The impact of Budget 2015 on SMEs
 |
| Petra Rees |
Micro businesses with a turnover under R335 000 will not pay tax, previously this threshold was R150 000. This news has the backing of small business owners, who will now have extra money to support their growth. “We work with a lot of start-ups in our incubation programmes and this is a fantastic way of getting entrepreneurs thinking of starting a new venture. We really welcome this move by the government,” says Petra Rees from Lean Enterprise Acceleration Programmes (LEAP), a subsidiary of PLP Group.
The biggest challenge facing SMEs will come in the form of indirect taxes, as the fuel levy and road accident fund levy are both set to increase from the 1st April 2015. This will have a particular effect on owners that need vehicles to run their small businesses. Rees illustrates this point by discussing one of the small businesses that LEAP provides mentorship for, which has six vehicles that each travel 100km daily and which are used five days a week.
“Based on the current price of 95 unleaded petrol, each vehicle costs R3 313 per month to run. With the increase in the fuel levy and road accident fund, the burden on this business will be an extra R17 040 per annum. This business makes 20% net margins, which means the owner will have to bring in an extra R85 200 in sales per annum to be at the same level as last year. This is not extra growth but simply a catch-up game,” states Rees.
Small business owners need to take these increases into consideration when they plan their financial year. Rees explains, “They need to adjust their budgets for growth to make provisions for the new tax set-backs, otherwise they might go backwards or increase their rates too much, leading to being out-priced in the market.”
Nene’s focus on SMEs is part of the government’s plan to reduce the high unemployment rate however, South Africa needs to encourage bigger businesses in the private sector to grow, as these are the ultimate job creators in this country.
Comments
Post a Comment