January, March, April… whatever the month, there’s a tax season to plan. And come tax season, companies are faced with deadlines, statutory filings, due dates, and the like. It’s not uncommon to find yourself going through the grind, sitting long hours at work, facing high-pressure situations, and soothing many a frazzled nerve. And this happens year on year, taking the fun right out of running your own show. Since there’s no escaping the tax man, let’s understand what’s the best way to get past the season without losing sleep. Here are a few quick pointers from my own journey.
A little planning goes a long way First things first, don’t let it build up to the year-end season. Spread the work through the year and you’ll have little or no fires at the end of the year. A little due diligence all year through can save you a pile up at the end of the year.
Well everyone has taxes to pay, but you also have the option of paying them on a monthly or quarterly basis. It would be wise to plan your pay-outs (such as VAT, TDS, Service Tax, Pro-fessional Tax) and spread them across the quarter so you can carefully balance your overall liquidity, giving you a fair amount in the bank by the year-end. This augurs well for those of you planning a loan or its renewal by year-end as these are the figures that stand to be high-lighted should you need financing.
What gets recorded, gets accounted for Every business incurs expenses. What’s critical is to ask yourself if these are being captured consistently and correctly for accounting purposes. The reason is simple – you’ve spent a significant amount on running your operations, but you haven’t accounted for these – naturally your profits are looking great and now it’s time to pay taxes! Then again, recording your sales accurately can give you a true picture of where you stand in terms of receivables, vendor payments, and other dues.
Transparency on your confirmations, payables, and profit ratios will pave the way for you to enter the next financial year with confidence – especially if your numbers are looking good! Your professional tax consultant or Chartered Accountant (CA) can be your guardian angel here, so go out there and proactively look to work with your CA on this aspect.
Don’t pay the price of non-compliance Getting your house in order, in fact is the first step towards meeting government compliance requirements as well. A streamlined process can help you keep track of all compliance-related issues in no time. All it takes is half an hour each week to complete your weekly accounts. And here’s the best part – a smart accounting tool can get this done for you in the blink of an eye.
Not only do such tools help small companies estimate the tax liabilities correctly but they also flag these well in time so you incur no penalties. What’s more, every small company faces a common situation of having personal credit cards used for business purposes. A clever tool can help you account for such expenses under relevant heads so that the numbers don’t hit you as a bolt from the blue!
Technology to the rescue Deploying a business management tool can also be an effective way to bail yourself out of a sticky accounting situation. Using a simple tool to help you manage business processes, can actually end up completing your accounts at the back end, all at the same time. Tools today are browser based and allow bank transactions to be directly integrated online. They not only help capture all expenses and payments, but also help segregate, update, and view vital in-formation so that nothing slips through the cracks and timely corrective action is taken. To me, this done is half the battle won. After all, it’s as Benjamin Franklin once said, “In this world, nothing can be certain, except death and taxes.” Now that’s it’s time for the latter, pull out all stops to put together your strategy and stay clear of the former! After all, we don’t pay taxes just to keep ourselves out of trouble but as good citizens we realise it as our duty to-wards the society.