Page 3 of 9 FirstFirst 12345 ... LastLast
Results 21 to 30 of 84

Thread: Anyone who needs TAX / Accounting Advice

  1. #21
    Gold Member Mark Atkinson's Avatar
    Join Date
    Jul 2010
    Location
    Durban, South Africa
    Posts
    796
    Thanks
    212
    Thanked 150 Times in 117 Posts
    Blog Entries
    12
    Hi Ice,

    Perhaps I can help you.

    With regard to expenses, to my knowledge all general expenses in respect of the property you are running the business from can be apportioned to the business according to the floor area of the business in relation to the floor area of the property. For example, your bond, if your office takes up 10 square metres and your property is 50 square metres, you could apportion 10/50 = 20% of your bond to the business.

    For expenses such as telephone bills and and travel allowances, where the phones or vehicles are being used for both business and private usage, specific records need to be kept in order to claim the business portion.

    This is looking at it from a taxation point of view. It's essentially the same for accounting records when splitting your private and business expenditure. Any expense which you incur for the business can be recorded as an expense in your accounting records.

    Regarding your vehicles, if they are privately owned, you wouldn't record them as assets of the business. You can record and claim expenses incurred in the production of income, however, such as petrol. I'm not quite sure about the HP and interest. You might be able to apportion it, but I'm really not 100% sure.

    Regarding depreciation: You would be able to record depreciation on any depreciable assets which belong to the business. Thus, if your vehicles remain privately owned, you wouldn't be able to claim depreciation on them. On any office equipment etc belonging to the business, you would be able to set a depreciation policy and claim that percentage each year as an expense. I would recommend, for simplicity's sake, that you take a look at SARS' Wear & Tear policies for various assets and match your depreciation policy to that. This will mean that your depreciation expense and your wear & tear allowance should be the same each year.

    As far as travel allowances is concerned: Travel allowance is a deduction in respect of tax. In order to claim a travel allowance you first of all need to be an employee who is given a travel allowance by the business. Secondly, you need to keep accurate records in a logbook as well as any expenses which you incurred (petrol slips). Then, unless it's changed in the last year (I'm not sure), you can deduct the business portion of that travel allowance using SARS' formula.
    I think from a business point of view you can expense the portion of running costs of the vehicle which pertains to the business. (You could probably split this using the logbook)

    If I'm wrong with anything please somebody correct me. I've kind of hit a blank on my general bookkeeping knowledge, it's shocking! This is what 3rd year accounts does to you!

    Hope that at least helps you in some aspects, Ice.
    "The way to gain a good reputation, is to endeavor to be what you desire to appear." - Socrates
    Mark My Words - Arbitrary thoughts on ordinary things

    LinkedIn | Twitter

    Bafokke Shirts - South Africa's No. 1 Fan Shirt!

  2. Thanks given for this post:

    Dave A (23-May-11)

  3. #22
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    21,272
    Thanks
    3,087
    Thanked 2,487 Times in 2,091 Posts
    Blog Entries
    12
    I think Mark covers many of the points very well - just the handling of vehicles, I guess. And thinking about it, I understand why Mark is struggling for a definitive answer - because there are a few ways to go about this and the best way probably depends on the exact circumstances.

    The first year in business often is rather exploratory as there are so many things that are guessed at without much definitive information to help.

    My suggestion is:
    • Keep a log book for each vehicle so that you can differentiate between business and private milage
    • Keep a record (complete with slips) of running costs - fuel, maintenace, licencing
    • Keep a copy of your HP/lease agreement handy, and keep track of your instalments

    You will now have a clear trace of the detail required for your accountant to finalise your financial records in this regard and advise you as to the best way to manage these going forward.

    Practically, this could be done as seperate expense line items in the business's "management accounts" (I like it this way because it is more likely you'll actually keep track of these things). Then when it comes to finalising your accounts with your accountant, these expenses can be reallocated if required.
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

  4. #23
    Junior Member
    Join Date
    May 2011
    Location
    Durban
    Posts
    13
    Thanks
    1
    Thanked 0 Times in 0 Posts
    Tx Dave!! I'm just trying to get everything right from the start and any and all help from yourself and FORUM members will be greatly appreciated. I'm a little confused about the difference between the TRAVEL ALLOWANCE and claiming the expense of petrol as in my mind they conflict with each other?? Also if I buy a computer for instance for the company - can I not just allocate that as an expense straight off?

  5. #24
    Gold Member Mark Atkinson's Avatar
    Join Date
    Jul 2010
    Location
    Durban, South Africa
    Posts
    796
    Thanks
    212
    Thanked 150 Times in 117 Posts
    Blog Entries
    12
    Ice, you need to try and separate expenses in your mind as TAX DEDUCTIONS and EXPENSES. A travel allowance is a deduction in respect of your taxable income. An individual (employee) can claim this deduction if he gets a travel allowance. Because if you think about it, what a travel allowance actually is, is an employer paying/reimbursing and employee for his travel expenses.

    The EXPENSE is what the business puts through it's income statement. That would be petrol & maintenance costs, etc.

    With regard to expensing a computer straight off, no you can't. A computer falls under the accounting definition of an asset and therefore needs to be recorded as such. The "expense" can be claimed over it's useful life in the form of depreciation. If there's anything I'm sure of, it's that. You definitely can't expense the whole amount straight off.
    "The way to gain a good reputation, is to endeavor to be what you desire to appear." - Socrates
    Mark My Words - Arbitrary thoughts on ordinary things

    LinkedIn | Twitter

    Bafokke Shirts - South Africa's No. 1 Fan Shirt!

  6. #25
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    21,272
    Thanks
    3,087
    Thanked 2,487 Times in 2,091 Posts
    Blog Entries
    12
    Quote Originally Posted by Ice View Post
    Also if I buy a computer for instance for the company - can I not just allocate that as an expense straight off?
    If it costs less than R7000.00, you can expense it straight away in terms of the small item write-off allowance. If it costs more than that, you need to capitalise it and depreciate it at the allowed SARS depreciation rate (three years for personal computers and 5 years for mainframes).
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

  7. Thank given for this post:

    AndyD (23-May-11), BusFact (24-May-11), Mark Atkinson (23-May-11)

  8. #26
    Gold Member Mark Atkinson's Avatar
    Join Date
    Jul 2010
    Location
    Durban, South Africa
    Posts
    796
    Thanks
    212
    Thanked 150 Times in 117 Posts
    Blog Entries
    12
    I wasn't actually aware of the small item write-off allowance. That's useful!
    "The way to gain a good reputation, is to endeavor to be what you desire to appear." - Socrates
    Mark My Words - Arbitrary thoughts on ordinary things

    LinkedIn | Twitter

    Bafokke Shirts - South Africa's No. 1 Fan Shirt!

  9. #27
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    21,272
    Thanks
    3,087
    Thanked 2,487 Times in 2,091 Posts
    Blog Entries
    12
    Quote Originally Posted by Mark Atkinson View Post
    I wasn't actually aware of the small item write-off allowance.
    I'd better expand on the allowance then. There are two things to bear in mind when applying this allowance:
    • The item can't be part of a set (basically, you can't break up something into parts to work around the limit). The example generally used is a diningroom set, which you can't break down to the table and each individual chair as it functions as a set.
    • It can't be an asset purchased to rent or lease to another party.

    Obviously the "set" issue can get interesting when it comes to IT infrastructure.
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

  10. Thanks given for this post:

    Mark Atkinson (23-May-11)

  11. #28
    Gold Member Mark Atkinson's Avatar
    Join Date
    Jul 2010
    Location
    Durban, South Africa
    Posts
    796
    Thanks
    212
    Thanked 150 Times in 117 Posts
    Blog Entries
    12
    Quote Originally Posted by Dave A View Post
    Obviously the "set" issue can get interesting when it comes to IT infrastructure.
    I can imagine. I'm sure if the "set" (example a PC including all peripherals) cost less than R7000 then it wouldn't be an issue? If you're buying a supercomputer and a 42" TV to use as a monitor then you might have an issue
    "The way to gain a good reputation, is to endeavor to be what you desire to appear." - Socrates
    Mark My Words - Arbitrary thoughts on ordinary things

    LinkedIn | Twitter

    Bafokke Shirts - South Africa's No. 1 Fan Shirt!

  12. #29
    Junior Member
    Join Date
    May 2011
    Location
    Durban
    Posts
    13
    Thanks
    1
    Thanked 0 Times in 0 Posts
    Hi again!!!

    On the question of depreciation again. If I buy a computer valued at R7500 for example and I pay CASH for it but only relfect a 1/3rd portion of that amount in my books for the first year - how do I enter that into my books cause the full CASH AMOUNT will show as having been paid from my bank account and then the bank figure amount will be incorrect? If the COMPUTER is purchased on terms then how do I reflect this in my books?

  13. #30
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    21,272
    Thanks
    3,087
    Thanked 2,487 Times in 2,091 Posts
    Blog Entries
    12
    You would create a fixed asset line item on your balance sheet called Computer equipment. (And depending on what accounting software you're using, you could create a sub-account for each computer asset).

    You debit the fixed asset account for the full value of the purchase and credit the bank account used to make payment.

    Depreciation entries are done separately, normally at the end of financial year.

    If the computer is bought on terms, you would add either a current liability (repaid within 12 months) or long term liability account (repayable over more than 12 months). From there you'd debit the fixed asset account and credit the liability account you created. As you make payments, you'd then be debiting the liability account and crediting the bank account used to make payments.

    Just to add one other wrinkle, if you rent the equipment or purchase on hire purchase, you'd expense your payments as an item on your income statement as you make payments.
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

Page 3 of 9 FirstFirst 12345 ... LastLast

Similar Threads

  1. Replies: 3
    Last Post: 11-Dec-09, 03:12 PM
  2. Tax Advantages of Proper Asset Accounting for Small Businesses
    By sgafc in forum General Business Forum
    Replies: 14
    Last Post: 05-Nov-09, 07:07 PM
  3. P Gordhan: Taxation Laws Amendment Bills 2009
    By I Robot in forum Tax Forum
    Replies: 0
    Last Post: 01-Sep-09, 07:10 PM
  4. Flat tax rates for SA.
    By Dave A in forum General Business Forum
    Replies: 3
    Last Post: 13-Apr-07, 10:25 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •