Starting and running a business is never a walk in the park. Here in the Philippines, even a renewal of business permit will already entail long and tedious processes, as well as lots and lots of forms—making it discouraging for entrepreneurs to follow the law or even to start a business in the first place.
Be a Smart Tax Payer
It is a well-known fact that Philippine taxation is a burden especially for small and medium-sized businesses, and some of whom may even not have enough resources to hire accounting services.
On top of this, the country still has an outdated tax system in dire need of reform. Fraudulent individuals have also been known to take advantage of clueless and desperate business owners. These business owners are forced to pay penalties and back taxes even if it wasn’t their fault.
The best way to avoid this from happening to you is to become a smart taxpayer. Learn the following best practices so that you can handle your business’ tax responsibilities correctly, accurately, and on time.
1. Read the Fine Print
The first thing you have to do is to know and understand the law. While you’re not expected to become a taxation expert, you should at least know which types of taxes apply to your business and when they are required to be paid.
Always read the procedures carefully and thoroughly and stay informed of any changes, if any. Nowadays, there are plenty of resources online that will help you with the computations. If not, you can also hire an accountant to help you out.
2. Always Be One Step Ahead
It’s always best to be prepared and to prepare early. Make your own tax calendar based on the BIR’s deadlines. Subscribing to relevant newsletters will, likewise, keep you updated with news and other updates.
Bear in mind that although the BIR has already executed the use of eBIRforms, they have been implemented clumsily with only tax collection in mind. Also, while you can submit electronic records, you can only do so after filing an application and paying fees.
The bookkeeping standard in the Philippines is still manual. This means you will still have to contend with physical books of account. Always keep your records organized even if the deadline is several months ahead.
Filing at the last minute makes you desperate and susceptible to ill-advised quick-fixes like “fixers.” If you’re not sure of what to do, always research or ask for help.
3. Always Be Vigilant
If you do decide to get some help, it’s always best to do a background check. When hiring an accounting firm or an independent contractor or freelancer, make sure they are reputable Certified Public Accountants.
Be sure to take note of the serial numbers of your Official Receipt and compare it with the scanned copy because fraudulent individuals can hire fixers to do the job. Don’t pay your hired independent contractor or freelancer until you are certain that the receipt he/she has given you is authentic.
Always be mindful of what you pay because corruption is a reality in the country. For instance, we have heard stories of microbusinesses getting charged for 1 million for a business permit renewal to offset discounts given to corporations.
The RDO refused to believe what’s indicated in their documents and didn’t want to issue a permit unless they pay the exorbitant amount. These are personal accounts and can be isolated events, but it still pays to be aware of the right policies and procedures.
Given all these possible inopportuneness, working with an accounting firm is still the best way to go. Don’t let these issues hinder you from establishing your own business. Just keep in mind all the mentioned tips and you’ll be on your way to becoming a successful business person.