#BounceExclusive: 5 Things A Small Business Owner Must Know About Tax (2)
In the first part of this series, we told you why it is in the best interest of a small business owner to educate him/herself about tax.
Here is a continuation of what a small business owner must know about tax payment in Nigeria.
3. You Need To Know The Kind of Tax Your Company Should Pay: There are different kinds of tax. There is Income Tax which a business must pay on the profit from the business.
There is also Sales Tax, also known as value added tax, VAT which you must remit on unit sales you make or services that you render.
There is the Employment Tax, which you as a business owner employing others must pay. And then there is even Self-employment Tax which is paid by mostly sole proprietors.
4. Ensure To Obtain A Tax Clearance Certificate: As the name ‘Certificate’ implies, it is a document that tax authorities, in this case, the Federal Inland Revenue Service, issues a tax payer as evidence of payment.
It is taken very seriously and you will find it handy in your official dealings with government and other businesses.
For instance, you may not be able to seal a deal with a multinational company operating in Nigeria without your tax clearance certificate.
There are different approaches for organizations to get tax clearance certificates. The process could be complicated for you if you had been doing business without paying and only just started looking for the certificate for a certain reason.
If you fall into that category, which most SMEs in Nigeria do, it is advisable that you you find a tax consultant to accompany through the entire process.
5. Be Punctual In Your VAT Remittance: As stated earlier, Value Added Tax, VAT is the indirect tax that your company collects on behalf of the government.
It should be easy for you to pay since it is the amount you charge customers on the items they buy. But it is not always that simple, business owners are soon tempted to convert it to personal use.
But you should resist the temptation. The Government expects these deductions to be remitted monthly and failure to do so can attract stiff penalties.
You must make sure your remittances are up to date. Non-evidence of VAT remittances can often lead to a non-issuance of Tax Clearance Certificate.