OVERVIEW
CAS was founded in 2009 as a single entity business. The single entity or “sole proprietor” business structure was chosen as it best represented CAS at the time. Though the business has grown in reputation, experience and stability, this business structure still offers the most flexibility and benefits for how CAS conducts business.
CAS standard business information includes:
Storm Wiggett T/A Creating a Storm
Tax registration
Tax number: 3664193145
Estimated tax bracket: 26% - 31% over R216 000
VAT registration
VAT number: 4620261349
VAT process: Processing of bank statements for a bi-monthly VAT period starting for the months
March and April. Thereafter a VAT calculation and a VAT reconciliation to then submitted to SARS.
Company registration
Storm Wiggett is trading in her capacity as a sole proprietor and therefore there is
no available company registration number.
Accountant information
Webb Accounting CC
Company address: 25 St James Street, Somerset West, 7130
Contact details: Grant Webb - 082 453 4674, Aalita Manilall - 083 602 2857, Office - 021 851 7400
SOLE PROPRIETOR STRUCTURE
The legal entity for the business is the natural person. This simplified structure reduces administrative burden and cost but makes the natural person, liable for the financial health of the business. This includes debts, tax obligations and legal liabilities stemming from contractual exposures (Corporate Finance Institute, 2018).
This form of business structure is common in South Africa and is widely used by small businesses run by individuals. While personal liability may sound daunting at face value, good governance coupled with sound contracts will mitigate almost all business risks.
Sole proprietor businesses are cost-effective to register and maintain in South Africa, and fiduciary duties are limited to a single natural person. In the case of CAS, this means that Storm is the sole shareholder, decision-maker, and beneficiary, and is liable for the wellbeing of the business in her capacity.
Sole proprietor businesses can employ freelance on limited-time contracts, but cannot employ full-time staff.
Obtaining and maintaining a credit score can be challenging. Typically, it is difficult to raise debt from financial institutions as a sole proprietor, as the form of liability limits the exposure that these institutions are willing to accept, and maintaining a significant enough credit score to make leveraging the business worthwhile is both time-consuming and cumbersome. Businesses that look to grow through external financing should not operate as sole proprietors, but rather as Limited Liability Company (LLCs).
Based on CAS’s current and envisaged future operations, CAS should continue to operate as a sole proprietor. This business model is advised until such a time as it becomes logical to either employ permanent staff or grow the business beyond its current operating paradigm.
ACCOUNTING SOFTWARE AND OPERATIONS
Accounting responsibilities for a sole proprietor are relatively simple in South Africa.
The financial year runs from February to February, with two tax semesters, due in March and August. VAT is paid in six instalments every two months, and year-end financials are submitted to the South African Revenue Services (SARS) at the end of the financial year.
All financial documents, including tax calculations, can be prepared and submitted by a registered accountant, and no third-party audits are required. In the event of a requested SARS audit, the appointed accountant can facilitate and submit the required documentation on the company's behalf.
In light of the above, CAS has retained the services of a chartered accountant tasked with preparing and submitting financial documents to SARS.
To date, I have managed the day-to-day cost accounting to maintain a transparent view of the business's cash flow and as a cost-saving mechanism.
CAS utilised SAGE software between 2009 and 2021. In 2021 an investigation and subsequent trial in the use of Xero as an alternative resulted in CAS following suit and migrating operational and cost accounting to Xero.
Accounting Software Comparison
Xero
R560/ $35 a month
Easy to use software that is both customer and accountant oriented
Access from multiple devises
Administration automation
Better accounting with app integration
Software specific for small businesses
Free & regular updates
Multiple currency billings
Good, quick, concise customer service
Easy syncing of bank and financial information
Apps to customise & streamline tasks
30-day free trial period
Everything in one place – capture bills, receipts from mobile
Recommended by small businesses & friends
Fig. 1. Xero, 2022. Xero Logo.
QuickBooks
R370/ $25 a month
Easy to use software that is customer orientated
Access from multiple devises
Automation
App integration
Software for small/ large businesses
Free & regular updates
Multiple currency billings, but only one at a time
Good customer service
Easy syncing of bank and financial information
30-day free trial period
Everything in one place – capture bills, receipts from mobile
Recommended by freelancers
Fig. 2. Quickbooks, 2022. Quickbooks Logo.
Sage Pastel
R494/ $31per month
Dated programming
Not user-friendly – software tailored to accountants
No automation
All-in-one single system solution for complex inventory management.
Expensive updates or add on
Paid for multiple currency billings, but only one at a time
Bad, slow customer service
Problematic syncing of bank information
30-day free trial period
The recent addition of bill & receipt capture – is not yet effective
Only recommended by Accountants
Fig. 3. Sage, 2022. Sage Logo.
Xero is 15% more expensive than SAGE. However, it has a more modern interface, and better workflow and bespoke machine learning models that allow the software to automate repetitive transactions, expenses, and tasks. This reduction in user time compensates for the price increase.
References
APM (2019). What is Project management? [Online] APM. Available at: https://www.apm.org.uk/resources/what-is-project-management/ APM Body of Knowledge 7th edition. Asana (2022). Home Page. [Online]
Asana (2022). Asana. Available at: http://asana.com [Accessed 2 Apr. 2022].
Manilall, A. (2022). Creating a Storm Accounting Structure. 2 Apr.
Xero (2022). Beautiful Business and Accounting Software. [Online] Xero. Available at: https://www.xero.com/za/. Quickbooks (2022). QuickBooks®: Official Site - Smart Tools. Better Business. [Online] Quickbooks. Available at: https://quickbooks.intuit.com [Accessed 29 Jul. 2022].
List of Figures
Figure 1. Xero (2022). Xero Logo. [Online Image] Xero. Available at: https://www.xero.com/za/ [Accessed 20 Jul. 2022].
Figure 2. Sage (2022). Sage Logo. [Online Image] Sage. Available at: https://www.sage.com/en-za/ [Accessed 20 Jul. 2022].
Figure 3. Quickbooks (2022). Quickbooks Logo. [Online Image] Quickbooks. Available at: https://quickbooks.intuit.com [Accessed 20 Jul. 2022].