Are you running a business as a single owner?
Or are you running a partnership business?
And your number of staffs are very few and most of them are technical person in the core business.
But there is no professional staff to maintain accounting records or bookkeeping and tax compliance. To hire a professional staff is costly for the small business. And that’s why you managing the accounting and tax by yourself.
Guess, you are facing problem in complex issues during recording accounting entries or maintain tax/VAT related issues.
You are not alone.
Most of the small business in the world, are managed by the owner. At the very beginning, business owner only keeps record for expenses and income. But after a certain period when he thinks that the business is doing well then he hire accountant or outsource accounting services.
A graduate from other background than accounts have no knowledge of financial transactions. That’s why they also face the same problem.
If a commerce background graduate is hire without professional articleship then they have lack of practical knowledge about accounts and tax. There may be chances of mistakes or even non-compliance may arise which will fall in penalty.
So what is the solution?
Hire professional accountant.
Thinking it is more costly?
Yes, but not as a fulltime employee. Outsource the services.
Is it costly?
Every businessman think about cost. Their main purpose is to maximize profit. They want to get quality services by paying less.
Your business is small and your volume of transactions also insignificant. Comparing to the works involve for the accounts and tax related works, you may need to recruit two staffs. One for accounts and another for tax.
This is costly.
But if you outsource both services from accounting firm or individual professional accountant, then the cost will be reduced significantly. And the accounting and tax services for your business will be accurate and high standard.
Considering the volume of your organization’s financial transactions, the professional accountant will estimate the hours/days require in a week or month to complete the recording of transactions. If they require suppose a day in a week then monthly four days for your organization.
The accounting firm will charge you for four days only.
This will reduce your cost but you will get high quality services.
The accounting firm or professional accountant has so many client like your business where there expert staffs are providing same services in that way.
So they can provide you the quality services at a very minimum cost.
Why outsourcing is important?
Because you need quality service.
We everybody expect quality.
As a businessman, your goal is long term. You always think about your entity as a going concern for the foreseeable future.
Your dream is big. Your organization will bigger and bigger year after year.
So, you have to comply local laws and regulations. This good track will help you to doing business as a good company which will create goodwill in the business sector.
If it is not, then your business will have a bad record and other businessmen or investors will not be interested to do business with your organization.
Accounting records is important for preparation of true and fair presentation of your organization’s financial statement. Based on the information presented in the financial statement, the investors or regulatory authority will invest in your organization or impose tax.
During payment to suppliers, employees, land owner you have to deduct tax at source as prescribed rates and deposited in a prescribed manner and time in accordance with Income Tax Ordinance 1984 and Value Added Tax and Supplementary Duty Act 2012.
Failure to do so will fall into non-compliance which consequences a heavy penalty. As a businessman, you may know that if tax was not deducted where applicable then the amount paid during the year will be disallowed and pay tax at 35% on that amount.
Your expenses are genuine but as you are non-compliant with tax law you have to pay tax on that amount at high rate. This will reduce your profit in one side and in other side the tax authority will continue monitor you as a non-compliant which will increase your time spend and legal expenses.
At the year end, you require to complete statutory audit for filing to the RJSC and may also require to submit it to your corresponding bank against your hypothetical loan, if any.
After completion of year end audit, the tax return is prepared for filing to the tax circle. The preparation of tax return is very complex because tax depends on the basis of preparation considering the taxable items.
Besides tax return filing, you may require to submit various tax report in a prescribed format in different dates during the year like monthly tax deducted report, quarterly advance tax payment, half-yearly withholding tax return, yearly employee tax return submission and deducted report etc.
So, here, you also require tax expert. As a professional accountant, they have the expertise to calculate tax and then return preparation for assessment.
If your financial data recording is accurate and complete then your financial statement will give a true and fair view of your organization which will help stakeholder take financial decision about your organization.
So, if you outsource the tax and accounting services then you will be tension free about all the consequences.
As a businessman, your main focus is to increase your business revenue and smooth operation of business. If you have to busy with regulatory authority for non-compliance, then it will hinder your main focus and will also obstruct your organization’s future growth.