General Business

I always tell people in my meetings “Don’t believe anything that anybody tells you, including me!” There is so much garbage out there, often written by “experts” who are just repeating some other “expert’s” garbage. So, always ask for the source from which the opinion was drawn and then check the source yourself. I have now had to extend that to “Don’t believe anything that anybody or any AI tells you, including me!” I often ask Perplexity tax questions and I always ask specifically which sections of which Act are its source. Then, I go…

Still wondering how AI can make your life easier? Here’s a nice one discovered by Sandi in our Durban office. A client sent her PDFs with loads of cash slips photocopied onto them. All different layouts, formats and suppliers. Sandi uploaded it to Claude.ai and asked him (it?) to schedule them on an Excel spreadsheet and sum the total. Out came a detailed table showing supplier, what was purchased, when and for how much. One of the slips was duplicated and Claude eliminated that without being asked. Claude’s total agreed with that given by…

Admittedly, I speak to a lot of people who don’t know the difference between a shareholder and a director, but surely we should be able to expect that CIPC, who are the guardians of the Companies Act, would know the difference? But no, they don’t. Here’s a pop up that you will sometimes get when you are completing a Beneficial Ownership return on the CIPC website. They are insisting on knowing when the Directors were issued their shares! For those of you who, like CIPC, don’t know the difference, here’s a short explanation – The shareholders own the company…

The best place to start is to watch a couple of AI How to videos, because you need to get an idea of what AI is all about and what it can do for you. Think Chat GPT, Claude, Perplexity. Then sit back and think of the repetitive tasks that you or your staff have to do. You know, the ones that make it difficult not to doze off and bang your head on the keyboard. I used it to read a year’s worth of bank statements and build a cashbook in Excel. It needed some help…

Most service providers charge about R2 000 to register a new company including registering the name of your choice. Some of them will provide the share certificate(s) and securities register included in their fee. But, if you are looking for the lowest cost option, you can do the job yourself via the CIPC website. It will cost you R250 in CIPC fees. You then have to create a share certificate and share register, and you need to know how to download all the company documents. The option that most people choose is to get us to…

Let’s say that you own 50 shares and they represent 50% of a company’s share capital. They cost you R1 000. The net Asset Value of the company has grown to R200 000, so your 50% is worth R100 000. Then the directors issue another 100 shares and sell them for R100 000. You now have 1/4 of the share capital and the Net Asset Value is R200 000 + R100 000 = R300 000. So, your shares are now only worth 1/4 x R300 000 = R75 000. Have you suffered a Capital…

I’ve just been looking at a trial balance that shows that there’s R13 750 in the petty cash box. I look at the transactions and all I see is R13 750 going into Petty Cash and nothing coming out. Clearly this is wrong. Now, in the old days, we used to keep a Petty Cash Book and recorded all payments made with cash. This had to reconcile to the amount of cash in the box. A nightmare! Then someone came up with the idea of the Imprest Petty Cash System. Here it is – Put…

I love this one. I revisited it when someone asked me pretty much this question in a comment to one of my articles. I decided to ask my AI friend, Perplexity.ai, to tell me specifically where in the Companies Act does it state that a company must issue shares, because I have been unable to find such a requirement. The AI responded with various “expert opinions”, all of which said that a company must issue shares. But the AI could not give me a reference in the Companies Act. So, here’s how I responded to the person who posted the…

When we do the bookkeeping for small companies we so often see payments to Wimpy, Dischem, Pick n Pay, Spar and the like. All quite obviously personal expenses. Is there anything wrong with this? Not in law, because the astute bookkeeper will debit these expenses to the business owner’s loan account. The problems are – Some personal expenses will get missed and will be deducted from the company’s taxable income. This is tax fraud. Some business expenses may be inadvertently treated as personal expenses and not be deducted from the company’s taxable income. The additional bookkeeping time spent sorting out…

Let’s take a look at what the Companies Act says about this. s13(1) One or more persons may incorporate a profit company, or three or more persons may incorporate a non-profit company. So, we’re back to the definition of a “person”. Interpretations Act – Definitions (x)(b) “person” includes any company incorporated or registered as such under any law. So, yes, it would appear that a company can be one of the incorporators of an NPC. Notice that the Act does not require that the incorporators be unconnected. That only comes into the Income Tax Act. Here’s what the Income Tax…