We have just concluded the tax season in Kenya, with the final tax returns due on 30th June 2023. If you’re a business that made a profit in 2022, I hope you were able to successfully file your returns by 30th April 2023 and pay your taxes.
The tax season can be a daunting task for many businesses, especially if they are not properly prepared. For many businesses, the idea of filing tax returns is postponed to one or two months before the returns are due. Whereas, proper tax planning and preparation will enable you to make better decisions for the efficient running of your business and proper tax management. You might even reduce your tax burden!
In this article, we will provide some tips and advice on how you can prepare your business for the tax season.
- Organize Financial Records
The first step in preparing for tax season is to ensure that all your financial transactions are accurately recorded.This includes all invoices, receipts, bank statements, and any other financial documents. There are several online tools that can be used for this. If you’re a small business, look out for free accounting software that meets your needs. If it is a challenge for your business to use an online tool, keep a good filing system that captures all of your revenue and expenses. Be aware, however, that keeping paper records makes it more difficult for your auditor to conduct a proper audit and might lead to increased audit costs. Some online tools you can consider are: Odoo, Wave, Zoho, Quickbooks, Payroll, etc.
- Ensure Accuracy of Financial Data
Once all financial records have been organized, it is important to ensure the accuracy of the financial data. This includes checking all bank statements, credit card statements, and accounting reports for errors or discrepancies. If any errors are found, they should be corrected before filing your taxes. Have the habit of performing bank reconciliations every month or every quarter in order to identify any issues that need to be addressed.
- Review Deductions and Credits
Familiarize yourself with any tax deductions and credits that your business could qualify for. Have a conversation with your accountant or a Tax advisor on the best way to position your business to make use of these credits and deductions based on your industry. Some of these might include deductions for equipment purchases, office expenses, and employee wages.
- Keep Track of Deadlines
Ensure that you keep track of all tax deadlines to ensure that you do not miss any important filing deadlines as this automatically leads to tax penalties which accrue interest. If your business made a profit in the previous year, you are likely required to make quarterly instalment tax payments the following year. Ensure that your accountant and/or auditor gives you accurate information on when to file and how to file. If you do not have an accountant on your team, consider outsourcing this service to reputable professionals. It is important to note that different types of businesses may have different filing deadlines, so be sure to research and understand your specific requirements.
5. Seek Professional Help
Finally, businesses may consider seeking professional help from a tax accountant, auditor or tax adviser. These professionals can help ensure that all tax requirements are met and that the business is taking advantage of all available deductions and credits. They can also help answer any questions or concerns that may arise during the tax preparation process.
In conclusion, preparing for tax season as a business requires organization, accuracy, and attention to detail. By organizing financial records, ensuring accuracy, reviewing deductions and credits, keeping track of deadlines, and seeking professional help, businesses can make the tax preparation process much smoother and less stressful. If you have any questions or concerns about preparing your taxes or planning for subsequent years, reach out to us at info@laeteon.com. We will be able to direct you to our partners to help you with this process.
You got this!
Ngwing K.