Filing taxes is an integral part of corporate compliance. Sometimes the data collected can be so massive that if the process is not started early, an organization will not meet the deadline. To avoid facing challenges, it is best to work with a professional to receive guidance on the required records and how to take note of the various expenses against the revenue. Prelude provides tax compliance consultation services to ensure companies do not face difficulty when filing taxes.
Poor record keeping
Auditors look at more than numbers. They need supporting evidence of every transaction listed. Many companies do not take some receipts seriously, such as fuel and entertainment expenses which were incurred as part of business transactions. Stating an amount and saying what the money was for without receipts, will automatically be considered as a false expenditure. Accounting records and bank statements should tell the same story.
It is also vital to note that having filed taxes is not the end of the process. The Inland Revenue Authority of Singapore (IRAS) may choose to carry out an audit on taxes that were filed as far back as five years ago. It is essential that these records remain available should a review be requested. Failure to have proper records could easily result in a miscalculation of the corporate tax to pay. The problem with miscalculation is that it incurs a costly penalty, especially if under-valuation is present.
Wrongful tax deduction
Companies need to understand the difference between tax evasion and tax avoidance. Tax evasion is a crime that is punishable by law. Tax avoidance, on the other hand, involves making acceptable deductions that will help corporations manage their tax payments. Unfortunately, some corporations do not understand which expenses are acceptable and which ones are not. For example, some costs are allowed only if they were incurred as part of a business transaction.
Starting the process close to the deadline
Having well-kept accounting records simplifies the tax filing process. However, preparing taxes is a process that should be done meticulously with no errors. The numbers should be crosschecked against the receipts and comparisons made with the bank statements for the period under review. To ensure all the information is correct, the process needs to be started early.
Not using a professional
Some business owners assume that filing taxes is all about deducting expenses from the income and determine that required tax payments. However, it is vital to know the costs that fall under acceptable deductions and those that do not.
IRAS often calls for an audit if questions are raised about the corporation’s tax filings, especially if there are suspicions in the deductions requested. A professional tax consultant deals with IRAS all the time and understands what needs to be done to be in the good books of the tax body. Audits take a long time and are quite involving. To avoid the pain that comes with this process, it is best to do things right from the get-go.
Preparing the papers for tax filing can be overwhelming. It is a process that needs the support of the personnel, including those that handle cash or incur deductible expenses. Keeping records is a critical part of tax filing, and every member of staff needs to appreciate its importance.