Bookkeeping that holds up: a working guide for small businesses

Bookkeeping earns its cost at two moments: when you need to make a decision and want numbers you can trust, and when SARS asks you to prove something. Records that fail either test are just data entry.

What the law requires you to keep

The Tax Administration Act generally requires records to be kept for five years from the date the return was submitted. Where no return was submitted, or where a dispute or audit is under way, the period runs longer.

Records must be kept in their original form, or in a form authorised by SARS, and must be accessible in South Africa. Digital copies are acceptable, provided they are complete and readable.

What that covers in practice:

• Bank statements for every account, business and any personal account used for business
• Sales invoices issued, in sequence, including cancelled ones
• Supplier invoices and receipts for every expense claimed
• Payroll records, EMP201 and EMP501 submissions, and employee tax certificates
• VAT records including valid tax invoices, credit notes and import documentation
• Asset registers with purchase dates, costs and disposal details
• Loan agreements, leases and contracts
• The logbook, if any travel is claimed

The monthly rhythm

The difference between books that work and books that do not is almost entirely whether they are done monthly.

Reconcile the bank. Every line on the statement matched to a transaction in your records. This is the control that catches everything else — duplicated payments, unrecorded income, debit orders you forgot you were paying.

Age your debtors and creditors. Who owes you money, for how long, and who you owe. A debtors age analysis that is never looked at is the reason businesses discover a bad debt a year late.

Review the income statement against the prior month. You are looking for anomalies, not admiring the profit. A cost that doubled, revenue in a category that stopped.

Set aside the tax. VAT collected and PAYE deducted are not yours. Moving them to a separate account monthly is the simplest cash discipline a small business can adopt.

VAT documentation

If you are a VAT vendor, input VAT can only be claimed against a valid tax invoice. For supplies over R5 000 that means the invoice must show the words "tax invoice", the supplier's name, address and VAT number, your name and address, an invoice number and date, a description of the goods or services, and the VAT amount or a statement that it is included.

An invoice missing any of those elements is not valid, and the input claim fails on verification regardless of whether the expense was genuine. Check invoices when they arrive, not when SARS asks.

From 1 April 2026 the compulsory VAT registration threshold rose to R2.3 million, so some smaller businesses previously inside the system may now fall below it.

The errors that cost the most

Mixing personal and business. Every personal transaction through the business account is a line someone has to identify and reclassify, and it weakens the separation between you and the company.

Coding everything to "sundry". A general expenses account absorbing 30% of costs tells you nothing and invites questions.

Treating a bank statement as a source document. A statement proves money moved. It does not prove what for. The invoice is the deduction; the statement is the payment.

Recording the net amount on a financed asset. An asset bought on finance is recorded at cost with a corresponding liability. Recording only the monthly instalment understates both.

Leaving the owner's loan account unreconciled. Money you put in and take out of your own company needs to be tracked. An unexplained director's loan account is a standard SARS query.

Doing it yourself, or not

Cloud accounting has made the mechanical part easier. Bank feeds import transactions and rules can code the routine ones automatically. What software does not do is tell you that a transaction has been coded to the wrong account, that an input VAT claim rests on an invalid invoice, or that your loan account has drifted.

A common arrangement works well: the business captures day-to-day transactions, and an accountant reviews monthly, handles payroll and VAT, and prepares the year-end. You keep visibility and control; the technical judgement sits with someone who does it daily.

If you are behind

Catching up is unpleasant but bounded. Start with bank statements for the full period — everything can be rebuilt from those, with supporting documents attached as you go. It costs more than keeping current would have, and considerably less than an estimated assessment.

We do catch-up work regularly, and it is rarely as bad as clients expect.