Financial Statements & Reporting

To know if your business is making a profit and is solvent. In any business the aim is to making a profit, the financial statements would provide you figures to see if you are making profit or loss for your business for the period of financial year.

Yes. If the business was incorporated as a company or close corporation there is a legal obligation to prepare accurate financial statements within six months after the end of its financial year. The financial statements must comply to the prescribe standards.

Yes. At the end of every financial year, every business must prepare annual financial statements according to the Income Tax Act and Tax Administration Act. The annual financial statements enable the business to determine how much tax they have to pay.

Management Financial Statements are set up in house for management purposes whereas all the non cash flow items allowed by SARS are not included. To give a true reflection of the profit shown. Also, the MFS can be set up when the date does not fall on a year-end date.

Annual Financial Statements are the final set of financial statements with all SARS non-cash flow items like depreciation etc which are done once a year on financial year end. These statements will be presented to the shareholders and then submitted to SARS as well as CIPC 6 months after year-end.

A Business plan is necessary when getting investors interested in your business or the bank lending you money or finance. This is a means for a 3^rd party to see what your current business proposal will be and what the outlook is for your company in the current economy and area within your specific trade.

A cash flow projection is one of the most important and influential reports a successful business can have. Without this, a person is lost. A cash flow will show all the money flowing in and out of the business. Also what the net cash flow will be a month on month or year on year. A negative cash flow is only bad when the surplus built up or the funding is exhausted.  A positive cash flow month on month has always lead to a successful business.

The need for any investor/bank for a business valuation is the foundation as to what your business is worth. Without it, you have nothing really. With a value being put on the company on retirement it can be sold, or if the business has equity it can be used to get more funding for bigger projects and more growth. An accountant can use certain methods to do the business valuation for the business. If a more formal evaluation is needed, then a valuator can be assigned to do the valuation. Normally an accountant will do for the valuation because the valuation is always a more or less basis figure, as the buyer always wants to pay less and the seller always wants it sold for more.

A registered accountant who qualifies under the companies act 2008 and who can carry the duties of an accounting officer.

No there is no compulsory financial reporting specified in the Act.

Discuss them with the accountant who set them up and get more insight of the Nett Profit and Nett Value of the business. Compare this information to the past financial year. Get advice from your accountant for tax planning in the next financial year.