What happens when I don’t make use of the business bank account yet the business is trading?
I am not sure how best to respond to the above question other than say “it is a self sabotage”
When a business is registered, it is given its own legal entities. Name of operation, registration number, tax number and must have it’s bank account opened for it so that all the business transactions can take effect from. Which means, it is a legal entity beyond it’s owner.
In instances where you have a business that is operating and do not utilise the business bank account, but use the personal account instead please note that you are merely saying the business is not trading thus you must file zero returns on the business financial year end. It means the business is dormant.
The Business that operates under the sole owner ‘s name is called a sole proprietor.
What is meant by a Sole Proprietor?
– is a business that is owned and operated by a natural person (individual). This is the simplest form of business entity. The sole proprietorship is not a legal entity. The business has no existence separate from the owner who is called the proprietor.
Which means for the sole proprietor to account for its taxes, it will do so under the individual tax number, not the company tax number.
You cannot even request that the transactions that happened under your personal account be transferred to the business account especially when all the transactions, including sales and purchases were transacted from personal account.
I know there are scenarios where some business owners would like to make it easier for their customers that prefers to transact from personal account. This can be done however – the transaction has to carry an equal debit and credit. Meaning as soon as the money comes into your personal account, it is transferred to the business account as it belongs there.
As an accountant, I wouldn’t advise on this method of transacting. It has elements of complications as it creates unnecessary administration for you. As much as you transfer all the money to a business account, you are still required to reconcile the individual account. To show that it is at zero. Meanwhile you do that, the bank also charges for utilising the facility- bank charges. Which means you pay bank charges on both the accounts. Is it worth it? I think not!
Let us stretch it further. What happens when SARS decides to raise an audit on all your bank accounts?
SARS doesn’t raise an audit without them having done their own reconciliation. Bear in mind, they have the powers to obtain your Bank accounts details without your permission. Yes they do that. They can even debit your account or raise a garnishee orders from your employer. That’s how powerful they are.
Thus if you are serious about building your business, why would you want to mess with such a powerful state entity? I advise that you keep things clean.
When you have a registered business, please use it to receive your salary that you will get from the business and transact all your personal activities from there.
SARS do not entertain the “I did not know” type of defense. They will still want to penalise you so that you do know for the future. Do not forget that SARS is in the business of collecting money, that’s their revenue thus they wouldn’t let you go easily!
You can consult with us if you need a more detailed clarity. Our email adress is enquiries@matsobanemetja.co.za
Compiled by Ms. Dikeledi Seoloane – Accountant, Tax Practitioner and Owner at Matsobanemetja Business Consulting – The Accounting Firm
http://www.matsobanemetja.co.za
He who buys what he does not need, steals from himself.
– Swedish Proverb
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