If you are involved in a business you must keep records that will enable to you prepare complete and accurate tax returns. You may choose a system of record keeping that suits the purpose and nature of your business, and records must clearly establish your income and expenses. As well as permanent books of account, you need to keep any other information to support these records, such as cheque stubs, paid accounts, and bank statements.

Importance of accurate records

Accurate records are crucial for efficient management:
1. Identity source of receipt:
you may receive cash or property from many sources and unless you have records showing this, you may not be able to prove that some are sources that would make them non-taxable.
2. Prevent omission of deductible expenses:
Expenses may be missed or forgotten when you prepare your tax return, unless you record them at the time they took place.
3. Establish amounts paid out as salaries or wages:
under normal circumstances amounts paid to employees for services rendered are taxable. In these cases employees' tax must be deducted from salaries or wages by the employer.
4. Explain items reported on your income tax return:
If your income tax return is examined by SARS, you may be asked to explain certain items. Adequate and complete records are always supported by slips, invoices, receipts, bank deposit slips, cancelled cheques and other documents.

Availability and retention of records

You will need to make sure that all records are available at any time for the Receiver (see diagram below).

(Note: see http://www.bizland.co.za/saebex_info.asp to see how Bizland's SARS approved eBilling service can help you with invoicing).

Information supplied by the South African Revenue Services, compiled by Bizland

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