Keep Your Accounts In Good Order
Fix Your Accounting Period
File And Pay Your Taxes On Time
Hire Professionals Or Do It Yourself
Keep Your Accounts In Good Order
- All businesses should keep proper records and accounts for at least 5 years from 1 Jan 2007. Records you should keep include:
- receipts for purchases
- invoices
- payment vouchers
- bank statements
- bills
- copy of receipts for payment received
- Keeping your accounts in good order will also help you to apply for loans and attract private investors.
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Fix Your Accounting Period
Each year, you pay taxes for the previous year’s income earned during the accounting period.
Sole-Proprietors, Partnerships & Companies
- To keep things simple, most sole-proprietors and partnerships choose the calendar year as their accounting year.
- Businesses (sole-proprietors, partnerships and companies) sometimes opt to end their accounting period after 31 December. By doing so, they have a little more time to settle their taxes.
- To illustrate, let's consider two businesses with different accounting periods:
- XYZ's accounting period is 1 January 2004 to 31 December 2004. The Year of Assessment (YA) for this accounting period is 2005.
- ABC's accounting period is 1 April 2004 to 31 March 2005. The Year of Assessment (YA) for this accounting period is 2006.
Companies Only
- Many companies choose to end their year slightly after 31 December to give themselves more time to prepare their tax returns. You should take note of how the first Year of Assessment is determined.
- For companies, the tax system draws a distinction between trade and non-trade income. Non-trade income is passive income from dividends, rentals and interests.
- Trade income is assessed according to the accounting period.
- Non-trade income is assessed according to the calendar year.
- From Year of Assessment 2005, non-trade income can now be taxed according to the accounting period. This simplifies the process for most companies.
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File And Pay Your Taxes On Time
- Failure to file your income taxes on time is an offence. Delaying payment will result in penalty fees.
- To save yourself time and hassle, you should develop the habit of filing and paying your taxes on time. Being on time also reflects well on your business.
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Hire Professionals Or Do It Yourself
- For a fee, you can retain professional bookkeepers or accountants to manage your accounts.
- Professionals can advise you on the latest changes in tax laws and alert you on tax deductions or incentives that you may not be aware of.
- It also frees up your time and allows you to focus on the business.
- Alternatively, you can manage this yourself by buying an off-the-shelf accounts software package to help you or by manually keeping track.
- If you do it yourself, remember to regularly update your accounts, so that you do not face last minute problems in filing your taxes.
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