From the articles
“The Taxman”-An Undisputed Stakeholder in Your Business
Any registered business whether SME or not are expected to remit one form of tax or another to the relevant statutory bodies upon registration as a company and commencement of business. The definite fact is that the “taxman” is a major stakeholder likely to have between 7.5% and 32% of the profit of every business.
So, is it not wise to adequately manage, befriend and ultimately control this ‘one man’?. Though the ‘taxman’ can and in the past has unsettled many lives and businesses, he can surely be well under control at minimum cost. The cost of planning your tax is lower than the cost of evading it.
A lot of Businesses have failed in remittance of their taxes thereby incurring tax penalties and interest in addition to taxes unpaid which can be avoided. Payment of taxes could be made simpler and cheaper through effective tax planning.
Tax planning involves taking into consideration the applicable tax legislation to ensure that the tax laws are properly complied with such that the various taxes due are paid as at when due. It also involves anticipating a set of circumstances and the identification of opportunities to minimize or defer tax liabilities within the law by arranging your business affairs in such a way that would ensure that the maximum allowances, exemptions and reliefs are enjoyed. In a case between the Federal Inland Revenue Service and American International Insurance Company, the Federal High Court said, ”Tax is an obligation; not a duty. One is not a bad citizen if one can organize his business or trade in a legal manner to minimize his tax liability”.
So, if your objective is to deal with the ‘taxman’ fairly, your first guiding principle will be your willingness to pay his due –effectively. Hence you will do everything to avoid tax (minimizing your tax legally) without evading it (illegal means of avoiding or reducing tax). Let your undisputed stakeholder have his fair share and make it a “win-win”; or should I say make it a “BIG WIN-win” – through tax planning – You have the BIG WIN.
Computation of taxes are based on the financial records that have been kept by the business. Your true tax exposure can’t be known if your records are not complete and accurate. If anyone has been computing your taxes based on the incomplete records you gave him, he has not done you a favor nor fulfilled the purpose he was paid for. The cost of evading tax is higher than that of avoiding and planning it. Hence, the foundation of good tax planning is having a robust accounting system that shows the true and fair value of your business. Upon this foundation should you know all your relevant taxes payable and provide for it. Wise businesses know their up-to-date tax exposure monthly till year end, only paying for relevant taxes that are required monthly if any while the others are paid at year-end.
Every Business Owner should strive to have ‘simple level’ knowledge of the various taxes that affect their business. This is the required tax education every business owner needs. The reason it is needful is because most business owners are the marketers of their product or service, hence in sealing a deal/transaction; all relevant taxes must be thought ahead. It is appropriate to read correspondences and publications coming from the one who has a stake in your business and show a little interest.
With appropriate tax education, the business will enjoy the important role of the consultant as a guide. No one ever plans to build a great house at minimum cost by leaving it entirely to the Architects /Builders. Business owners should work closely with their consultant, showing kin interest and get involved.
The Tax law has abundant loopholes through which you can avoid taxes and I think we have one of the cheapest tax system in Africa (albeit, much improvement is needed in administering it). Seek ‘simple level’ knowledge of tax and get guidance for your company NOW.
