Dormant company SARS Tax Penalties: Why Shutting Down Your Dormant Company Can Save You From Costly Penalties
Dormant company SARS Tax Penalties: Why Shutting Down Your Dormant Company Can Save You From Costly Penalties In our extensive experience as accountants and business advisors, we frequently encounter individuals who have registered businesses for various reasons. In this article, we will delve into these common motivations and explain why shutting down your dormant company can save you from costly penalties. Common Motivations for Business Registration: Formalizing a Side Gig: Many people register businesses to legitimize a side hustle before realizing it may not be sustainable or they lack the time to run the venture effectively. Meeting Regulatory Requirements: Some individuals are requested by friends to serve as directors for a company primarily to fulfil regulatory obligations, often related to BBBEE (Broad-Based Black Economic Empowerment). Shifting to Sole Proprietorship: There are instances where individuals initially registered a company but later decided to continue trading as sole proprietors. Overseas Relocation: People who registered a company but subsequently relocated abroad for employment often leave their company unattended. Regardless of the initial reason for registration, many of these businesses eventually become an administrative burden for their founders, partners, or directors. These administrative challenges encompass: Compliance with CIPC: Ensuring adherence to regulations set by the Companies and Intellectual Property Commission and the Companies Act. Filing CIPC Annual Returns: Meeting the requirement to submit annual returns to maintain company compliance status. Filing SARS Tax Returns: Addressing the critical issue of filing tax returns with the South African Revenue Service (SARS). The Risks of a Dormant Company The company you registered but might have forgotten about can pose a substantial tax risk. Here’s why: Tax Obligation: Registered companies have a legal obligation to file annual tax returns with SARS to provide updates on their financial and trading status. Accumulated Unsubmitted Returns: If you’ve lost track of your registered company, you may have a backlog of unsubmitted tax returns. For instance, if your company was registered five years ago, you could potentially have five years’ worth of outstanding tax returns. This applies to all applicable tax types, including VAT and PAYE. Ignored Notifications: You might have received notifications and reminders from SARS but overlooked or failed to understand their significance. Penalties: SARS imposes administrative penalties for non-submission of tax returns, even if the business is not actively trading. These penalties can vary but often start at R250 per month, with a maximum penalty of R16,000 per month. Consequently, for five years of non-submission, you could face a minimum penalty of R15,000. It is important to note that the trigger for these penalties is not trading status, but non-submission of tax returns. Steps to Mitigate Penalties So, what should you do if you find yourself in this situation: Submit Outstanding Tax Returns: Initiate the process by submitting all outstanding tax returns. File Returns Regardless of Income: File tax returns for all relevant years, irrespective of whether your business generated income or expenses. As mentioned earlier, penalties are triggered by non-submission, not income levels. Understand Responsibilities: Avoid registering as a director or tax representative for friends or family without fully comprehending your duties toward the company and tax authorities. Check Company Compliance: Utilize the Companies and Intellectual Property Commission (CIPC) to obtain a ‘spider report’ for each company you are a director of and verify their tax compliance. Consider Resignation: If you’ve already registered as a director or tax representative, explore the possibility of resigning from those positions. Engage with SARS: Communicate with SARS to discuss penalty remittance, repayment plans, or reduced penalties. Deregister Inactive Companies: If your intent is not to maintain the company’s active status, consider deregistering it with CIPC and SARS. Conclusion: Remember, SARS appreciates law-abiding citizens. It’s best to be proactive and honest in addressing any oversight or compliance issues. Approach SARS with transparency and a willingness to rectify the situation by submitting overdue tax returns and seeking resolution for penalties. Feel free to reach out if you require assistance or have further questions. Leave a message Subscribe now:
Unlock Compliance with Ease: Navigate South Africa’s New Beneficial Ownership Laws with Our Expert Help!
From 1 April 2023, South African businesses must disclose their beneficial owners to the CIPC in line with the Companies Act. Furthermore, SARS necessitates companies to report shareholders who possess an interest of 5% or more in their tax declarations. Why the Change?: This mandate compels companies to maintain and submit beneficial ownership records to the CIPC. Its primary aim is to curb money laundering, financial frauds, and reputation tarnishing activities. Moreover, it aids South Africa’s objective of getting delisted from the Grey-list. Entities Obliged to Disclose: Beneficial ownership must be reported by: Private Companies Close Corporations (CC) Non-Profit Companies (NPC) State-Owned Companies (SOC) Specifically: Trust shareholders equate the beneficiaries as beneficial owners. In a CC, beneficial owners are the members. NPCs with members recognize the members as beneficial owners, whereas NPCs without members consider the directors. For SOCs with a minister as a shareholder, the minister becomes the beneficial owner. Entities Exempted: The following aren’t obligated to disclose beneficial ownership: Public Companies Primary Co-Operatives (co-op) Personal Liability Companies Notably: Public companies are already overseen by entities like the Johannesburg Stock Exchange (JSE) and thus don’t need to submit again. Present amendments exclude primary co-operatives from the mandate. No specific directions have been issued yet for personal liability companies regarding this disclosure. Who Can Submit?: Individuals authorized by the company can file the beneficial ownership details. Deadline Reminder: Submissions to the CIPC are due by 1 October 2023, which marks 6 months post the inception of the General Laws Amendment Act. If you’re yet to adhere, this provides a month’s time frame to align. Submission Process: Filing can be accomplished through the bizportal. Alternatively, using our professional services can streamline the process for you. Mandatory Documents: When filing to CIPC, ensure you have the following, which we can generate for you: Mandate to Lodge Beneficial Ownership Register of Beneficial Owners Register of Shareholders (or Members if it’s a CC or an NPC with members) Verified/Certified ID documents of beneficial owners Once processed and complemented by essential documents, the CIPC will provide a certificate as an acknowledgement of receipt. Don’t navigate these new regulations alone! Let our experts guide you seamlessly through every step, ensuring full compliance without the stress. Act now for peace of mind tomorrow. Contact us today and stay ahead of the curve Leave a message Subscribe now:
Entrepreneurial Strategies for Overcoming Common Small Business Challenges and Avoiding Failure
Statistics reveal that 50% of small businesses fail within two years of inception. One research conducted by the UWC indicates that between 70% and 80% of small businesses fail within five years. The impact of these failures on the economy and unemployment is substantial. But what factors contribute to the collapse of small businesses? Unsuitable product offering: A product or service that fails to meet the needs of the target market can doom a business. It’s essential that small businesses conduct thorough market research to understand customer needs and preferences. The business should develop a unique value proposition that differentiates it from competitors. A failure to continuously innovate and adapt the product offering to market changes can lead to a decline in sales and, ultimately, business failure. Inadequate customer understanding and engagement: Understanding your customers is crucial to the success of any business. Without a deep understanding of customer needs, wants, and behaviours, a company may struggle to attract and retain customers. This can be especially problematic for small businesses that rely heavily on a loyal customer base. Effective customer engagement strategies, including personalized service and regular communication, can foster stronger customer relationships. A failure to engage with customers and respond to their feedback can lead to customer dissatisfaction and, eventually, a loss of business. Inadequate planning: Many businesses are established as a means of survival. Business owners often register a company without a detailed plan regarding its operation. There are no clearly defined short-term or long-term goals, leading to a lack of understanding of costs, responsibilities, markets, funding needs, and other business requirements. As a result, business owners eventually run out of steam and must return to the drawing board. It is crucial for business owners to create a well-defined plan and maintain a business data room with critical information to aid in discussions with investors or when seeking funding. Overreliance on a single individual: In many small businesses, the owner is the primary point of contact for all matters. They handle customers, suppliers, employees, production, administration, shareholder relations, and general problem-solving. This leaves them with insufficient time to focus on essential business aspects, such as growth and strategy. Business owners should identify areas of their business that can be delegated to assistants or other employees to free up time for more important tasks. The UWC report shows that personal initiative and goal setting are consistently related to business success. A proactive approach to dealing with issues is more likely to succeed than a reactive one. Failure to differentiate personal and business accounts: Mixing personal and business finances can lead to confusion and difficulty in tracking expenses and measuring profitability. Business owners should decide on a monthly salary based on their living expenses and the company’s cash flow and tax implications. They should avoid owing the business unless they have a solid repayment plan in place. Insufficient record-keeping and financial systems: Many small businesses lack proper financial records, systems, and technology due to cost concerns or fear of the unknown. However, businesses that adopt cloud accounting and other technologies can achieve efficiencies in various areas. Real-time data access can also enhance decision-making quality. Small businesses should embrace technology as an ally, proactively seeking solutions before the lack of it forces them out of business. Delayed payments by larger businesses: In countries like Kenya, late payments to suppliers are being considered for criminalization, highlighting the severity of the issue. Cash flow is vital for all businesses, and small businesses must pay their suppliers, who may also be small businesses. Large companies and government departments should process supplier payments more quickly and address officials demanding kickbacks from small businesses. Passion does not equal expertise: Passion cannot replace experience. Small business owners should stay ahead by attending managerial, business management, finance, and tax training programs. They should maintain a keen interest in their financials as well as their bank balance. Ineffective management: The saying, “People don’t leave jobs, they leave managers,” rings true. When hiring managers, it is essential to find individuals passionate about developing and listening to others. Otherwise, high staff turnover and the associated costs of hiring and training. Conclusion: The success of small businesses hinges on several factors including, but not limited to, strategic planning, effective management, proper financial systems, customer understanding, and a suitable product offering. It’s imperative for business owners to approach these areas proactively and adopt strategies that foster growth and sustainability. Ensuring they keep their business and personal accounts separate, leverage technology, and encourage prompt payment practices also greatly contributes to longevity. However, it’s equally important to realize that passion does not equate to expertise, and continuous learning is a key aspect of entrepreneurial success. By understanding and mitigating these common pitfalls, small business owners can significantly increase their chances of success and make a positive impact on the economy. Get in touch Leave a message Subscribe now:
Effective Steps to Successfully Close a Business in South Africa (Guide)
Effective Steps to Successfully Close a Business in South Africa Who should be reading this article? Anyone whose business is no longer trading and wishes to wind it down Anyone who wants to liquidate their business Anyone who has lost interest in their registered business and now wishes to discontinue it KEY TAKE AWAY POINTS: Pay all outstanding creditors Collect from all debtors if any Cancel all contracts (ensuring that all the conditions and terms of doing so are understood and taken care of) Inform all employees and customers of the intention to close down the business Sell your business assets (including the cars) and stock (if any) or write off any assets or inventory no longer – S0, basically liquidate the business The last step would be to distribute any cash or assets that remain in the business Deregistering at the CIPC Deregistering with SARS (all tax numbers) Why may you consider closing a business? There are many reasons for this. But, you may consider closing off your business because of any of the following reasons (not limited to this list:) The business was negatively affected by COVID and there is no possibility of the business doing well again in the future The business has become unprofitable and it no longer makes sense to continue operating Your focus or passion has changed and you would like to focus on something else The project for which the business was designed has ended and will not be resuming again in the future The most profitable clients of the business have left and you do not see the business attracting any new clients Changes in technology that drive your product or business out of the market You no longer have the cash flow or working capital to keep the business going If you are considering closing down your business, the following steps and considerations are important: 1. Have an exit strategy: Truly speaking, this should happen before there is a need to close down a business. This is because we will all exit from our business one way or the other. Some of the exit reasons are what we have already highlighted above. But, it could also be due to health reasons, death, new investors, a merger or sale of the business or part of the business. Whatever the reason, every business should have an exit and succession plan in place. Your goal here is to formulate a plan of how you will close down the business or exit from the business. Without a plan, things usually go wrong and you may be caught unaware along the way. 2. Notify your employees: After your customers, your employees are an important asset to the business. Besides, they have families to feed and lives to live. Leaving it until late may place an unnecessary mental burden on them and leave them with little time to look for alternative employment. As an alternative, use your relationships to find then alternative employment. But, the important point here is to keep the employees in the loop, not in the dark, about what is going on. Also, decide on who will handle the communications with the employees. It is also important to decide and communicate their terminal benefits and how these will be paid. 3. Notify your clients It is important to notify your clients in time so that they have time to look for alternative suppliers. Also, you may need to collect anything that they still owe you. It is important that you decide how you will collect and how they will be notified. 4. Collect your outstanding debts Plan your business closure around your existing collection policies and avoid giving new credit lines to existing or new clients. You also want to collect any outstanding debts before you close the business because it may become difficult to get payments once you have already closed off the business. Some businesses’ financial policies do not allow payments to individuals. Avoid announcing that you want to close off your business before you collect outstanding debts because some clients may just stall on payments hoping it will all go away. You can offer settlement discounts to encourage customers to settle their accounts. An alternative is selling these accounts to a collecting agency. 5. Notify your creditors and pay outstanding debts Inform your creditors of your decision to close and ensure you have a plan to handle the outstanding debts. SARS may be one of those creditors. Ensure that you have filed all your returns and that every return is paid for. If you are unable to pay them, there are processes you can follow to ask for a compromise or a repayment plan (Click here to read more about compromises and repayment plans here.) There may be specific laws on how you may pay your creditors. Ensure you are familiar with these and follow them in settling your creditors. If you are not sure, enlist the services of a lawyer. 6. Sell your business and operating assets If you can, package some of the cash-generating units that are still functional and profitable and sell these to interested parties. If this is not possible, you may want to sell the assets in the business including all the inventory, vehicles and other operating assets you may still have if there is a market available for them. 7. Deregister the business Once you are satisfied that all processes are complete, it is now time to deregister your business with the CIPC. This is to inform the CIPC that your business is no longer in existence. After this is done, inform SARS that you have deregistered the business. Also, apply to have all tax types (numbers) deregistered. This is to clear you of future tax compliance burden since your business is no longer in existence. Frequently asked questions: How do I shut down a business in South Africa? Start by submitting all outstanding SARS tax returns Obtain a tax
Timely Financial Reporting/Financial Statements preparation
Financial statements are intended to meet the needs of decision-makers as well as providing useful information to shareholders. As a result, the timely preparation of these reports is essential. Financial statements must be available in time to inform decision-making. Therefore, it is important that financial reports/financial statements should be published as soon as possible after the end of the reporting period. However, we should note here that timely financial reporting should not be reduced to a well-managed busy financial statement drafting season. Rather, it requires careful, yearlong planning and monitoring. Of course, the need for timeliness has to be balanced against the need for reliability, which in addition to timeliness is also an essential characteristic of financial statements. Requirement of the Companies Act: In terms of the Companies Act, Section 30, Companies are required to produce annual financial statements within 6 months of their financial year-end or within any shorter period as may be appropriate to provide the required notice of an annual general meeting in terms of section 61(7). For example, if one’s year-end of Feb 2018, they should have a set of financial statements by end of August 2018. Recommendations: I would like to make the following recommendations about ways to improve the timeliness and reliability of financial reports. These recommendations are based on my personal experiences and cannot be viewed as an exhaustive list. Do not leave it until the last time: It is never a good idea to start the preparation of your financial statements late on in the year. As mentioned in my introduction, the process requires careful yearlong planning and monitoring. Start with clients whose books are updated and are in order on a monthly basis. For me, these are the client I have monthly management meeting with and at each management meeting, we ensure that the accounts for that month are in order. Once we close off the accounts, we do not come back to these to make any changes. You will find that by the year-end, there is little left to do to produce the financial statements because all books are in order. For me, I find that this process ensures the ongoing completeness and accuracy of financial data. Team collaborations: Reid Hoffman once said, “No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team.” I cannot stress enough the importance of working as a team and ensuring that the communications among the team are good and maintained. In my firm, as an example, we have three teams that work closely together to produce financial statements; the tax team, the financial statements drafting team and the financial management team. The financial management team is responsible for day-to-day accounting and the production of the Trial balance. The tax team helps with all complex tax matters. The drafting team takes the Trial balances and produces the financial statements. What makes the teamwork together well is communication, each member communicating whatever changes or processes that take place at any stage of the process. The biggest advantage of all this is that the reliability of the financial statements is greatly improved. The application of tax and financial reporting laws is also improved. Systems and processes: I also find that it helps to have proper systems and processes in place for the production of financial statements. Companies should have a financial system that they use to draft financial statements. These should be able to produce financial statements acceptable for submission with SARS and the CIPC. Also, there should be a well-defined process for the production of financial statements. It could be a well-defined checklist, which has all elements that must be checked before a trial balance is imported into the financial statements software. The presence of such a process will also go a long way in producing a reliable set of financial statements. Closing and financial statement preparation processing: The annual closing process. To avoid delays, aim to have your annual close within a month from the end of the financial period. Communicate these deadlines to all people involved in the process so that everyone is aware of the deadlines and the deliverables that each should meet. Unforeseen circumstances. The financial report preparation process may identify items that could affect the amounts reported in the financial statements, such as legal disputes, contractual obligations e.t.c. In most cases, a reasonable amount of time may be needed to resolve such items. To avoid delays, it may be better to proceed with the issuance of the financial statements based upon reasonable estimates, rather than to delay their issuance. Planning: There is that old saying that says if you fail to plan, you plan to fail. It is important to carefully when for when the production of financial statements should start, and by whom the financial statements should be prepared. As mentioned earlier, do not leave the drafting to the busy drafting periods. After the year ends, aim to have at least one set of financial statements done per week. Start with those where not too much cleaning is required going to those where late adjustments and more cleaning is done. Also, you may want to aim to submit these financial statements by the time the tax season opens in July. So, plan in a way that will make this possible. Leave a message Subscribe now:
Are you ready to exit from your business?
Are you ready to exit your business? Some people go into business with the aim of building a good business then sell it. Others spend years building their businesses so that they may leave something for their children. Whatever the intention, it is clear that at some point one will exit their business. Even though the idea of you exiting your business sounds inconceivable, you must remember that you will not run your business forever. As an example, the people that started Coca Cola are not the same people running it today. Therefore, you and your business must be exit and investor-ready at every stage of your business. You must have an exit plan. The exit will happen in a different form, whether you are prepared for it or not. Your exit from your business may happen in any of the following ways: Retirement The passing of your business to your children Selling Health issues limiting the ability to run the business Death Lack of interest in the business and a desire to start a new venture Exit an unprofitable business Every business must have an exit plan: Unplanned exits may be disastrous. Imagine trying to sell a business whose tax affairs or books are not in order. Also, investors are looking for a well-run company. They want to know that their money will not go down the drain. A good plan will ensure that you exit at the right time. Remember, just because you are ready to exit does not mean your business is ready. Life has its own dictates on when or how you will exit our businesses. When life circumstances dictate an unprepared exit, it rarely goes smoothly. Do you know how much your business is worth? Any exit plan should start with a professional valuation. A professional valuation is critical to ascertain the accurate value of your business. If you are to approach a buyer and you do not know how much your business is worth, where are you going to start the negotiations for a price? Proper due diligence will also be needed. This will help you to review your business from the perspective of a potential buyer. It will help you identify any gaps in the key drivers of your business and identifying ways of closing these gaps in order to have a proper exit and investor-ready business. Good due diligence will also enable business owners to determine the key value drivers of the business and identify the areas that will impact its sale value. Once you have a proper plan, a value for your business and well-executed due diligence for your business, it will be easier to identify and approach potential buyers. Some of the actions that are important in developing an exit strategy: Do not allow the business to heavily rely on you and your skill set. When you get sick or die, the business takes sick leave or dies with you. Therefore, develop key employees who can run the business on a day-to-day basis without your involvement. Develop an operating manual of how you do what you do. Define each key process and quality control checks. This is important because business goes on even when you or your key employees are not around. In addition to the operating manual, have a library or knowledge base. This will ensure that important information/knowledge is shared among everyone in your business. Also, you will most likely find yourself in a unique situation from time to time. Adding your experiences of the case and how you dealt with it will ensure that you do not waste time dealing with a similar issue in the future. Have a dashboard that shows you the key performance indicators and what the trends of those indicators are. Have a compensation system in place that rewards managers who help improve key performance indicators of your company and who come up with innovative ideas to improve your business and customer experience. Have a data room for your business. A data room is a place where you store all important documents and information about your business. Your data room may include but not limited to: Latest financial signed financial statements Share certificates and share register Memorandum of incorporation (MOI) Company registration documents Your latest up to date Tax clearance (what is now known as Tax Compliance certificate) Operating Manual and knowledge base Shareholder Agreements Board members and advisors Licences and permits and other Intellectual properties Strategy and KPI targets Pressroom Internal controls Risk profiles and risk management Organisational structure CVs of key management Summaries of key employment agreements and benefit plans Copy of IDs for senior management Material contracts Be aware of the tax consequences If you will be selling beware of the tax consequences. Whether you sell the operating assets in the business or the business as a whole, the transaction will attract Capital Gains Tax (CGT). Therefore, a well-thought tax plan is an important part of the overall exit plan. If you do not have a dedicated tax team within your business, get the services of a professional Tax Advisor/Practitioner. Succession after death or retirement: Strategic planning for a business needs to include a proper succession plan. Succession planning may not be high on your agenda but retirement and death are certain. In a small/family business succession planning is even more important to effectively conclude the transfer of ownership or management from one party to another: The first step is to draw up a shareholders agreement. The agreement should specify the rights and privileges of a shareholder if they wish to sell/exit. It should be agreed if the existing shareholders have the first preference to buy. The agreement should specify the terms and conditions of the sale and purchase by existing shareholders if existing shareholders are to takeover. The second step is to take a policy to cover for the key shareholders. This should step in when the key shareholders die or get disabled/or are permanently incapacitated. To avoid
Why do Small businesses fail?
Why do Small businesses fail? According to statistics, 50% of small businesses fail within 24 months of launch. According to research and report by the UWC, between 70% and 80% of small businesses fail with 5 years. This is a significant number of small business that fails. The consequences of this to the economy and unemployment are significant. But what exactly closes doors for small businesses? Lack of planning: Most businesses are brought into existence for survival. The business owners simply register a company and hope everything will just be fine. There is no detailed plan on how the business is going to be run. There are no well defined short-term and long-term goals. As a result, there is no understanding of costs, responsibilities, markets, funding needs and other requirements of the business. Before long, the owners of the business run out of steam and find themselves back to the drawing board. Therefore, it is critical for business owners to have a clearly defined plan for their business. Also, a business data room that contains all critical information about the business is essential. This will come in handy when talking to investors or when seeking funding. One-person show: In small businesses, often the owner is the go-to person. They are the main source of contact for everything to do with the business. They deal with customers, suppliers, employees, production, admin, dealing shareholders and putting out fires in general. This leaves them with little time to run the important aspects of the business. They have no time allocated for growing the business and attending to strategic issues relating to the business. This is why it is important for business owners to identify, early on in the business, aspects of their businesses that they can hand over or delegate to their assistants or other people in the business. This will, in turn, free up their time to focus on what matters. According to the UWC report, personal initiative and goal setting are consistently related to business success. In other words, a business owner who is always reacting instead of proactively dealing with issues is more likely to fail than one who proactively deals with issues. Failure to separate personal and business accounts: You often hear people say, “This is my business. This is my money. Why can’t I get the money out?” We have dealt with one such business before. The owner had a gambling problem. As a result, he spent over a million rands over two years in gambling. None of the winnings would come back to the business and no taxes would be paid over to the authorities for the business. While this business is still there, it consistently had cash flow problems and may not be around for a very long time. Using a company account as a personal account will no doubt cause a lot of confusion. Business owners will struggle to keep track of their costs and will find it difficult to measure their profitability. Secondly, they will create significant loans accounts in the business, which will be difficult to clear. As a general rule, business owners should decide on how much they need to survive on a monthly basis and pay themselves a salary from the business, obviously taking into account the cash flow and tax implications of doing so. Secondly, one should not owe the business unless they have a solid plan of paying or reducing this loan in the future. Lack of proper records and financial systems: Many small businesses lack proper financial records and systems and technology. This could be related to the fear of the cost or fear of the unknown when it comes to technology. But, many businesses that have adopted cloud accounting and other technologies have achieved efficiencies in a number of areas of their business. This is so because they no longer spend a lot of time on manual processes. Having data in real-time has also improved the way and quality of decision-making in many small businesses. For many small businesses, technology should not be seen as a threat but as an ally. Small business should, therefore, be proactively looking for technology solutions before the lack of it throws them out of business. Late payments by larger businesses: According to Moneyweb, Kenya is considering making late payment of suppliers a criminal offence. This shows you how big this problem is. In South Africa, many government departments are known for paying way too late. In the Western Cape, the City of Cape Town is in a legal battle with a water supplier they asked to build a desalination plant in the Water Front. The company built the plant with over R37 million of their money, but to date, only about R4 million has been paid. For any business, cash flow is anything. Small businesses also need to pay their suppliers who may in themselves also be small businesses. So, a call on large companies to pay their suppliers in time should become even louder than it is currently. Government departments should also look at how they can process supplier payments quickly. We also hope the new dawn that is sweeping through the country will also deal with officials who ask for kickbacks from these small businesses. Passion is not expertise: Passion is not a substitute for experience. In fact, experience is a bad teacher. Often one only learns from it after a mistake is already made. So, it is important for small business owners to stay ahead of their game by attending managerial, business management, finance and tax training. Do not wait until it is too late for you to learn. Have an interest in your numbers and finances as much as you do in your money and bank balance. Poor management: Ever heard people say, “People do not leave jobs, they leave managers?” When hiring managers, one needs to get someone who has a passion for developing and listening to people. When