Frequently Asked Questions

What you've always wanted to ask...

BC Accounting

A cost of sale is an expense precisely related to the income. Defined as: a cost (expense) that you incurred to make the sale. Eg: if you sell bread, you must buy the bread to sell it.

Accounting is the system that records financial transactions of an entity.

Yes. Sales, turnover, income and revenue are all synonyms. (Income will be used on this page, but you can replace it with any of these phrases)

No. Income is the total of all the invoices that you issued to clients / customers. Profit considers the expenses involved in producing your product / service.

Profit is the amount of money that remains after all the expenses are deducted from the income for a period. There are 2 types of profit:

  1. Nett profit: this is the profit that remains are all the expenses are deducted. This is often called nett profit before tax. Tax is then taken off this amount and this results in nett profit after tax.
  2. Gross profit: This the amount of income remaining after all cost of sales are deducted.

This is always the case and it confuses many business owners. There are a few reasons for this but here are just two: Non-cash items: These are expenses that don’t pass through the bank account. An excellent example is depreciation. This is levied against assets owned by the business. This will decrease your profit but not your bank account. Outstanding money: This is money that is still outstanding from clients. Example: The invoices total is R 1 000 in the month. One client received an invoice for R 200. He still owes you at month end. Although the remaining monies were received, the bank account will be less because that customer owes you R 200.

Yes. There are specific requirements to do so. To claim this donation, the charity must be registered with the South African Revenue Services (SARS) as a section 18(A) organization. You can either look them up on the SARS website (www.sars.gov.za), ask them if they are registered or they will issue you a certificate with their PBO number stated on it.

Without this certificate and the number, you cannot claim the amount in your tax return. It is vital that you retain the certificate, so you can submit it as supporting documentation with your tax return. They will ask for it as there is a specific section in your tax return to enter all the information.

Slips are a pain! Our wallets get fatter with all the slips and loyalty cards than with actual cash. This is not the way it should be. The fact is, that you actually have to keep them if you want to be able to claim for the expenses attached to those slips. You do have to keep them, but you do not need to keep them as a physical piece of paper. This will change your life. The process here is easy as 1, 2, 3 and 4.
  1. Get the slip
  2. Convert it into digital format
  3. THROW THE SLIP AWAY!
  4. Capture the slip.
Read here for the full article Slips
PAYE is an abbreviation for Pay as you Earn. SARS defines it, on its website, as: “Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. The process of deducting or withholding tax from remuneration as it is earned by an employee is commonly referred to as PAYE.”   Basically, as you earn money, you will be taxed according to the tax tables. The tax tables are a sliding scale of tax deductions and is broken down into tax brackets. Each bracket is tax at a different rate (increasing with more money earned).
SARS defines is as, “The Unemployment Insurance Fund (UIF) gives short-term relief to workers when they become unemployed or are unable to work because of maternity, adoption leave, or illness. It also provides relief to the dependents of a deceased contributor.” This is a set amount paid monthly by the employee and the employer. It is 1% of the gross income paid by the employee and 1% paid by the employer. It is 2% in total that is paid to SARS with the PAYE and SARS then hand it over to the department of labour.
SDL an abbreviation for Skills Development Levy. SDL is a levy imposed to encourage learning and development in South Africa and is determined by an employer's salary bill. The funds are to be used to develop and improve skills of employees. Employers who have a salary bill or R 500 000 over 12 months is required to register for SDL. The SDL amount is 1% of the gross salary of each employee.