How Can Small Business File Income Tax Return
Filing tax return is an important annual chore for all businesses. This article provides comprehensive guidance for small business owners on how to file their income tax returns.
If you are a business owner in India, you need to file the income tax returns every year diligently in order to be tax compliant. Tax filing helps build the credibility of the business.
The tax filing activity is done once in a year unless you do it incorrectly. If you have no prior experience, it can seem to be a complicated task, and the entire process needs to be handled carefully. Even a slight mistake can lead to several hassles include penalty and business scrutiny. But, if you have the right know-how, you can easily file the business income tax returns. The following tips will greatly help you in this regard:
A lot of small business owners struggle with their tax filing as they do not have a proper data management system to maintain the necessary information and documents. At the time of the filing, it becomes a tedious task to gather all the required information. So, make sure that you maintain the books of account properly and stay organised all through the year.
Look beyond Excel
A lot of small businesses in India rely heavily on Excel sheets for accounting purposes. It is advisable that you invest in a good and robust accounting platform. It will not only help you stay more organised as your business grows, but it would also help you monitor the business’ performance and accurate business tax filing.
Seek expert help
Most small businesses in India have a centralised structure; the owners are at the helm and they control everything. However, when it comes to filing business income tax return, it is advisable that you hire a reputed and trustworthy income tax filing service provider. Not only will they help you in preparing and filing your taxes correctly, but they will also help you get maximum deductions and identify areas of tax saving for the future.
Include taxes in your financial planning
Financial planning is a crucial part of conducting business, and it generally includes profit estimation, production growth, identifying new markets, reducing cost and revenue prediction. However, not all small businesses realise the importance of taking note of the taxes in financial planning. Consequently, they miss several tax saving opportunities.
Take advantage of investment allowance and start-up expense
If you are involved in the manufacturing business, you can claim a tax deduction in the form of investment allowance. Also, not many business owners know that the Government of India provides special tax benefits to start-up enterprises. The Corporate Income Tax is also relatively low for the start-up business, take note of this while filing your small business tax returns.
You may use various tools, equipment and furniture in your business premise. These items, over the years, lose their value. You can consider the depreciation of these assets as a business expense and claim tax deduction while filing business taxes.
Contributions towards charity
Under Section 80GGB of the Income Tax Law, all the charitable contributions made by to company is considered as tax-deductible. The deduction ranges from 50 to 100% of the charitable donation depending upon the nature of the charity. Most small business owners are unaware of this tax provision and fail to take advantage of it.
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