Advice for small businesses to succeed in the new financial year
This will be remembered as one of the most complex tax seasons that Kenyan small businesses have ever faced. The Digital Service Tax, the The Finance Act, 2021 (the Act) which was assented to on 29 June 2021 are among many issues that the SME market is building up on in the current market. Whether your business has thrived during the pandemic or merely survived, you will need to navigate a complex web of tax obligations.
COVID-19 has accelerated the digital transformation of businesses, with the use of electronic and digital signatures skyrocketing. Zoom, will from Aug 1, 2021 start taxing its Kenyan users. Over the last 18 months, we have seen emergency legislation introduced, allowing for the extension of e-signature to an even wider range of documents so agreements could continue to be signed regardless of a person’s location and in broader use cases.
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Many of these additional measures have already been made permanent and there is an industry expectation that many of the remaining temporary measures will be made permanent in the new financial year. Such a trend is further helping to accelerate the broader adoption of electronic signature usage throughout the country. The Finance Act, 2021 has to be seen with an optimistic eye in order to build upon it else, the nostalgia of the days long gone for businesses is what can easily be the trend.
As your small business emerges from this once-in-a-generation tax year, now is the perfect time to apply what you’ve learned and set yourself up for future success. Here are our key recommendations for FY22:
- Simplify and streamline processes – When COVID-19 hit, many businesses had to implement new processes and technology to make sure they could continue to operate. While this quick response was critical, now many are faced with a tangled web of platforms and systems that aren’t necessarily fit for purpose. This is an excellent time to review your technology partners and streamline your services.
- Go paperless – With many organisations re-evaluating their physical office space or transitioning to hybrid working, physical files are becoming more inconvenient to store and manage. Paper trails cause confusion and important documents could get lost. Soon, we may see an e-signature legislation in our country now that the Data Protection Act was assented to . There’s no reason to carry around boxes of paper documents.
- Use smart, collaborative digital tools – While reviewing your technology providers, you can also review how you manage your documentation. Smart and collaborative document management is a game changer for many SMEs, saving you hours on your job. One of the most challenging things to manage when it comes to suppliers, contractors and customers is the small print. Smart documentation means that you can be alerted when certain clauses or terms come into effect or if someone is in breach of contract.
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- Review contracts, suppliers and agreements – With cash flow always a challenge, the beginning of the new financial year is a good time to think about renegotiating lower rates with your suppliers or reviewing subscriptions. The easiest way to do this is to have a clear view of all of your current contracts securely stored in one place. If you haven’t done this yet, my advice is to set this up for FY22. It will save you time and money.
In our opinion, it possibly will be that a majority of people do anticipate their company’s focus for the next 12 months to be on increasing operational efficiency. We recommend this be your focus also to give your business a strong start in FY22.
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