Running a SME does not excuse you from being a business owner of good standing.
Jannie Rossouw, Head of Sanlam Business Market offers 8 ways business owners and entrepreneurs can apply ethics in their business dealings.
Every business owner knows that there is always room for negotiating a business deal. But some bully their smaller suppliers into reducing their mark-up to the point that the transaction is not beneficial to the other party. Ask yourself if you are looking for a win-win outcome where all parties will benefit.
There is nothing wrong with looking at legitimate ways to reduce your tax bill. But as soon as you pay less tax than you are legally obliged to or avoid paying tax altogether, you are in breach of the law. Failing to declare any income, claiming deductions for expenses that you didn’t incur, creating false invoices or not registering for VAT when you exceed the exempted threshold are some of the unethical business practises that amount to tax evasion.
The saying that if you lie with dogs you will catch flea’s sums up the importance of choosing your business partners carefully very well
3. Creditor payments
You should be paying your creditors and suppliers on time and not use them as a bank. Late payments can cause your smaller creditors to collapse. A survey by accounting firm, Xero found that late payments were a source of cash flow problems for 32% of surveyed small businesses, while 16% felt that chasing invoices reduced productivity.
Do you bill for actual expenses and a reasonable mark-up or do you charge some clients more than others?
5. Government regulations
Are you operating within the ambit of all local authority regulations?
6. Software piracy
Do you have official licencing agreements in place to use proprietary software?
Are you paying your staff a market-related salary for their services and do you have formal employment contracts in place? Do you comply with the department of labour’s regulations requiring businesses to employ not more than 40% foreign labour? Also make sure that you comply with the minimum wage and the provisions of the Employment Equity Act.
8. Business partners and associates
The saying that if you lie with dogs you will catch flea’s sums up the importance of choosing your business partners carefully very well. If you get into business with people of compromised ethical standards, you might be setting yourself up for future challenges.