Friday January 1 2016

Small businesses tasked to keep books of accounts

Trade minister Amelia Kyambadde. file photo

Trade minister Amelia Kyambadde. file photo 



Government has now made it mandatory for businesses whose trading licences cost more than three currency points (Shs60, 000 and above) to keep books of accounts.

According to ministry of Trade statistics, majority of businesses paying for such licences operate informally and without records.
Announcing the development contained in the Trade Licensing Amendment Act, 2015, at the ministry offices last week, Trade minister Amelia Kyambadde said the changes are meant to streamline trade in goods and services.

She said: “Government has amended the Trade Licensing Act cap 101 following the assent by the President to the Trade Licensing Amendment Act 2015.”

She continued: “The Amendment Act provides for a number of changes in the trade licensing of business that Kampala Capital City Authority, local and urban authorities, business community and other stakeholders need to take note of and ensure compliance.”

The changes, she said, provide for mandatory keeping of books of accounts by businesses that pay a licence of more than three currency points. One currency point is an equivalent of Shs20,000.
When contacted on Tuesday, Kampala City Traders Association chairman Everest Kayondo applauded the amendments, saying most of them were as a result of their demand and prudence.

He said: “Book keeping and other amendments in that law were our proposals. We have argued for bookkeeping because it helps the owner of the enterprise understand whether he/she is making profit or recording losses.”

The amended law, according to Ms Kyambadde, also provides for increase in the number of grades in a city, municipality and towns from the current 2 to 4 grades. This is important for purposes of determining trade licencing fees.

Unlike before where traders would pay for licences irrespective of its grade— size of business, the new law requires that each enterprise is licenced according to its size.
It also provides for trade in services. Previously the law only considered licencing trade in goods, leaving out trade in services, depriving authorities the much needed revenue from such entities minting money in the service industry.

Changing the duration of the licence to 12 months from date of issue rather than expiry on every December 31 is the other addition in this law, which Mr Kayondo said was one of the contentious provisions of the previous law.

Licensing act
The Trade Licensing Amendment Act, 2015 does not only wipe away multiple payments but also widens revenue sources for authorities. This is evident with licencing of trade in services as opposed to only trade in goods as it was the case since 1960.