QUICKBOOKS PRO VS QUICKBOOKS PREMIER VS ONLINE SIMPLE START VS ONLINE ESSENTIALS VS ONLINE PLUS

FEATURES QUICKBOOKS PRO DESKTOP QUICKBOOKS PREMIER DESKTOP ONLINE SIMPLE START ONLINE ESSENTILAS ONLINE PLUS
Payment Method Once Off Once Off Monthly Subscription Monthly Subscription Monthly Subscription
Number of users 3 5 1 + 2 Acct 3 + 2 Acct 25 +2 Acc
Track sales, expenses and profit Yes Yes Yes Yes Yes
Create professional invoices and sales receipts Yes Yes Yes Yes Yes
Send invoices directly through popular or Intuit email systems Yes Yes Yes Yes Yes
Batch invoicing to invoice several customers at once Yes Yes No No No
Track your cash flow with reports Over 100 reports Over 135 reports 20+ reports Over 40 reports Over 65 reports
Create professional quotes and estimates Yes Yes Yes Yes Yes
Automatically pass expenses to customers Yes Yes No Yes Yes
Company snapshot Yes Yes No Yes Yes
Calendar view for tasks, bills, invoices ad transactions Yes Yes No No No
Keep on top of receivables with the Collection Centre Yes Yes No No No
Track and manage VAT Yes Yes Yes Yes Yes
Manage supplier bills and payments Yes Yes No Yes Yes
Track stock Yes Yes No Yes Yes
Create back orders for out of stock items and set stock aside No                Yes No No No
Use different units of measure No Yes No No No
Flexible pricing to set prices and discounts by customer, job, item or currency No Yes No No No
Offer early payment discounts Yes Yes No No No
Track time and highlight unbilled expenses before your invoice No Yes No No Yes
Handle multiple currencies and track currency gains and losses Yes Yes No Yes Yes
Create budgets and compare to actual performance Yes Yes No No Yes
Build financial forecasts No Yes No No No
Classify transactions by business area Yes Yes No No Yes
Recurring Invoices Yes Yes No No Yes
Manufacturing Module No Yes No No No
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The Basics of Withholding Tax

A withholding tax is an amount that an employer withholds from employees’ wages and pays directly to the government. The amount withheld is a credit against the income taxes the employee must pay during the year.

Withholding tax applies to income earned through wages, pensions, bonuses, commissions, and gambling winnings. Dividends and capital gains, for example, are not subject to withholding tax. Self-employed people generally don’t pay withholding taxes; they typically make quarterly estimated payments instead.

The rate is 15% on dividends distributed by companies listed on the Zimbabwe Stock Exchange. Withholding tax can be final or non-final, when it is final no further tax or return is required from a payee. WHT is final on dividend and on interest from local financial institutions.

Three key types of withholding tax are imposed at various levels:

  • Wage withholding taxes,
  • Withholding tax on payments to foreign persons, and.
  • Backup withholding on dividends and interest.

WHTs are applicable where dividends and royalties or similar payments are declared or distributed to non-Zimbabwean residents (and Zimbabwean residents in some instances).

Dividends

Dividends declared by a Zimbabwean company to a non-resident holding company will be subject to non-resident shareholders tax (NRST), a WHT. NRST is payable at a rate of 15% unless treaty relief is available. Dividends from companies listed on the Zimbabwe Stock Exchange have a rate of 10%. NRST is payable within ten days after declaration of the dividend.

Interest

WHT of 15%, calculated on the gross amount of interest, is payable on interest accruing to any person resident in Zimbabwe. This applies to interest arising from a registered banking institution or unit trust scheme. The tax withheld is a final tax, and the financial institution is responsible to withhold the tax.

Non-resident investors, however, are currently exempt from any WHT on interest.

Royalties or similar payments

WHT on royalties are payable once a Zimbabwean company pays a royalty to a non-Zimbabwean resident. WHT is levied at a rate of 15% and is payable within ten days of the date of payment. The WHT falls due upon accrual (i.e. when payable), and actual payment is not a factor.

A royalty includes payment for the use or right to use any patent or design, trademark, copyright, model, pattern, plan, formula or process, or any other property or right of a similar nature. It also includes the imparting of any scientific, technical, industrial, or commercial knowledge or information for use in Zimbabwe. The nature of the amount payable should therefore be carefully considered in order to determine whether the relevant amount represents a royalty.

Fees

Fees are defined to include amounts that are technical, managerial, administrative, or consultative in nature; costs are paid externally. There are some exceptions, but the definition is broad and brings in most costs that may be charged to a Zimbabwean person.

WHT is levied at a rate of 15% and is payable within ten days of the date of payment.

Is a penalty charged for failure to remit withholding tax on time?

Any person who fails to deduct the 10 percent withholding tax is liable for the payment of the amount due. In addition, a 100 percent penalty is also chargeable on the amount due.

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QuickBooks 2020 new Features

Intuit always find ways to ensure that the QuickBooks accounting system encompasses new features that are interesting and have a lot of advantages to all its users and is well suited for growing business that range from small to medium enterprises.

The year-end has brought a lot of excitement as intuit has launched the latest version of QuickBooks Desktop 2020 which has new features that are aimed at ensuring that growing your business is made easier and productive. QuickBooks 2019 saw some features which included Invoice tracker, go to pay bills button and improved IIF import feature but the 2020 version comes with more improved features which are summarized below;

Automated Payment Reminders

Following up on trade receivables can be a hustle and consume most of the day’s productive hours by identifying overdue invoices and composing emails. Intuit saw the need to cut down on time spent on follow ups so as to ensure other productivity through the Automatic payment reminders to be sent to customers on overdue debts. One can schedule, review and send payment reminders to customers for their due or overdue invoices.

Automatically add customer Purchase Order Numbers to Invoice emails

There is now an option to insert the customer’s purchase order number to the subject line of the email you send the customer with the invoice attached. This allows your customers the ability to search their email by purchase order number, and not have to open up each attachment.

This has an advantage that If you work with customers who need to connect purchase orders to their invoices, you can make life easier for them by adding their PO number as the first thing they see in the subject of invoice email.

Combine multiple emails

Emails to customers can now be sent easily and a customer who has a job that requires different corresponding invoices to be sent at the same time than having to send different emails with invoices. This has an advantage of ensuring that the customer receives all the emails at once to avoid scenarios were they do not find some invoices as they will be a lot of emails sent to client.

Company file search

Easily find and open your company files with the addition of a file search option on the No company open screen.

Easier Admin password reset

Company File Admin Password can now be reset without needing to enter a long list of information to make sure it’s you! Just pick your email from a drop down list of emails registered with your QuickBooks and enter the token you’ll receive to reset your Admin password.

Enhanced Accessibility

Accessibility enhancements to improve usability for vision-challenged users on the Bills, Invoice and Write Check screens.

Collapse columns in reports

If you have complex reporting, you can now collapse columns in reports with jobs and classes to view customer totals or class totals without scrolling or exporting to Excel.

Smart Help

Press F1 for improved content and search experience, or access care agents through messaging and call back options.

This new version is not one to miss out on a chance to upgrade as the new features are tailor made for your company and aimed at making your business grow in any country or economy

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Tax incentives for Small and Medium Enterprises

Background

With the shrinking economy, the big businesses have become overladen with taxes. It is opined that if the SMEs contributed their fair share of taxes there could be a lot of revenue that may well have been collected for the benefit of the fiscus and ultimately for the benefit of the country.

Fiscal exclusion has also been a factor influencing the lack of formalization of the SMEs. Depending on the type of registration undertaken by SME’s there are tax obligations that must be fulfilled by every business that is registered for tax purposes and this includes the SMEs. These include income tax, withholding tax, PAYE, VAT and Presumptive tax.

These obligations may be greater or lesser depending on the structuring of the business. This piece of writing aims to indicate the tax issues that may affect the SMEs.

The Tax Benefits

In Zimbabwe 10% withholding tax is deducted on local businesses to business sales (B2B) upon payment to a supplier without a valid tax clearance certificate. By virtue of formalizing tax affairs, SMEs can enjoy exemption of the 10% withholding tax on contracts with other businesses. In addition, it is now a prerequisite for most business transactions.

SMEs relationships with big businesses are unavoidable sometimes. A valid tax clearance is one of the documentation required in order to participate in most tenders, including government tenders. Therefore if you do not have a valid tax clearance you will not only suffer withholding tax on payments from customers but you could also lose business opportunities.

Further qualification for duty rebates and other import incentives are also linked to possession of a valid tax clearance. By regularizing your tax affairs, you will be entitled to claim expenses that you incur in your business.

Special Initial Allowance

SMEs even have a better capital allowance regime compared to big companies which write off capital assets against their income to reduce tax payable over three years at 50% in the first year then 25% wear and tear in the second and third year compared to 4 years of 25% per annum.

SMEs do not enjoy assessed losses which can be carried forward for six years. When making losses the law allows you to use such losses to reduce taxable income, until the losses are used up or expires the company will not pay taxes to the fiscus. The reporting of such losses can be only done by a person or company who is formally registered for taxes.

Monthly payment of provisional tax

The income Tax Act provides for payment of provisional income tax in advance on a quarterly basis. And the quarterly payments are done in instalments of 10%; 25% 30% and 35% of the provisional income tax for each of the quarters of the year.

The Income Tax Act provides that the Commissioner-General may, “on application by a taxpayer, who qualifies as a “small or medium enterprise”, permit such taxpayer to pay provisional income tax on a monthly basis, that is, one month at a time in advance.”

This facility is quite favorable and can allow for working capital management flexibility on the part of SMEs given that for most of them, their business models are quite different from those of large enterprises.

Lower rate of mining royalties

The sale of specified minerals by miners to buying agents attract a deduction of tax at rates that vary depending on the mineral being sold. Payments to small scale gold miners, popularly known as “gold panners” or “makorokoza” for gold deliveries are deducted mining royalties at a lower rate of 3% as compared to the general rate of 5% applicable to other enterprises.

The small scale gold miner should be classifiable as a “micro-enterprise” in terms of the mining and quarrying sector of the economy per the SMEs Act.

Access to funding

For SMEs to enjoy funding and fiscal inclusion, they must formalize their businesses. Formalization of the SMEs opens up the access to funding and the protection of the law. Banks and financial institutions are more likely to fund formal businesses as opposed to informal businesses.

For this they would proper books of accounts to be kept and the business to be compliant with the tax laws. Therefore a formalized SME that shows good organization and a good business track record is more likely to get the much needed funding to expand the business as opposed to an informal one.

A brilliant business idea may fail to grow because of lack of funding. Formalization can bridge this gap.

Conclusion

Formal SME’s that keep proper books of accounts, furnish tax returns and pay taxes are not subject to presumptive tax subject to them being in possession of a valid tax clearance.

Informal SME’s on the other hand are liable to pay presumptive tax. It is a misconception that to be registered for tax is expensive. The reverse is actually true. Withholding tax applies on turnover for lack of tax clearance, the business losses on tax opportunities such as claiming business losses when they occur and above all when the taxpayer is eventually caught the law provides for back dating of tax registration and payment of taxes from the date the person was supposed to be tax registered.

This comes along with stiff penalties and interest on late paid taxes and returns. It is wise as a business owner or company executive to gain more understanding on how to go about being tax compliant to avoid missing out on business opportunities and being on the right position for growth.

Transitional issues arising from reduction in VAT rate

The government reduced the VAT rate from 15% to 14.5% with effect from 1 January 2020. The change has triggered transitional issues, hence accounting systems must be configured in order to accommodate the new order. The fact that VAT rate change has not been experienced in the recent times means that some taxpayers may experience challenges crossing over to the new rate. 

VAT liability is triggered in Zimbabwe by either the general or specific rules of time of supply, collectively known as the “ordinary rules of time of supply”. The general rule of time of supply dictates that VAT liability is generated on the date an invoice is issued by the supplier, the payment is received for supply, delivery for goods, taking possession of immoveable goods and performance of services, whichever occurs first.

Specific rules of time of supply are applicable to specific transactions among lease agreements, construction contracts, installment credit agreements, lay-bye sales etc. They vary the general rule of time of supply to accommodate other trigger points such as the date the payment for the supply becomes due, date the agreement is terminated etc.  The third category of time of supply rules applies for purposes of dealing with transitional issues whenever there is an increase or decrease in VAT rate.

The transitional rule stipulates that goods are deemed supplied (provided) when they are delivered and in the case of rental agreement (operation lease) when the recipient takes possession/ occupation thereof.

This means that VAT liability may be prompted by the delivery or occupation/possession thereof, despite none of the ordinary time of supply rules has taken place. Therefore, if delivery of goods or possession/ occupation took place before 1 January 2020, then the old VAT rate of 15% will be applied. On the other hand, if delivery or possession took place after 1 January 2020, new rate applies, unless the ordinary rules of time of supply occurred before this date.

Furthermore, with regards to specified items VAT rate may not necessarily be confined to one rate, instead the rate may vary according to the time of supply. With regards to specified items such as service, operating leases (rental agreements) or construction, manufacturing, repair etc contracts, if performance began and ended before 31 December 2019, the old rate of 15% will be applied.

If, however, performance began in 2019 and ended or ends in 2020, the supply will be apportioned according to the time performance was done. Part of the supply will be subject to the old rate and the other part based on the new rate, hence the companies are entitled to keep the two rates in order to deal with reversing transactions for instance credit or debits notes issued after 1 January 2020 for supplies made at 15%, settlement and volume discounts, bad debts written off and recovered etc. The Act is silent about how the apportionment shall be done except to say that the basis of apportionment should be fair and reasonable.

With regard to input tax claim, a registered operator is entitled to deduct input tax equal to the tax charged to him on goods or services acquired for purposes of trade that makes taxable supplies. The transitional rules do not change this principle: the rate at which the operator claims input tax will therefore depend on the rate at which its suppliers levied VAT on the supplies.

However, invoices issued at the incorrect rate and subsequently corrected by suppliers may pose a challenge to operators who claimed input tax in respect of such invoices. It is therefore possible that the ZIMRA may reject some of the claims if no sufficient documentation is available.

Besides the legislative implications outlined above there are other transitional issues brought about as a result of the decrease in VAT rate such as the need to update systems, train relevant personnel handling tax issues and properly configure systems that cater for both the old and new rates to ensure a smooth transition. The change in VAT rate will have a major administrative impact such as changes to accounting systems there need to consider new tax codes, change tax invoices, debit and credit notes, change product labelling and price lists.  

Conclusively, taxpayers should watch transactions such as operating lease, contracts providing for periodic payments, construction, manufacturing and repair contracts for these are affected by transitional rules which may entail application of the old rate or of both rates. Therefore even after 1 January 2020, the old rate of 15% may still be applicable. In addition they should review all existing contracts that provide for ongoing or periodic supplies of goods and/or services for the implications of the VAT rate change

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Interest rate on late paid taxes skyrockets

Introduction

The concept of interest on late paid taxes is found in most civilised communities as it reflects the interest which would have accrued to the State had the correct amount of tax been paid at the right time. It compensates the State of the opportunity cost of money and in an inflationary environment, the opportunity cost plus loss of monetary value.

With this in mind, the Minister of Finance and Economic Development Prof Mthuli Ncube has issued several Statutory Instruments whose effect is to increase interest rate on tax due and refunds across most tax heads as fully explained below. The SIs were published in the government gazette of 31st of December 2019 and immediately revoked the old interest rate of 10% per annum.

Customs and Excise Duty

The Customs and Excise Act imposes interest on unpaid duty where goods have been released from customs control or are found to be liable to seizure because they were smuggled. The new rate of interest has been fixed at 25% of the duty for any month or part thereof during which the duty remains unpaid. However, it only becomes payable after the first 30 days of the date of release from customs control of goods on which duty was not paid. In other words the government has granted a grace period of 30 days from the date goods are released from customs control.

The Commissioner General may suspend the payment of interest as a result of an incomplete or defective return whereupon he is satisfied that such incompleteness or defect was not due to any negligence or intent to evade the payment of duty on the part of the person responsible for paying the duty. The taxpayer has 30 days from date of notification to him by the Commissioner General to resubmit correct returns.

Meanwhile refunds from ZIMRA are also subject to interest at the same rate if not made within 30 days of the date duty subject to refund was paid, unless the overpayment was due to an incomplete or defective declaration and taxpayer has been advised of this by the Commissioner within that period.

Capital Gains Tax

Late paid capital gains tax is subject to interest and this has been increased to 25% for any month or part thereof during which tax remains unpaid provided it shall only become payable after the first 30 days of the date the tax became due. This gives a grace period of 30 days from the date capital gains tax becomes due.

The interest is suspended where, as a result of incomplete or defective return submitted, the Commissioner General is satisfied that such incompleteness or defect was not due to any negligence or intent to evade the payment of tax on the part of the taxpayer. A taxpayer has 30 days from the date of notification by ZIMRA of defective or incomplete return to correct and resubmit the return. Interest on delayed capital gains tax refunds has also been fixed at the same rate.

Refunds are delayed if not paid within 30 days of the date capital gains tax was paid, unless the overpayment was due to an incomplete or defective return which has been notified to the taxpayer by the ZIMRA.

Income Tax Act

Similarly late paid employees’ tax, provisional tax (QPDs), 10% withholding tax, non-resident shareholders tax, resident shareholders tax, non-resident tax on fees, non-resident tax on remittances, non-resident tax on royalties, property insurance commission etc attract interest.

The new interest is 25% of tax due for any month or part thereof during which tax remains unpaid. The same interest rate applies on reduced assessments and refunds that are delayed by the Commissioner General.

Refunds are deemed delayed if they are not paid to the taxpayer within 30 days of the date of receipt of return by the Commissioner General (CG) unless this was as a result of submission of incomplete or defective return which has been brought to the attention of the taxpayer. The interest will start to accrue after 30 days from the date fresh returns are submitted.

Value Added Tax

Generally VAT is due on or before the 25th of the month following the end of the tax period. If taxpayer fails to meet the deadline he/she will be charged both interest and penalty. The new law revises upwards the interest to 25% of the VAT due for any month or part thereof.

The same rate shall also apply to VAT refunds. However, the Commissioner General is not liable to pay interest if it emanates from defective or incomplete returns and shall only start to run after 30 days of resubmission of the corrected returns. In conclusion interest will be computed based on old rates up to 31st of December 2019 and new rates thereafter.

For instance a tax debt which accrued prior to 31st of December 2019 but remains outstanding in full or in part after this date will be subject to old rate up to 31 December 2019 and new rate after this date. The fact that the interest rate is per month or any part of a month, therefore signifies a higher annualised interest rate of at least 300%. This is by far more than the current penalty rate of up to 100%.  A taxpayer that pays its tax late could therefore be found paying the tax due plus 4 times that tax inclusive of both penalty and interest.

This a serious message from the government against late payment of tax. Taxpayers should take heed and pay their taxes on time in order avoid such cost. Interest is a non-negotiable (are not subject to waiver) debt due to the State.  Further, the fact that the Minister has not ring-fenced the new rate to Zimbabwe dollar taxes makes the interest unbearable for persons liable to pay their taxes in foreign currency. We urge the Minister to revisit this and ring fence the new rate to Zimbabwe dollar tax debts.

Accounting Systems Basics

An Accounting System is a computer based software that is used to track all financial records for decision making purposes. Due to high rates of technology advancement, systems have been developed to collect, process and store financial related information. Pastel and QuickBooks are some of the Accounting systems that have emerged and are quiet helpful to both small and medium sized enterprises.

QuickBooks

This Accounting system is mainly used by small- medium enterprises and has two versions the online and the desktop version. This system keeps track of all the expenses, sales, pay bills, create invoices and generate reports among other features. The desktop version is installed on your desktop and one does not need internet access to keep track of their financial records. The online version is cloud based and to keep track of your financial records one has to be connected to the internet. QuickBooks can support both windows and mac but on windows, Windows 7 is no longer supported. QuickBooks desktop is mainly used by companies that do much of selling products whereas QuickBooks online is mainly used by organizations that do not have their employees in the office and need to access their records on the go.

Pros and Cons of QuickBooks Online

  • It is easier to setup unlike the desktop version
  • One can access records anywhere even on their mobile phones as long as they are connected to the internet
  • Unlimited invoices via email which saves time
  • No need for a software to install
  • One can customize their dashboard based on their preferences

Cons

  • The need for internet in order to keep track of what is going on
  •  Training costs to train beginners as they may feel overwhelmed

Pros and Cons of QuickBooks Desktop

  • No need to access the Internet
  • It helps with better organization as it has an easy to use dashboard

Cons

  • It does not have a platform for data storage (cloud) hence the organization is exposed to the risk of data loss
  •  There is no professional guidance hence the organization has to invest money on maintenance work
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Digitalization in the tax sector

The modern technology trends are having a significant impact in the tax arena. It is important for organizations to embrace the digitalization which has positive effects rather than adverse effects in organizational operations. The tax function and the role of tax professionals in Zimbabwe has been changing drastically in recent times.

Tax consulting firms have been projecting the future realising that it will be a period of significant technological advancement for the tax function within all organizations, regardless of size.

The information age has brought with it the necessity to handle, organize and process large amounts of data. These changes have also necessitated that our responses mutate and innovate to stay abreast of them. Technology is assisting in easing execution of tasks. Whilst, digitalization has started there is still a long way to go before the desired outcome is achieved. Resistance might be a major drawback. However, measures can be put in place to ensure the technology is embraced across Zimbabwe.

When the digitalization process is complete ZIMRA would be the biggest beneficiary. Execution of tasks in the Customs department will become more efficient. Loop holes are minimized. It is important to note that Automated Systems for Customs Data ASYCUDA system that has been making positive in roads in the tax sector. However, misunderstandings are still evident in the customs sector.

It is vital to appreciate that the digital has arrived and that tax practitioners should look at digital solutions to reduce the amount of the routine tasks they do. This would give them the space and time to focus on analyzing data and adding value to their functions. Although, there are still challenges the positives cannot be ignored as they outweigh the adverse effects.