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Never bin these two crucial records

by , 08 May 2013
Did you know that you can lose a dispute with SARS because of inaccurate record keeping? Make sure this never happens to you by discovering three financial records you should never lose...

There's a special list of documents or company records prescribed by the Companies Act. These documents must be kept in written form or in a manner that allows you to convert that information into a written form for a period of five years.

Failure to do this could result in SARS winning disputes over your company when you fail to prove expenses incurred or income received because of inadequate record keeping. 'SARS'll hold you responsible for any mistakes or transgressions and your company will have to foot an expensive bill or worse jail time for the business owner,' warns the Practical Tax Loose Leaf Service.

Here's how to avoid becoming one of the statistics.

Ensure your company always keeps these two financial records on file

  1. Statement of Financial Position. According to Accounting-Simplified.com, statement of Statement of Financial Position, also known as the Balance Sheet, 'present the financial position of an entity at a given date and is comprised of three main components: Assets, liabilities and equity. These statements help your company to assess its financial standing in terms of liquidity risk, financial risk, credit risk and business risk.
  2. Profit and loss accounts (income statement). Your Income Statement shows you how profitable your company is over a particular period of time. It shows how much money you took in, versus how much you spent. If your Income Statement and Balance Sheet don't add up, this is a sign that there's a problem with your accounting records.

Remember to always keep these records. If you don't stick to these, your company will be found guilty of tax evasion and will either face a fine or go to jail for two years. You'll also suffer additional financial losses as SARS might invoke other Act provisions like additional tax and penalties.

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