#5 Points All Entrepreneurs Should Remember While Filing Taxes
In case a business has incurred losses, it's more important and beneficial to timely file tax returns.
An important task for every entrepreneur is to take charge of his/her finances. And when it comes to finances, handling taxes becomes a big issue. From running to the chartered accountant’s office to going through old records, entrepreneurs have to do it all. But, to make it easier, here’s a quick checklist that every business owner should go through while filing taxes.
Maintaining Books Of Accounts
It’s very important for an entrepreneur to maintain a detailed company book and keep an accurate record of the company’s financial history. These days, most banks and financial institutions refer to the Income Tax Returns record before they sanction any kind of a loan or credit. You should seek professional help early to ensure compliance.
How To Address Business Losses?
When an entrepreneur starts his/her journey, he/she faces many challenges. And usually, in the first year of their entrepreneurial venture every business generates losses. That’s totally normal. In case the business has incurred losses, it’s more important and beneficial to timely file tax returns. Business losses are allowed to be carried forward for eight assessment years and can be set off against the business income.
Personal VS Official?
When you are running your own company with a small team, often business and personal expenses get mixed. So, it is advisable that an entrepreneur creates two different bank accounts right from the start. This helps in clear distinction between the expenses that your business can claim and the ones it cannot.
Before you set up your business or formally register your company, you might incur a few expenses that often go unaccounted for. It’s very important to keep a track of these expenditures, which are called as preliminary expenses. Such expenses may be claimed as a deduction in the year business is commenced. An entrepreneur should maintain records of such expenses and should take advices from CA for claiming the same while filing its ITR.
Bills Are Important
Every individual applying for assessment should keep its accounting records for a period of six years from the end of that year. An entrepreneur should ensure that all proofs and receipts of transactions are preserved carefully. Details of assets purchased, expenditure incurred, rent agreements and all other documents must be safely kept as well. All these help at a later stage when the Assessing Officer (AO) asks for it.