the 2010 Soccer World Cup reflected in the latest business and consumer confidence index. Throw in the shock of Britain’s exit from the EU and the resignation of prime minister David Cameron, it will be a long slide before the bottom is reached, several years, before we see an economic upturn again.
We are confronting change, and change is an opportunity for advances. Now you have the choice to take advantage of the opportunities presented by change or allow yourself to be buried by it. As you review your business you may see many areas that require change. Now is the time to start taking action to implement those changes.
Although it is not possible to cover the many strategies you could use in your business in our July 2016 issue of the BAN Bulletin, as usually these strategies are driven by the relative size of your company and the nature of your industry, there are however some pronounced multi-tactic measures that you should use in your approach. The most common combination among smaller businesses that have not only thrived, but grown, despite a distressed economy pursued an attempt to differentiate themselves from their competitors through innovation, kept financially astute in their business plus produced some type of service or product customization plan.
A change of mind-set in the midst of economic turmoil can play a surprisingly large role in mitigating the negative effects and making the best of a bad situation.
Visit our Newsletters tab and click on the BAN Bulletin – July 2016 to read the full article.
HOW SALEABLE IS YOUR BUSINESS?
Most business owners think that their business is worth more than it actually is. In fact, the majority of smaller businesses are either not saleable, or do not sell. The number one reason for this is that business owners fail to plan for the sale of their business years in advance of putting it on the market.
In this month’s June issue of the BAN Bulletin, Monique Sharland, founder and CEO of Business Accounting Network, reveals some of the main value drivers of business and shares a few tips on what you need to do together with your accountant to prepare your business financially in advance of any prospective buyer’s due diligence process.
Business Accounting Network’s accountants can assist you with preparing a 3 year financial plan that targets factors to increase the value of your business and will consult with you periodically, offering mentorship in auctioning the plan. We have also developed a due diligence readiness program that will prepare you and your business for prospective buyers in the future.
Visit our Newsletters tab and click on the BAN Bulletin – June 2016 to read the full article.
MANAGING YOUR REPUTATION THROUGH A CRISIS
The reputation of a business is essential to its survival. The trust and confidence of the customer or client can have a direct and profound effect on a company’s bottom line.
Remember the recent David and Goliath battle between Frankies soft drink company vs Woolworths? Another all too fresh memory is that of one of KFC’s franchisee’s staff washing chicken on a dirty concrete floor. The importance of reputation has become increasingly apparent with the rise in popularity of review sites like Hellopeter.com.
When was the last time you thought long and hard about your company’s reputation? The odds are that you’ve been forced to think more about your company’s reputation and how it’s affecting everything from your company’s ethics, hiring process, attracting and retention of talented employees, your quality control, reliability, management, leadership and customer focus to your company culture.
In the past, businesses relied on word of mouth of customers, suppliers and their own employees in order to establish, build and maintain their reputations. In this age of social networking, websites, and other methods of instant communication, businesses both big and small must be conscientious of their reputations on a constant basis and be responsive to any crisis that may have an impact on their reputation.
Our strategic alliance partner, Regine le Roux, MD of Reputation Matters shares insightful tips on how to manage business reputation through a crisis in our May 2016 issue of our BAN Bulletin.
Visit our Newsletters tab and click on the BAN Bulletin – May 2016 to read the full article.
PROTECTION OF YOUR BUSINESS FIXED ASSETS
If you haven’t signed a personal guarantee or suretyship that pledges your business assets for some loan or you have not incurred some significant liability that threatens to wipe out your business, then now is the time to consider protection for your business assets.
This is particularly relevant to those businesses with fixed assets of significant value, for example the manufacturing and engineering sectors who own expensive plant and machinery.
An asset-protection plan employs legal strategies, put into place before any lawsuit or claim arises, that can deter a potential claimant or help prevent the seizure of your business (and personal) assets after a judgment. If you haven’t already put your asset-protection plan in place, don’t wait – the longer the plan has been in existence, the stronger it likely will be.
Chanelle Rheeder, a director of our alliance partners and Trust law specialists, Delgado Velosa Kenworthy & Associates, discusses this option in our April 2016 issue of the BAN Bulletin.
Visit our Newsletters tab and click on the BAN Bulletin – April 2016 to read the full article.
NEW RETIREMENT SAVINGS TAX INCENTIVES IS HERE!
According to South African government statistics, South Africans are now borrowing more than they are saving. To encourage people to plan and save for their retirement, the National Treasury is forfeiting short term tax revenues to relieve fiscal pressure in the future. Monique Sharland, CEO of Business Accounting Network, discusses the new retirement fund tax reforms and the changes employers need to prepare for that come into effect on 1 March 2016 in our March 2016 issue of the BAN Bulletin.
Most payroll software systems should now all be aligned to the new retirement tax regulations. Clients administering and processing their own payrolls in-house are advised to ensure that their payroll systems are updated before running their March payroll.
Visit our Newsletters tab and click on the BAN Bulletin – March 2016 to read the full article.
THE ART OF RESOLVING DISPUTES QUICKLY AND COST EFFECTIVELY
Legal disputes are not uncommon in business today, and legal claims can be especially worrying as it costs precious time and resources that often produces a result that is less than satisfactory for all parties concerned and destroys business relationships.
Using collaborative law is a way of resolving disputes without litigation. Business Accounting Network’s strategic alliance partner, admitted attorney to the High Court and commercial litigation specialist, Robyn Hey shares more insight into alternative dispute resolution in our February 2016 issue.
Visit our Newsletters tab and click on the BAN Bulletin – February 2016 to read the full article.
PERSONAL LIABILITY OF DIRECTORS AND MEMBERS FOR COMPANY TAXES
As a business owner, do you understand what it means when you are appointed the Public Officer of your company, close corporation or trust or when you signed as the Representative Taxpayer on your EMP (PAYE) registration form? Most people don’t!
We have recently seen SARS delivering letters of “Notice of Personal Liability of Representative Taxpayer” issued in terms of the Tax Administration Act read together with the Income Tax Act. In our December 2015 BAN Bulletin newsletter, we reveal two situations recently experienced by clients that we hope will induce you, if you are unsure, to check with SARS who the representative taxpayers are in your business (and any past businesses you might have been involved in) and to caution those who are a registered representative taxpayer or public officer, be aware of what your responsibilities are.
Did you know there’s one thing you must do if you cease to be a representative person or withholding agent? You must notify SARS within 21 business days from the effective date, otherwise you could be held personally liable for the taxes of the company, CC, or trust.
But be careful! Just because you cease to be a representative person or a withholding agent it doesn’t relieve you of the liability you had while you were responsible.
Visit our Newsletters tab and click on the BAN Bulletin – December 2015 to read the full article.
BUSINESS VALUATIONS – IN SEARCH OF FAIR MARKET VALUE
Many business owners think that their business is worth more than it actually is. That is because a business’s value to a seller is more often than not the same value to a buyer. For one thing, there are several valuation methods that can be used and even choosing the correct method (or more likely, the correct combination of methods) to use in a given situation is more of an art than a science.
There are a number of instances when you may need to determine the market value of your business. Indeed, buying and selling a business is the most common reason. Estate planning, divorce settlements, determination of a buy-out price for a partner’s share or verification of your worth for lenders or investors are other reasons. To intentionally cultivate business value over time should be the focus of any business owner and an annual valuation can be used to measure the performance of the business.
Our November BAN Bulletin newsletter, written by our alliance partner and business valuations expert, Dr John Hendrikse, focuses on 14 considerations in achieving the goal of a fair market valuation for your business.
Valuing a company is scarcely a precise science and can vary depending on the type of business and the reason for coming up with a valuation. The process can be very complex and time-consuming, and takes quite a lot of experience to do well. Hopefully, you’ll take our advice and hire an expert business valuator to do this for you.
Visit our Newsletters tab and click on the BAN Bulletin – November 2015 to read the full article.