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After all monetary transactions have been caputred efficiently, and you're just about ready to sit back and smoke that cigar, along comes year end.
This is where your accountant steps in, for not all is as it seems.
It's time for SARS to collect what SARS expects is due.
A trial balance represents the totals of all income and expenses accrued for the year. Your accountant would need to analyse these totals and ensure that certain adjustments are made to fully represent the business' financial health.
Depreciation on assets, sale of assets, purchases of new assets, stock variances, prepayments, accrued income, and certain other allowances would have to be taken into account to determine a true net profit for the year.
A cumulative international reporting standard of all financial transactions must be prepared and presented for approval by the business owner.
Financial statements are a legal requirement for freelancers, contractors, sole proprietors and all businesses in South Africa and are presented to SARS for taxation.
SARS, being a rigid and inflexible institution, demands that transactional records are maintained and stored for up to 5 years. Taxation rules are stringent, and taxes are imposed on net profit, depending on what category your trade falls under, for example:-
- Sole Trader
- Micro Business
- Small Business
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