Categories: Tax
August 30, 2018
| On 9 months ago

5 Questions to ask your accountant about your tax return

So, it’s that time of the year again, and I have to be honest with you, it’s not my favourite time of the year. You might be wondering why I say that. After all, I’m an accountant and surely tax time is the time of the year when I have loads of new clients calling me up and asking me to get their taxes done for them. And that’s precisely the point. I’m accountant. Sure, getting my clients’ taxes done is part of my job, and I take it seriously, but if I’m doing my job right, I making sure that my clients’ finances are in order a long time before tax season comes round.

Tax season is an important time of the year

That said, tax season is an important time of the year for business owners, and especially if you are a first time business owner. Because getting your taxes right the first time round can get your business off on the right foot and can also save you thousands now and in the future.
So here are five important questions every business owner needs to ask their accountant about his or her tax returns and the South African Revenue Service (SARS).

1. How do my business’s finances compare to those of my competitors?

This isn’t about knowing how well you are doing compared to other businesses in the same market. This is about making sure that the numbers your business presents to SARS are in line with what the auditors are expecting. We won’t share another business’s financial information with you, but we can compare your business with industry averages and apply a financial-ratio analysis to benchmark your business locally and nationally. This kind of analysis can help us to spot any red flags that might trigger an SARS audit and is also useful to help identify opportunities that might strengthen your business’s finances.

2. Is there anything on my tax return that might cause an audit?

This isn’t about knowing how well you are doing compared to other businesses in the same market. This is about making sure that the numbers your business presents to SARS are in line with what the auditors are expecting. We won’t share another business’s financial information with you, but we can compare your business with industry averages and apply a financial-ratio analysis to benchmark your business locally and nationally. This kind of analysis can help us to spot any red flags that might trigger an SARS audit and is also useful to help identify opportunities that might strengthen your business’s finances.

3. How (and where) do you store my business’s financial records?

According to SARS, tax records for businesses registered in South Africa should be stored and maintained electronically at a physical location within South Africa. Businesses that store and maintain accounting or invoice records using cloud computing with servers in Europe, the USA or Canada, for example, can get approval from from SARS to do so, but they must ensure that the records can be readily accessed from South Africa, that the form of the records meet the storage requirements for SARS and that an acceptable electronic form of the records can be produced by the business in South Africa.

4. Is my accounting software compliant with SARS standards?

Most modern accountancy firms can import data from from any financial records-keeping software (yes, even your multipage Excel spreadsheet with your custom macros) into a SARS compliant platform to submit your tax returns, but it’s a good idea to make sure. Even better, check with your accountant what cloud-accounting software he or she recommends and think about migrating to a cloud based accounting platform where you can access your company’s financial data from anywhere in the world.

5. Will you go through my tax returns with me?

Finally, and maybe, the most important question you should ask your accountants is whether they will go through your tax returns with you. Understanding what’s happening to your money is vital to the success of you business, and no more so than during tax time when a small error can result in a costly SARS audit.

So go through your returns and then set up a meeting with your accountant so he or she can explain anything you don’t understand or recognise on your tax return. This will prevent any errors and make sure that you keep in good standing with SARS.

A good accountant secretly loves doing tax returns. It’s where he or she can sometimes show big savings, so take advantage. Asking these 5 simple questions when the time comes to choosing an accountant to do your taxes can make a big difference in the financial health of your business.