HANDLING TAX MATTERS

DMC MOTIVATION TIPS CORNER

Our searchlight in our Motivational Column focuses on how we can handle our Business Financial Position viz-a-viz obligations to Government as regards rendering your Tax Returns to Government in the Most reasonable way that you won’t put yourself at a disadvantage.

Please note the following if you are a Business Owner or you are planning to become one:

1. If you have registered a limited liability company with the Corporate Affairs Commission and you have opened a bank account in your company name, don’t use the account for personal transactions, if you do, you run the risk of having tax issues with the FIRS.
2. When FIRS discovers such bank account (with BVN, it’s very easy for them), they will ask you to account for the money. They will ask you to present different kinds of accounts such as Audited Financials, Management Account, Cashbook, etc. You will be expected to show evidence of your VAT and WHT payments as well.
3. If you claim your company is not doing any business yet, they will not believe you because there are transactions in the company’s bank account. So they will assume all the inflows into your bank account are transaction proceeds and they shall compute VAT at 5% on the sum total.
4. So I advise you, if you have a company registered and you have not started doing any business with it, do not open a bank account in that company’s name and if you have opened an account, do not transact with it. Transact personal businesses with your personal bank accounts. That way, you only have PAYE to worry about with your state internal revenue service.
5. If you have registered a limited liability company and you have not started business, ensure you file Zero Returns with the FIRS.
6. If you want a Business name for whatever reason, instead of registering a company, why not start with a Business Name? You can have your corporate bank account but you will not have to file returns to the FIRS. You will only remit VAT, and WHT on Invoices from limited companies, any other tax (basically PAYE and WHT on Invoices from non-limited enterprises) will just be with your state IRS.
7. Finally, do not transact personal business with your corporate bank accounts.

An uncle wants to send you #2m to buy a car. Do not receive it through your corporate account, receive it into your personal account.

You want to start that small business? Register a business name and not a limited liability company.

Save yourself from avoidable tax issues in the future!

… Let’s Educate ourselves on Tax Matters!