Financial Year Guide for Start-up Success

The Financial Year-End (FYE) for business in South Africa is here. If you haven’t planned it yet, don’t worry, you still have some time on your hands to get everything ready? Closing the books in the FYE can be quite a hassle, especially for small business owners. However, staying up to date with your business’s critical data and finances helps make the process smooth and easier.

One of the most effective ways to do so is to create a workflow or checklist. It can be quite essential for planning your next year's strategies as it allows you to closely examine and review your business's important data and financial state. So, before we dive deeper into what to include in your checklist, let us first understand the financial year in South Africa and the importance of a good end-of-financial-year closing.

What is a Financial Year?

A financial Year is a one-year period used in government accounting for budgeting and preparing financial statements. This period is also used for financial reporting by businesses and other organizations. In most cases, laws would require companies to prepare and publish financial reports on an annual basis. At the same time, taxation laws require some accounting records to be maintained and taxes calculated before the end of the financial Year.

In South Africa, the financial year runs from the 1st of March 2024 to the 28th of February 2025. The last financial year was from the 1st of March 2023 to the 28th of February 2024.

When is the Financial Year End in South Africa?

The next financial year-end for South Africa falls on the 28th of February 2025. On this date, you, as a business owner, will need to verify, reconcile, and review all transactions and elements of your business accounts. The result of this analysis will help you determine the tax payable to the South African Revenue Service (SARS). Unless otherwise specified by the Commissioner, all businesses must submit their annual employer reconciliation returns to SARS within 60 days of the start of the Employer Tax Filing season.

Things to Keep In Mind as a Small Business for the End of the Financial Year

Preparing your business for the financial year end can be a difficult and time-consuming task, so it is important that you plan and make sure that you don’t miss anything.

To ensure that you have a smooth close of the last financial year for your business, there are some important things that small businesses in South Africa should remember. Here are a few key considerations:

• Business registration: It's important for small businesses to register with the Companies and Intellectual Property Commission (CIPC) and obtain all necessary licenses and permits to operate legally in South Africa.

• Taxation: Small businesses in South Africa are required to register for tax and submit regular tax returns to SARS. It's important to stay current with tax laws and regulations to avoid penalties and fines, plan your tax deductions, and ensure you are keeping your business compliant.

• Bookkeeping and accounting: Keeping accurate records of income, expenses, and other financial transactions, is essential for small businesses. This information is needed to file tax returns, track business performance, and make informed decisions.

• Employment regulations: Small businesses that employ staff need to be aware of the relevant labor laws, such as minimum wage requirements, working hours, and leave entitlements.
  

• Cash flow management: Managing cash flow is essential for small businesses to ensure they have enough money to cover expenses, pay staff, and invest in growth. Small businesses should create a budget, monitor expenses, and look for ways to improve cash flow.
  

• Embrace technology: Technology can help streamline your business operations, improve your marketing, and enhance your customer experience. Stay up to date with the latest technology trends and use them to your advantage.

Important Dates to Remember

For small businesses owners in South Africa, the following annual deadlines apply:

• By the end of February every year, second provisional tax returns are to be submitted.

• By the end of August every year, first provisional tax returns are to be submitted.

• By the end of August, the Annual Financial Statements are to be prepared.

• If the previous year’s income tax returns are still due, they should be submitted by February.

Some other dates and ongoing submissions to keep in mind:

• 29 February – The last day of the Tax-Year.

• 1 March – New Tax Year starts.

• 31 May 2024 – Deadline for annual employer reconciliation submissions.

• 30 June 2024 – Return of Earnings for COIDA 2024.

• 31 August 2024 – IRP5/IT3a should be completed for all employees.

• 31 October 2024 – Deadline for mid-year employer reconciliation (EMP501) submissions.

• 28 February 2025 – IRP5/IT3a should be completed for all employees.

• 31 May 2025 - Deadline for mid-year employer reconciliation (EMP501) submissions.

Get Your Business Ready For the End of the Financial Year

Planning ahead is a simple and effective solution to make year-end accounting less stressful for your financial team. With so much paperwork and other things involved, it’s easy to miss the details. That’s why we’ve compiled a comprehensive list with all the important tasks, so you don’t have to.

1. Update financial records

Review and update your financial records to ensure that all transactions are accurately recorded. Here are a few documents that you should keep handy.

• Bank statements

• Other business bank statements example, Credit card, Savings statements

• Inventory (Stock) counts

• Last year's tax return documents

• Loan statements

• Supplier statements

• Payroll reports

2. Reconcile bank accounts

Reconcile all bank accounts to ensure that the balances are correct and all transactions have been recorded.

3. Review and update fixed assets

Review and update your fixed assets register to ensure that all assets are recorded accurately and that any disposals or acquisitions during the year are reflected.

4. Review and update inventory (if applicable)

Review and update your inventory records to ensure that all items are accounted for and valued correctly.

5. Review and update debtors and creditors

Review and update your debtors and creditors' records to ensure that all amounts are accurately recorded and any outstanding balances are identified.

6. Prepare financial statements

Prepare financial statements, including the balance sheet, income statement, and cash flow statement, to provide a snapshot of your business's financial position at the end of the financial Year.

7. File tax returns

Prepare and file your tax returns, including income tax, value-added tax (VAT), and employee tax (PAYE).

8. Review compliance

Review your compliance with relevant laws and regulations, such as labor laws, health and safety regulations, and industry-specific regulations.

9. Review business performance

Review your business performance for the year and compare it to previous years and industry benchmarks.

10. Plan for the financial Year ahead

Use the information gathered during the Financial Year-end process to plan for the next financial Year, including setting budgets, goals, and objectives.

Remember that this is a general checklist, and your specific business may have unique requirements. It's always best to seek the advice of a qualified accountant or financial professional to ensure that you're meeting all necessary requirements.

How Can UniBlack Consulting Help You?

With this guide and checklist, you’re off to an amazing start. Make even better progress with partnering with UniBlack Consulting. We help start-ups and small businesses organize and keep track of financial data, save time with automated processes, and empower business owners and their teams through business coaching and performance management advisory to make informed data-driven financial decisions.

With QuickBooks Accounting Software as a base together with other technology and management frameworks, you can get greater real-time visibility, greater control over company budgets, employee spending, tax, organizational performance and business strategy, all from one service provider who is like an extension of management, who is fully focused on your growth.