Measures to ease pressure on owners of small businesses

PRESIDENT Cyril Ramaphosa, in his State of the Nation Address last week, boosted the hopes of small business owners by promising to create a more conducive environment for them by, among other things, removing regulatory hurdles.

Stefani du Preez, the director of Innovative Accounting Solutions, which offers accounting, payroll and tax services to small businesses, says although the Budget has not provided anything concrete regarding reduced regulation, it contains a number of measures that will stimulate entrepreneurship and take some of the pressure off small business owners. These are:

• A fund with an allocation of

R2.1 billion over the medium term that is being developed by the departments of Small Business, Science and Technology, and National Treasury.

However, Du Preez says, R2.1bn is not much in the context of the larger Budget. “If the government was serious about creating a more enabling environment for start-ups, it would need to increase the value of this fund or use it as a guarantee, allowing the private sector to come on board with additional funding.”

• The amendment by Treasury of its preferential procurement regulations to favour small business. A Bill awaits Cabinet’s approval. The changes to these regulations will include targeted procurement from designated groups, including township and rural enterprises, black women and youth enterprises, co-operatives and people with disabilities. The use of sub-contracting to designated groups in contracts of more than R30 million will be compulsory.

• An amount of R6bn provisionally allocated in 2018/19 for drought management and public infrastructure, “which will hopefully alleviate the pressure that poor infrastructure places on small businesses’ daily operations”.

• Proposals to ensure the proper governance of public entities and encourage accountability. This is welcomed, Du Preez says, as many small, medium and micro enterprises struggle to survive as a result of late payments (or non-payments) from government departments.

On the negative side, Du Preez says, although there is some relief for small and micro enterprises through tiered rates, the corporate tax rate of 28% is high compared with other countries. “At 28%, many companies are encouraged to shift profits abroad and pay less tax elsewhere,” she says.