FREQUENTLY ASKED QUESTIONS
Everything you need to know about Financial Statements, Management Accounts as well as Tax
- Which healthcare facilities need financial statements?
A : Medical facilities can fall under the category sole proprietor which is taxed based on a tiered system detailed in tax tables. Incorporations are taxed at a flat 28%. Non-profit healthcare facilities, medical personal liability company’s (plc) and publicly traded medical facilities will also need financial statements.
- Which healthcare facilities need a compilation of annual financial statements?
A : All registered healthcare facilities must prepare annual financial statements. Independent medical accounting professionals, such as us at Inaura, are able to compile these statements.
- Why does my healthcare facility need income statements and balance sheets?
A : Income statements and balances sheets are vital for your healthcare facility. Your statements are a record of all the transactions made at your practice or hospital, based on your journals and ledgers. This information is then transformed into concise, compiled revenue and expense figures.
Balance sheets also give you an overview of your assets and liabilities.
- What is a schedule of operations?
A : The schedule of operations will detail a monthly income statement for your medical practice. This is important for doctors because it clearly outlines the increases and decreases in sales and expense line items. Equipped with this information, management is able to identify:
• Areas that the business can save on costs
• Wasteful expenditure leading to cash flow issues
• Declining or increasing monthly sales figures
- What are business and director tax packs?
A : You, as a medical practitioner, may not know what taxes are payable and when. This opens you up to the risk of missing a tax deadline and incurring interest and penalties or not budgeting for a particular type of tax – leaving you with surprise tax burdens that cannot be met.At Inaura we provide you with a monthly tax pack which details:
• The amount payable for each tax type and when it is due
• An estimated amount of provisional tax payable at the next provisional tax payment date
• Any outstanding tax amounts
• A tax clearance certificate every few months to ensure your taxes are always up to date
- Can I get a customised report on my healthcare facility’s finances?
A : Yes, if you need a little something extra for better decision making in your practice, we are the specialised medical accountants to assist you.
INCOME AND VAT SUBMISSIONS
- What is income tax?
A : Income tax is a tax levied on all income and profit received by a taxpayer (which includes individuals, companies and trusts). SARS establishes a few methods of paying income tax – namely PAYE and provisional tax. Companies are taxed at a flat rate (28%). Individuals are taxed based on a sliding scale of taxation.
- When is income tax paid?
A : Salaried employees would pay PAYE each month. This is paid by the employer on the employee’s behalf. Incorporations and sole proprietors would pay provisional tax every 6 months and submit an income tax return after year end.
- What is employees’ tax (PAYE)?
A : This is the tax that employers must deduct from the employment income of employees – such as salaries, wages and bonuses – and pay over to SARS monthly. The income tax tables used to calculate PAYE are the same tax tables as income tax for individuals. The advantage of this is that the tax liability for the year is settled over the course of the whole year of assessment.
- What is value-added tax (VAT)?
A : VAT is an indirect tax on the consumption of goods and services in the economy. It is mandatory for a person to register for VAT if the taxable supplies made, or to be made, is in excess of R1 million in any consecutive twelve-month period.
- When is VAT paid?
A : The VAT returns and payments are normally submitted on or before the 25th day after the end of the tax period. The tax period usually covers one month or two months depending on the tax period allocated to the vendor by SARS.