Francois Marais

For most small businesses 28 February is the last day of the financial year. Many businesses will today be busy with stock takes. (The purpose of the year-end stocktake is mainly to satisfy external auditors as to the value of inventories at financial year-end where in general weekly or monthly stock takes is for the purpose of internal control.) Doing a stocktake enables a business to calculate its gross profitability and to compare actual inventories on hand with theoretical inventories. MIssing inventory could point to theft, natural losses, or accounting errors.

For many small business owners and individuals who are required to submit an annual statement of assets and liabilities with their annual tax return, today is the day on which the amounts are to be calculated. A farming sole proprietor would also be required to use the value of today's livestock inventory when preparing his annual balance sheet or as it is known these days (SOFP) Statement of Financial Position.

The difference between your total assets and total liabilities is your net value or equity. Companies can have different types of equity where the equity of the business of an individual is known as the capital account. SARS (South African Revenue Service) looks at the movement in equity and compares it with the declared income to determine if you have declared your net income from your trading activities accurately. You have to be able to explain improvements to your balance sheet with correlating income.

Today is a great day to start with a new electronic accounting system. Accounting systems that are not reliant on a physical cashbook and ledgers or on a physical hard drive of a computer is known as cloud accounting systems. Many small business owners have regretted not having a proper backup of their accounting records when their computers crash or get stolen. With a cloud accounting system, your accounting records are backed up automatically. The most popular cloud accounting software in South Africa is Sage Accounting and Quickbooks Online. Some small business owners use excel spreadsheets to write up their annual cashbooks. Using Google sheets means your accounting records are automatically backed up in the cloud.

Using cloud-based accounting software has the main advantage of being backed up automatically. Another advantage is that one can share your accounting records with more than one user like your accountant without having to make physical backups or emailing backup files.

Larger businesses use cloud accounting software like Xero or other (more advanced and expensive) Sage Cloud products. Sage also offers cloud-based Payroll solutions.

I have assisted with the migrating of more than one set of books to Sage Cloud Business Accounting. I did not like the experience of the automated process as it lead to a lot of manual work. It is much easier to start afresh with a new set of accounts in Sage or Quickbooks. The debtors/customer and suppliers opening balances are important for the daily running of a business and the important cash flow of a business. Between today and the next few days, it should be easy to reconcile the correct opening balances to start your books in the cloud.

If you are a small business only using an excel spreadsheet then moving your excel spreadsheet to a Google sheet is a very simple process. You and your accountant can look at the same spreadsheet from anywhere in the world and edit in real-time without having to email spreadsheets to and fro.

You can contact me via email francois@francoismarais.co.za or on 0745470221 to assist in choosing the right cloud accounting system and setting it up. Hope you have a great new financial year!