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  @TyronneNel : #SME Advice - Dear entrepreneur never forget, the true value of advice is only discovered once you try use it 😉 5 days ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur what problem are you solving for your customers? Don’t know? This might explain why they’… 5 days ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur if you’re spending your days reminding staff that their salaries are not an “appearance fee… 1 week ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, when seeking advice or mentorship always remember the following: “The hardest person to t… 1 week ago
  • RT  @DJKaymoworld_ : Playing at  @RocketsLife  Bryanston right now 🔥🔥🔥 it’s a vibe 1 week ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, surprise surprise it’s Friday again & you made through another week. Keep at it...this is… 2 weeks ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur no matter how tough business gets or how tight your cash flow, always keep a little fun mon… 2 weeks ago
  • RT  @CatherineHYoung : Although its an older post, such relevant lessons here! Reminder-we are running a ‘Fabulous Failures’ series over next… 2 weeks ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, I have bad news! The only time Success comes before Work is in the dictionary! So get ou… 2 weeks ago
  • RT  @VentureCentral : Startups, less than 2 years old, in the fintech/financial services space, e.g. wealthtech, insurtech, data-analytics in… 2 weeks ago
  •  @Entrepreneur  Where are the BIG gains? This headline is misleading! 2 weeks ago
  • #CarbonTax Bill: What effect will this have on corporate SA? https://t.co/UXsXOlbJI9 via  @Biz_Legal  2 weeks ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, it’s been a week. Go have a beer and reflect on what was 😉 https://t.co/vhzGsJ6AoE 3 weeks ago
  • RT  @TyronneNel :  @KeetvZ   @khumbudzo77  Start off on the right foot with real time financial analytics on the SME sector 😉 https://t.co/IImmAe… 3 weeks ago
  • RT  @TyronneNel :  @CelliersJ1  Wills are one thing, imagine giving your clients real time financial analytics on their businesses? The possib… 3 weeks ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur never forget that sales is about solving potential customers problems and not about pushing… 3 weeks ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, a common misconception about communication is an assumption that the parties involved unde… 3 weeks ago
  • RT  @ProcessMechanic : I need a BEE consultant to assist me with some number crunching - any recommendations? 3 weeks ago
  • RT  @SABEntrepreneur : Less than 1 week left! Are you are a female business owner who manufactures her own beverages, looking to grow your bu… 3 weeks ago
  • RT  @PLMyburgh : Hi  @Julius_S_Malema . I just heard you again on  @eNCA  extending an invitation to journalists to come and view  @EFFSouthAfrica … 3 weeks ago

Subscribe to our mailing list

* indicates required
 In Newsletters

The much complained about VAT increase from 14{a87fdf049d1ab93073cc4529e6637aafdc037c90a3a9dc13375d149f4a1ddf2f} to 15{a87fdf049d1ab93073cc4529e6637aafdc037c90a3a9dc13375d149f4a1ddf2f} 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