What is Turnover? A Simple Explanation (South Africa Edition)
Turnover is a fancy word for the total amount of money a business makes from selling goods or services before taking out any costs. Think of it like a spaza shop: if you sell 10 cooldrinks for R10 each, your turnover is R100.
Who Does Turnover Apply To?
Turnover applies to businesses of all sizes in South Africa—big companies, small township businesses, online stores, and even freelancers. If you sell something or provide a service, turnover is the total amount you earn before paying for expenses like rent, salaries, or materials.
For freelancers, turnover is the total amount earned from client payments before deducting costs such as software subscriptions, internet fees, or marketing expenses. Whether you're a graphic designer, writer, or consultant, your turnover includes all the money you receive from your work.
Why is Turnover Important?
For Businesses and Freelancers: It helps owners and self-employed individuals see how much money is coming in and if their business is growing.
For SARS (South African Revenue Service): The government uses turnover to figure out how much tax a business or freelancer needs to pay, such as VAT or small business tax.
For Investors: People who want to invest in a business look at turnover to see if it’s making money.
Turnover vs. Profit – What’s the Difference?
Many people mix up turnover and profit. The key difference is:
Turnover is the total money earned.
Profit is what’s left after paying all expenses.
Going back to the spaza shop: if you made R100 from selling cooldrinks but spent R40 on stock, your profit would be R60.
For freelancers, if you earned R10,000 from clients but spent R2,000 on tools, software, and advertising, your profit would be R8,000.
Understanding turnover is important because it helps South African businesses and freelancers know how well they’re doing and plan for the future. Whether you’re running a spaza shop, a freelance business, or a big company, knowing your turnover is key to success!
