For most people, April might signify the start of summer vacation, the coming of hotter days, or simply nothing at all. But every business owner has an additional concept associated with the month: it’s the time to file your tax returns.
Every entrepreneur should be familiar with the process, and should be following it to the letter so as not to acquire penalties. But we sat down with online tax assistance platform Taxumo to ask about the policies and practices many business owners don’t know, and how they might benefit from these.
From addressing common mistakes to offering smart alternatives, here are their top five tips and reminders:
This is a common mistake people make, so be careful. Remember that even though your paperwork says zero at the bottom, it still needs to be filed – because owing taxes and filing returns are two separate things.
According to Taxumo, the interesting thing about Percentage Tax is that it changes. Right now, the rule is that if your business’ income is 1.9 million or below, you qualify for Percentage Tax. But with factors like inflation, that number may change in a few years. So you may be qualified now, or you will be soon. If you fit the requirements, consider switching to Percentage Tax – it’s a smart way of saving.
As mentioned, everything above 1.9M is no longer qualified for Percentage Tax, which means once you go over that bar – and as a successful business, of course you will – you’ll have to switch back to VAT.
The common practice for Filipino entrepreneurs is to ask their accountant friends for help or guidance when it comes to almost anything related to money. While that’s well and good, don’t forget that perfectly good resources are just a phone call away. You can contact the BIR to make sure the information you get is up-to-date and accurate, and they can even advise you regarding payment and processing.
Sadly, many business owners who have arrears don’t file their current taxes because they’re afraid to get caught. The bad thing about this habit is that the longer you don’t file, the bigger your penalty becomes. So the best option is to file current tax returns even while you’re fixing your arrears, so the penalty isn’t constantly increasing.
Finally, since April is coming in fast, make sure you have everything in order. Keep yourself updated on the processes, developments and even alternatives, so that you can make the most out of your taxes. Remember to double-check your form entries, get to the BIR on time, and be prepared for anything. Good luck!
Learn from tax experts’ discussion to know more about tax filing for entrepreneurs! Watch Globe myBusiness Academy’s webisode here.
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