South African consumers are currently trying to get used to the Value Added Tax (VAT) increase which came into effect on 1 April. Government and the business sector on the other hand have been engaging in talks looking into mitigating the impact of the VAT increase. For small businesses, there are some tips you can apply when dealing with VAT increase. Here are some of these tips.
If you’re still using spreadsheets and other manual systems to keep VAT records, its a good idea to switch to a cloud-based accounting solution, like Sage One. Automated systems eliminate many of the headaches and admin associated with tax compliance and ensure that all your invoices, credit and debit notes comply with the ‘time of supply’ clause in the VAT Act.
Familiarise yourself with tax exempted products
Government has put in place VAT exempted products, it is important that small businesses familiarise themselves with this list. Zero rated products include brown bread, dried mealies, dried beans, lentils, pilchards or sardinella in tins or cans, rice, fresh fruit and vegetables, vegetable oil, milk, eggs and edible legumes.
The VAT increase has come with a tough balancing act of VAT charged to customers with VAT due to suppliers. The key in this regard is shopping smart for products and services in order to minimise the cost. You can also carry out a stock audit to check what’s selling and not selling.
Train your staff
Training your staff should be a priority so that they get familiar with what needs to be done. This includes making the right calculations, applying the correct rate of VAT to all items, and keeping good records of all receipts and invoices.
Try to avoid being late with your VAT returns and payments. It is important to know that the percentage charged on any VAT liabilities you owe increases according to the number of times you have been late.
The tips provided above should go a long way in dealing with VAT developments.