As a small business owner, one thing we fear the most is being penalized for not meeting our tax obligations. Underpayment, late filing, or failure to file your taxes could mean a big loss on our income. We don’t want that. That’s why we prepared 4 simple tips on how to avoid tax penalties.
1. Document all your financial transactions.
Build a habit of documenting all your transactions and keeping all your receipts. Expenses must be ordinary and necessary to your business and industry, and must be supported by valid receipts. Record as soon as the transaction is completed. This way, you will not miss anything. Also, don’t forget to keep your records in a secured place.
2. Close your books regularly.
Have timely and accurate bookkeeping. Sticking to a schedule will help you build a habit of keeping your books up to date. Consider dividing bookkeeping into smaller and more manageable tasks. You can then schedule these tasks to be done on a bi-weekly, monthly, and quarterly basis.
Although simpler accounting records can be tracked using an accounting book, it would also be helpful to utilize technology and use spreadsheets like Google Sheets or Microsoft Excel. For more advanced recording, you will have to use bookkeeping softwares like QuickBooks and Xero. With these, you can guarantee efficient and accurate recording.
Tallying your books with your tax returns before filing can also minimize inaccuracies. This can prevent you from underpayment which can also cause you to be penalized.
3. Be updated with tax deadlines.
Always mark your calendars as soon as you find out the deadline for your deliverables. However, remember that these are also subject to change. Most of the time tax deadlines gets extended, but they could be set earlier as well. Not knowing the dates would mean failing to file them on time. And that could get you penalized.
So what should you do? Regularly check IRS (for US) and BIR (for Philippines) to know about the latest updates. If your business is in the Philippines, JCSN has prepared a comprehensive tax calendar for you. If you are in the US, don’t worry. We’re also building up one for you.
4. Get help from the experts.
Tax laws are always changing. If you are the one managing your taxes, it is your responsibility to stay informed. You don’t want to miss any deductions that you might take advantage of. However, as your business grows, tax work becomes heavier. Don’t hesitate to seek the help of tax experts.
Good thing is, whether you are in the Philippines or in the United States, JCSN has tax experts that can help you. With JCSN as your trusted partner, you don’t need to worry about tax penalties anymore!
Want to take the burden off of your shoulder? Feel free to contact us now.