Fin24: #Budget 2019: What small businesses should look out for
The Small Business Institute (SBI) has called for Finance Minister Tito Mboweni to request an audit of government’s overall financial support from all departments with programmes assisting small business in South Africa.
“We would like to know which are failing to achieve targets and those succeeding can better guide priority fiscal allocation,” the SBI told Fin24.
The SBI also wants the finance minister to consider tax implications for SMMEs.
“We would urge Mboweni to review tax incentives to make it more desirable for SMMEs to hire people. We would also urge a review of all tax compliance issues which burden SMMEs and move swiftly to reduce or simplify the code in respect of their obligations.
The SBI would like Mboweni to consider a voucher or credit for SMMEs to cover the costs of specialist advisors across the start-run-grow continuum.
In its view, the government could help SMMEs with best practice to raise finance and managing cash flow; attracting and keeping customers; bolstering leadership and managerial skills; employing digital technology; and exporting.
What to look out for
According to Gary Epstein, managing director of EasyBiz Technologies, small and medium enterprises (SMEs) should look out for any changes to corporate income tax, also known as business tax, in Budget 2019.
These will have a direct effect on the annual and provisional payments of tax on all income received by or accrued to the business within the new financial year.
He says businesses should take note of any changes in VAT, as this will impact their daily accounting transactions, especially when it comes to standard, zero-rated and exempt from VAT charges.
From a payroll perspective, Epstein says SMEs with employees will have to look out for changes to personal income tax because it’ll affect what business owners will be required to pay to the SA Revenue Service (SARS) on behalf of their employees.
Pieter Bensch of Sage Africa & Middle East would like Budget 2019 to deliver examples of how the government will work towards boosting South Africa’s ranking in The World Bank’s annual Doing Business Report.
“Given that India climbed 23 positions in this year’s ranking and that South Africa ranked 32nd just a decade ago, this goal is highly achievable,” said Bensch.
Morne Cronje, FNB head of franchising, says the Budget speech is an important economic indicator that franchises can use to gain insight on the government’s plans on spending and economic growth for the year ahead. Any form of relief that is likely to bring positive change, rebuild confidence and address some of the key challenges impacting consumers will be welcomed by franchises.
Cronje says consumer spending contributes a significant portion to the profit margins of franchises, especially in the food sector. Franchise owners will be looking to benefit from regulatory changes that aim to improve growth, operating environment and enhance participation in all facets of the formal economy.
Wynand Smit, CEO of INOVO, commented that the current economic environment dictates how companies will be honing their business strategies. Of primary importance is to manage the large volumes of consumer debt that exists, so it’s essential that those companies examine and optimise their debt collection processes in order to achieve enhanced liquidity, in his view.
“This will ultimately free up consumers to enjoy a healthier financial lifestyle. Massive debt across the board hinders consumers, companies and the entire country from achieving financial well-being.”
“With SA’s balance sheet looking decidedly precarious and Eskom’s saga affecting small businesses as they are unable to trade without power, government has to support the SME sector – the lifeblood of our economy – that has been taking significant strain in the last couple of years,” says Karl Westvig, CEO of Retail Capital.
“Unfortunately, I think SMEs will be ignored with the current focus being on financial restructuring as the biggest dilemma government faces.”
Last year President Cyril Ramaphosa announced an outlay of R1.5bn into a Small Business Fund to be shared among over 2 million small businesses.
“At face value, it might sound like a lot of money, the reality is that this investment barely scratches the surface when it comes to materially changing the plight of SMEs,” says Westvig.
“We would like to see a significant increase to that value and for government to demonstrate how it’s been applied and what impact it has had. Realistically, the fund should be increased by twenty-fold to make any real difference.”
Westvig feels that small business owners must relook their business models to survive 2019.