4 Tax Tips For Small Businesses
March 3, 2021
What are useful tax tips for small businesses?
- Register your business
- Know the taxes you need to pay
- Work on taxes all year long
- Hire a certified public accountant
As a business owner, you have the responsibility of paying your tax dues to the government. If you don’t, your company’s reputation will be affected, leading to a loss in revenues. This topic may be difficult, but one of the traits of an entrepreneur is the willingness to learn. Keep on reading to learn more about tax tips for small businesses!
Register Your Business
Many small business owners start their entrepreneurship journey by selling products and services part-time. But as your company grows, you might reach an annual revenue that goes over the limit of tax exemption. To abide by your duty as a citizen, registering your business is a must.
This way, you can avoid legal problems and penalties. A registered business also has a tremendous effect on your relationship with your customers because it secures your reputation. You can freely market your products, meet suppliers, and partner with other companies—even big corporations. Without legitimate proof of business, you can’t do all these.
Know The Taxes You Need To Pay
Now that you have registered your business, it’s time to educate yourself about your dues. To give you an idea, here are some of the taxes you need to pay:
Quarterly Percentage Tax
Businesses whose annual gross sales are under Php 3 million pesos are exempted from paying value-added tax. Instead, you need to pay a percentage within 25 days after each taxable quarter. The amount varies according to your nature of the business, with a minimum of 0% and a maximum of 30%.
For individuals who have mixed-income derived from compensation/practice of profession and business, a percentage of your income will be levied with tax. This is also the same for domestic and foreign corporations.
If your business has both salaried employees and third-party contractors, you need to submit withholding taxes monthly.
Work On Taxes All Year Long
As a legitimate business, you have the duty to pay taxes monthly, quarterly, and annually. This means that all your transactions should be kept in an accounting book consistently, so you can compute your taxes properly. If you neglect this task, late payments may be fined with penalties.
Hire A Certified Public Accountant
Because small business owners don’t often hire CPAs, they might have difficulty complying with tax dues, renewal of business permits, and audits. But with the knowledge and experience of an accountant, you can leave the efforts of organizing records and tax compliance to these professionals. This gives you time to focus on your company’s growth and save money on penalties.
As a legitimate business that pays for its taxes, you will gain a reputation for your company. Aside from avoiding penalties, your customers and business partners will also transact with your organization with peace of mind.
If you have additional questions regarding tax tips for small businesses, you may send a message to Benito Keh. As an expert on business and entrepreneurship, he can impart his knowledge on accounting topics.