Running a small business in South Africa is hard enough without accounting mistakes adding to the pressure. But most owners do not realise they have a problem until the VAT bill arrives, the cash is gone, or SARS sends a letter. By then, the damage is done.
Here are the five mistakes we see most often at Sikatrix — and the fix for each.
1. Mixing Business and Personal Money
This is the single most common mistake, especially among sole proprietors and early-stage companies. You pay the business phone bill from your personal account. You buy petrol on the business card for the family trip. Over time, your records become impossible to untangle.
Why it matters: SARS can disallow deductions if you cannot prove an expense was for business purposes. Mixed accounts also make it nearly impossible to know whether your business is actually profitable.
The fix: Open a dedicated business bank account. Even if you run as a sole proprietor, a separate account costs very little and saves enormous accounting time. Use it exclusively for business income and expenses.
2. Not Keeping Source Documents
An invoice you cannot find is a deduction you cannot claim. Many small businesses capture transactions in their accounting software but fail to attach the original invoice, receipt, or statement.
Why it matters: SARS requires you to retain supporting documents for five years. During an audit, the software entry means nothing without the document behind it. A missing invoice for a large purchase could cost you the deduction — and potentially a penalty.
The fix: Photograph and upload every receipt on the day you receive it. Cloud accounting platforms like QuickBooks, Xero, and Sage allow you to attach source documents directly to transactions. Build the habit now; your future self and accountant will thank you.
3. Ignoring Accounts Receivable
Issuing an invoice does not mean you have cash. Many SME owners treat the invoice as the end of the sale, then wonder why the bank account looks thin despite a busy month.
Why it matters: Outstanding debtors tie up your cash and increase the risk of bad debts. A R50,000 invoice that sits unpaid for 90 days has real cost — you may need to fund that gap from overdraft or personal funds.
The fix: Set payment terms on every invoice (15 or 30 days is standard). Send automated reminders at 7 days, due date, and 7 days overdue. Review your debtors age analysis weekly. Chase consistently; most people pay when reminded, not because they are proactive.
4. Treating VAT as Your Own Money
If your business is VAT-registered, the VAT you collect from customers belongs to SARS — not to you. But it sits in your account until the next return period, and many business owners spend it.
Why it matters: VAT returns are due every two months. If you have spent the VAT you collected, you will need to find that cash from somewhere else. Missing a VAT return or underpaying triggers penalties and interest that compound quickly.
The fix: Open a second business account and transfer every VAT amount collected into it immediately when you invoice. When the return comes due, the money is sitting there ready. Some businesses call this the "VAT account" and treat it as untouchable.
5. Only Looking at Profit — Not Cash Flow
A business can be profitable on paper and still run out of cash. This confuses many SME owners who look at their income statement, see a profit, and cannot understand why they cannot pay salaries.
Why it matters: Profit and cash flow are not the same thing. If you sell on credit, pay suppliers on tight terms, and hold stock, you can show a healthy profit while being cash-starved. This is called a cash flow timing mismatch, and it kills otherwise good businesses.
The fix: Run a cash flow forecast — even a simple one in a spreadsheet — at least monthly. Know what is coming in, what is going out, and when. Your accountant can set this up and help you read it in under an hour.
The Bottom Line
None of these mistakes are complicated. They are habits — or the lack of them. The good news is that once the right habits are in place, your accounting almost runs itself.
If you recognise your business in two or more of these points, the best time to fix it is now — before it costs you more than it needs to.
[Book a free consultation with Sikatrix](/contact) and we will review your current setup, identify the gaps, and give you a plain-English action plan.
