Owner-managed with a PI score under 100? You may not need an accountant to compile your financials

This is an unusual thing for an accountant to write, so let me say it plainly: a lot of small companies do not need me to compile their annual financial statements. If your company has a public interest score below 100 and every shareholder is also a director, the Companies Act lets you prepare your own AFS and file them with CIPC without an audit or an independent review.

What you still have to do

“Not required to be audited” does not mean “no rules”. Your annual financial statements must still:

• be prepared within six months of your financial year end,
• comply with a recognised financial reporting standard (IFRS for SMEs is the norm for small companies),
• fairly present the company’s financial position, performance and cash flows,
• be approved and signed by the board, and
• be filed with your CIPC annual return, together with a Financial Accountability Supplement if they were not independently reviewed or audited.

And your tax obligations are completely separate. You still need an ITR14 every year, provisional tax payments, VAT and PAYE if registered, and the numbers in your return must agree to your AFS.

Where it goes wrong

Doing your own AFS fails for two reasons: the underlying bookkeeping is a mess, or the statements are a spreadsheet that does not meet the standard. Both are fixable.

How FTG Books fills the gap

I built FTG Books because the software most small businesses use either stops at a trial balance or charges extra for statements an owner-managed company should be able to produce themselves. FTG Books:

• keeps your bookkeeping clean month by month with bank imports and reconciliations,
• handles VAT and produces the figures for your VAT201,
• calculates your PI score automatically from your own data, and
• when you qualify, compiles IFRS for SMEs compliant annual financial statements from your trial balance, ready for board approval and CIPC filing.

It is free for all my accounting and tax clients, and available on a paid plan for everyone else.

When you should still bring in a professional

• Your PI score is approaching 100, or you have outside shareholders.
• You have lenders, investors or a franchisor who want reviewed statements.
• There is anything unusual: foreign currency, leases, deferred tax, group structures, a disposal or acquisition.
• You simply do not want to spend your time on it.

Either way, the first conversation is free. Book a consultation and I will tell you straight whether you need me, or whether FTG Books on its own will do the job.

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This article is general information, current at the date of publication, and not advice. Tax law and SARS practice change; please confirm the position for your own circumstances or book a consultation.

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