Are you a business owner? Let us discuss Tax!

Are you a business owner? Let us discuss Tax!

Tax is part of every business. Taxation is all about laws and figures everywhere in the world. A taxman wants to see profit in your records because his revenue is dependent on it. You need to accept this fact and adequately arrange your affairs in a way that would favour you.

When a levy is by government through its relevant laws, it is called taxation.

Tax consultant Temitope Adare explained that taxes collected from businesses includes Companies Income tax (CIT), Petroleum Profit Tax (PPT), Value Added Tax (VAT), Personal Income Tax (PIT), Withholding Tax (WHT) and Education Tax (now known as Tertiary Education Tax (TET fund).

Others she mentioned are Stamp duties (STD), Capital Gains Tax (CGT), Information Technology  Tax (IT Fund). All of these taxes are backed up by its own tax law except for WHT that is an advance form of Income tax.

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She said that “Business is the activity you enter into for profit making. It can be commercial in nature, services or industrial. The profit may however not be for personal gain in some instances like a church owned shop/business centre.”

Adare noted that a business can fall under categories such as sole proprietorship (one-man business), partnership (2 and more persons), corporate business or non-governmental (charity org, cooperatives, unions, etc.).

For a business to be recognized it would have been registered as a business entity under the Nigerian law with a certificate of incorporation.

She advised that prospective business owners should endeavour to register at least an enterprise for a business activity. More so, you should have the business account opened immediately. And that is the right thing to do under the law of the Federal Republic of Nigeria.

She said that ensure you sign all your documents by yourself in order to avoid unnecessary issues such as irregular signature when you are about opening your business account at the bank.

“You need to prepare your articles and memorandum of association, and director’s details if it’s a company. If possible, get copies of other business documents to guide and edit to suite your business line. Get them legally prepared and sign by yourself not a proxy (very important) before you upload if required online,” Adare stressed.

HOW TO AVOID TAX EVASION

The tax consultant explained further on how a business owner can avoid tax evasion or avoidance.

* Directors’ fees attract 10% WHT for Companies and Individuals. So it’s better you place yourself on salary as the business owner.

* Withholding credits is an advance method that you can use to offset your income liabilities as a business. Income is at 30% which is the highest after PPT. WHT is also a planning form.

* Agriculture is one of the most favoured business sectors in the Nigerian taxation law. You can carry allowances on assets (capital allowances) indefinitely and unrestricted unlike every other business.

* Capital allowance is a form of planning, so don’t keep cash idle. Invest your idle cash in assets of the business no matter how little.

Disposing your capital assets would expose you to CGT (tax on capital gain) rather, use the proceeds to acquire another assets of the same category if you must sell off.

* Don’t be too keen on cash sales or purchases, a business exist on credits from others. Your liabilities reduce your net assets which is an important item to both business analyst and of course – TAXMAN.

* Involve the services of a consultant because it’s part of your running cost.

*Finally, every business needs to do a planning. You can reduce your burden legally.

Adare urged every business owner to have a basic understanding about the various laws that can affect his or her business.

“Know the various opportunities of tax cut/ exemptions/ allowances that can benefit your business. Know the basic deductions for your line of business; involve the service of a consultant as your running cost, and keep proper records of all business transactions with its returns made regularly,” she added.

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