Harbour & Associates

I’ve always believed in keeping it simple and encouraged clients to rather have common shareholders in separate companies than have a holding company in which the various parties own shares. But there’s one clear exception – Let’s say you have a very profitable company in a high risk business and the company is owned by your trust. Is the trust at risk? No, but the profits are stuck in the company unless it declares dividends to the trust. So now, after the deduction of the Dividends Witholding Tax (DWT at 20%), the trust sits with 80% of the cash. What…

SWOT analyses (Strengths, Weaknesses, Opportunities, Threats) have been around for years. I always thought they were a bit of a gimmick, but later on, I saw their value. This was when I realised that the Weaknesses and Threats could be used to create Opportunities. You’ll recall my recent article called Blessed Crises? What makes a crisis blessed? The fact that it stops you in your tracks and forces you to re-plan your future. You can use a SWOT analysis to do the same thing (and it’s a lot less painful). My big weakness was that I…

Casual importers and exporters do not need an Import/Export registration in order do send or receive international shipments. They can use their Income Tax registration number in place of an import/export number. I learned this from a shipping agent during a meeting with a client. They tell me that only habitual importers/exporters need to register. If you do need to register we can make it painless by doing the registration for you. It takes about two weeks.

Every contract that you sign will require you to state your domicilium citandi et executandi (Oh, how attorneys love their latin!). Stop right there! You are about to fall deep into a trap. The meaning of the Latin is roughly “the place where legal notices can be served on you”. Never, ever, ever give a street address as your domicilium, because if you do, and you subsequently move from that address, any summonses or other legal notices in respect of that contract will be served at a place where you, or your company no longer resides. You won’t even know that…

When anyone mentions his “auditor”, I always ask “Is he a CA?”. The answer is invariably something like “I assume so”. What?? My last article was prompted by a new client who’s auditor had been guilty of several mis-conducts. I knew he was a registered auditor because he had performed and signed off audits every year on the client’s financial statements. In frustration, the client was considering reporting him to the Independent Regulatory Board for Auditors (IRBA). I went on to the IRBA website and found that neither he, nor his company were registered. I checked on the SAICA website…

So you’re starting a new business. You figure that you can undercut the established competition because you don’t have their overheads. You are about to make your first two mistakes as a business person. Firstly, you are relying on your low prices to get business, whereas you should be differentiating yourself so that you stand out from all the rest. Secondly, if there’s not some extra fat in the price, you’ll never grow, or if you do, you’ll soon run short of cash and won’t be able to afford the overheads that are necessary to sustain growth. So, stop thinking…

It has happened so often now that I am no longer shocked when I hear from an entrepreneur that his accounting professional failed to bring any one of these four things to his attention. 1) In terms of the new Companies Act, if your company is doing less than about R400 million a year turnover, it doesn’t need an auditor. 2) And it does not need an audit. The auditing industry suffered very badly when the new Companies Act introduced these new requirements (or lack of them), so let’s break it down. I’ll assume that yours is not a company…

It happens occasionally. A really unhappy client. What do we do? Here are the worst bits of what he wrote – “The level of competency in your office is beyond ridiculous, seriously. The entire address capturing assignment was much worse than a visit to the dentist for all round teeth crowning. The service levels are truly pathetic.” Taking this against the backdrop of compliments that get showered on us and my staff, it would be very tempting to pass it off as someone who is over-reacting to the fact that we are all human and we all make mistakes. But…

One of my clients has a company with branches in Jhb, CT and Durban. The turnover is about R25m and he has three adult children. This is how and why we decided to restructure the business. His intention was to pass shares on to his children as he approaches retirement. We figured that we should form three new companies, one for each branch and each owned by one of his children, but with him as the sole director of all of them. He can relinquish the directorships when he retires. The existing company has certain accreditations which require additional specialised…

I’m often asked to prepare a shareholders’ agreement. Why? Because there’s a perception that it is one of the things that you ought to do. Not in my view! Ask yourself these questions – 1) Will I ever understand all that legal jargon that makes up a Shareholders’ agreement and builds it to an impressive 5mm thick document? 2) What will I do with it when we have a bust up? Will I take my previous co-shareholder to court? Not if you’ve got any sense. 3) What do I really want? In my entire business life I have never signed…

Many people form a company and start a business without knowing what this really entails. So, here are the basics in FAQ format – What is a company? It is a legal entity (person, if you like) which is separate from those who own it and those who run it. Who owns a company? People, other companies, trusts or other legal entities buy shares in a company and the more shares they own the bigger their “shareholding” in the company. Who runs it? It is the Directors who run the company, not the shareholders. How does one get to be…

Having problems collecting money from your debtors? Look at it this way – You like to read the daily newspaper in the morning, but you are short of cash. You say to me “Sell me today’s newspaper and I’ll pay you tomorrow”. So I make the “sale” and you become a debtor. Tomorrow, you want the newspaper again, but you only have enough money to pay me for yesterday’s. Which is more pressing, seeing today’s newsaper or paying for yesterday’s? You’re too embarrassed to come to me, so you go to another newspaper vendor and ask for today’s paper, telling…

Whether you need a business plan or whether you want to create a three year budget, our free financial projection workbook will help you plan the future and present your plan in a professional format. Although most startups only draw up a business plan when they are trying to raise finance, my view is that no business should start without one. Remember, if you can’t even plan your success on paper, then you are most unlikely to succeed in reality. All you need to do is download the workbook and make a copy under another name so that you always have…

There’s still a lot of confusion about audits and whether a company must be audited or not. It was the new Companies Act of 2008 (which actually only came into law in 2011) that changed the game. First off, all owner managed companies except the big ones (typically with a turnover in the region of R300m) are not required to undergo any form of audit. They don’t even have to prepare financial statements to any particular standard which means that an income statement and balance sheet printed from their accounting software will do. Owner managed means that the shareholders and…

There are four well known bookkeeping packages. ACCPAC, Pastel, Quickbooks and My Business Online. Which one should you use? I’ve listed them in descending order of sophistication and that is one of the factors that you need to take into account. ACCPAC is for the heavyweights and has all sorts of add-ons that enable you to tailor it to your business. It is also the most expensive. Pastel is probably the best if you employ a bookkeeper as it has a forced audit trail and makes it difficult to “cook the books”. I find it very old-fashioned – it doesn’t…

We have formed about 1 000 companies since my partner packed her bags at the end of October 2014. That’s an average of over two per working day. Each of these represents someone’s dream. I know from their non-submission of tax returns and CIPC returns that the vast majority of the dreams turned to dust. Here’s my advice. 1) You must have a product/service that people already want. 2) You must be able to produce/deliver that product. 3) You must be able to market that product. 4) You must be able to sell that product at a price that is…

We’ve been waiting for one registration since May. I decided to go to the WCC myself to find out what was wrong. As is the case at SARS, if you are friendly and courteous, they are only too pleased to help. This is what I learned. 1) If you submit by email to cfcallcentre@labour.gov.za. it will be 2 to 3 weeks before they even open your email 2) It is therefore far better to submit personally. 3) You will need a Power of Attorney from the director(s) even if you are the director yourself, appointing you to act on…

I am so often asked about the legality and technicality of “trading as …………” The legal position arises from the Consumer Protection Act. It states that any business trading under a name other than its own (e.g. ABC CC trading as XYZ) must register the trading name with CIPC (the old CIPRO). CIPC then issued a statement to the effect that they do not have the capacity to register trading names (you’d think that the drafters of the Act would have checked with CIPC first) so it became impossible to comply with the Consumer Protection Act. So anyone or any…

Every company needs a bookkeeper and a Tax Practioner (to file its tax returns). There are lots of them out there and most of them haven’t a clue what they are doing. The problem is the cost of entry into this game is practically zero. All you need is a computer and some software and away you go. You work from home between feeding the baby and doing the shopping and you’ve got no overheads. But what are you, the client, getting for your money. You may be paying as little as R200 an hour. Great price for quality, expensive…

We often get requests for a shelf company with an import/export licence. I can understand why, the application to SARS is a nightmare. We’re doing two applications right now. Each one is 1/2cm thick! That’s even worse than a VAT application. And I doubt that the documents will be accepted, even though this is our second shot at these particular two. The trouble is, as usual, SARS keep moving the goal posts and to make things worse, not all of the consultants at SARS agree on where the goal posts are, so one will reject your documents because of one…

General Business

When is a holding company a good idea?

Is SWOT of any real value?

You don’t need an Import/Export registration to import or export

Beware the Domicilium Citandi et Executandi

If you want a CA, get a CA

If you don’t charge for overheads, you’ll never get them.

Four things your accounting professional didn’t tell you

An unhappy client

Splitting up your company for B-BBEE and Small Business tax perks

Shareholders’ agreements vs. MOAs

Company basics

Collecting debtors and yesterday’s newspaper

Your free financial business plan

Do I need an audit?

What bookkeeping software should I use?

How to become a successful entrepreneur

Workmen’s Compensation Registration

Trading as …………..

Beware the unqualified bookkeeper

Import Export licences for shelf companies

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