Fill in your details below and one of our friendly consultants will call you back as soon as possible.
  • This field is for validation purposes and should be left unchanged.

Follow us on Twitter

  • RT  @_BeardedTony : Hey y'all I am selling personalised chopping boards for R169.99 each. I engrave any artwork or message below 15 cm… 7 hours ago
  • RT  @TyronneNel : #SME Advice - Entrepreneurship is incredibly difficult, so don’t put yourself through that amount of suffering unless your… 4 days ago
  • RT  @Small_Biz_Expo : The #SmallBizExpoSA exposes visitors to a wide-range of business models, incubation programmes, business contacts, spe… 4 days ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, you can’t build a brand without having an underlying product/service that delivers a solid… 5 days ago
  • RT  @PayFast : If you have started or you are starting an e-commerce business and you want to make sure you’re on the right path, here are fo… 6 days ago
  • RT  @OPENworkspaces : We have a limited number of dedicated offices left at OPEN Sandton. Dedicated offices are great for small teams and org… 6 days ago
  • RT  @SAVCA_news : The  @SAVCA_news  2019 Southern Africa Industry Conference to be held at Spier Wine Farm will for the first time have both #P… 6 days ago
  • RT  @radix_solutions : #Office365: One License, Five Devices https://t.co/vZC2jlON53 6 days ago
  • RT  @christoff008 : This is promising to be a highlight for business advisor CPD this year.... https://t.co/OcL6WDylEM 6 days ago
  • RT  @TyronneNel : #SME Advice - If you can’t find the fun in the things that you do, life becomes a series of complaints interrupted by sleep… 1 week ago
  • RT  @radix_solutions : Disasters happen. Are you prepared? #Azure Site Recovery delivers a cloud-based data-recovery solution designed for en… 2 weeks ago
  • RT  @radix_solutions : Even minor outages are unacceptable. With data as their lifeblood, your customers need a failsafe disaster-recovery so… 2 weeks ago
  • RT  @radix_solutions : Disasters happen. Are you prepared? #Azure Site Recovery delivers a cloud-based data-recovery solution designed for en… 2 weeks ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, highlight problems in a client relationship early & document your concerns and remedies in… 2 weeks ago
  • RT  @KeetvZ : Join me & a few other VC Investors for the SA edition of #UberPitch. A Web Series where entrepreneurs will pitch their Startups… 2 weeks ago
  • RT  @Edge_Growth : An opportunity for women entrepreneurs in Cape Town! Read more here: https://t.co/0lB0GW5BAW https://t.co/F7lUH1LzMs 2 weeks ago
  • RT  @TyronneNel : #SME Advice - When chasing deadlines or goals, don’t forget to reward yourself for achieving them! Celebrating milestones… 2 weeks ago
  • RT  @TyronneNel : #SME Advice - If you can’t measure it, you can’t manage it! Currently the best tool in the market for tracking your busines… 3 weeks ago
  • RT  @TyronneNel : #SME Advice - When launching a new business or product, a good rule of thumb is: It will take twice as long as you thought… 3 weeks ago
  • RT  @GrindstoneXL : Hitting the high road - what it takes to join  @KnifeCap ’s  @GrindstoneXL  Accelerator [Q&A with  @AndreaBoehmert ] https://t.… 3 weeks ago

Subscribe to our mailing list

* indicates required
 In Newsletters

The much complained about VAT increase from 14% to 15% has now been in effect for one month. Have you noticed an impact on your business? Will there be an impact on your business? Not sure? Continue reading, we’ve listed some points for you to consider.

 

What is VAT?

Just to recap, VAT is as the name suggests – a Tax on the Value that you (business) adds to a product before selling it to a customer!

Therefore, if you’ve added no value to the product no VAT is charged.

 

VAT’s Effect on Business?

In theory, VAT should not influence business as it’s a non-impacting addition to what we are already doing.

In practice however, VAT has several detrimental effects on business, namely:

  • Cashflow – as VAT is most often calculated on an invoice basis, the moment clients do not pay within 30 days of invoice the majority of SME’s experience a cashflow crunch.
    How do you overcome this?

    • Clients can be incentivised to pay sooner
    • Suppliers can be paid later
    • Margins can be increased to cover the shortfall
  • Input costs – as a result of market forces many input costs will be increased. This could have an impact on your business if you’re unable to pass these costs onto your clients.
  • Salaries – Consumers bear the brunt of VAT increases as they have no option to offset their effect, this often leads to demands for higher salaries. The higher salaries, ultimately has an impact on the selling prices of goods and services.

 

As you can see the VAT increase affects business in many ways. Make the time to sit with your accountant / business advisor to understand how your business is being affected and put the necessary steps in place to minimise its effect.

At Phezulu VBO we do more than just assist clients with Business Structuring, we are your “one-stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website or give us a call on 010 003 8558.

Recommended Posts

Leave a Comment

Start typing and press Enter to search