Top 10 secrets for small business to pay the right Tax:
Tax tips that you can apply now! (Part 1)
13 Aug 2021 | 📋 Tax
Professional accountants believe in paying taxes: not a cent more, not a cent less. Getting taxes filed correctly is a challenge for all businesses. But how do business owners know if they are paying the right amount of taxes? In this two-part series, we share insights to the professional accountant’s top 10 secrets to paying the right amount of tax.
Are you a business owner who:
- Feel that you may be overpaying your taxes?
- Worried that you may NOT be paying enough taxes (or any at all) and then end up having to pay them anyway but with penalties?
If so, this article is written for you. Grab a cup of tea and enjoy!
Get your books right
This is Chapter 1 of our topic today kids!
When you read, you begin with A,B,C; when you handle tax, you begin with getting your books right. Bookkeeping is the very first step towards accountability of your business’ monies.
If you hold the opinion that: “Business’ monies are money that belongs to me, and mine only”…You probably need to dig deeper to note two critical concepts – that the law recognises a limited liability company (i.e. a Sdn Bhd) as having a ‘life’ of its own…
To be aware of our shadow shareholder too: The taxman, whose ultimate objective is to remind everyone to not mix business with pleasure. Healthy bookkeeping helps you in this area by keeping personal transactions separate from business matters.
With bookkeeping as a foundation of every business out of the way, next comes accounting. Accounting is defined as the process of summarizing, analyzing, categorizing and reporting business transactions to stakeholders, regulators and the tax office.
Contrary to popular belief, bookkeeping and accounting are vastly different areas of work for the professional accountant.
In Malaysia, financial reporting standards such as MPERS (Malaysian Private Entities Reporting Standard) and MFRS (Malaysian Financial Reporting Standards) establish the accounting practices used for the preparation of financial statements.
Documents such as the MPERS and MFRS range from 280 to 2,000 pages, that are constantly evolving, and takes the accountant their entire careers to master (and keep up with changes).
Let’s just say that this sort of stuff is best left to the professionals. But do check out MASB (Malaysian Accounting Standards Board) resources if you’d like to dive deeper into technical stuff.
Be registered with the taxman and file your tax returns
Have your business registered with the taxman, period. There are no two ways to it.
Without a tax registration, a business is like an illegal immigrant. It can only lurk in the shadows and miss out big time on what the business ecosystem offers.
Reminder: Get your books right, and; file your tax return.
Contrary to what you may sometimes be told, you should file a tax return, even if you are not taxable. As a business, the law is very clear on the requirement to file taxes.
Just remember, your view as a business owner of “No profits to be taxed hence no tax return to be filed” is entirely different to the taxman’s view of “tax return not filed hence I shall penalize”.
Not to forget that even when your business is experiencing a loss position for the year, these losses could be retained and used to offset future profits and therefore may reduce the tax payable too.
Consider signing up for our newsletter so that you don’t miss out on the second part of this series! It’s free, and it might help you when business problems relating to accounting or bookkeeping arise!
Ps. Have you ever wondered if you had access to a team of professional accountants, how much of a value it would be for your business? No more headaches, tears shed or tantrums thrown as your accounting will always be in order.
In the spirit of helping the business community we would like to invite you to book a no obligation, risk free 30 mins virtual meeting with our lead accountants on how modern professionals + technology could help solve your business’ accounting problems. Click here to book a time slot now!
Co-Founder & Tax Lead at GA Alliance
Patrick is a professionally-qualified accountant and tax practitioner. He takes pride in helping clients thrive in their businesses with a peace of mind and ensuring they are financially compliant with experience gained locally and abroad.