Businesses are mostly engrossed in their operations, sales and profits/losses that at times they forget to apply for their tax return. Also, most of the business owners don’t even know much about the tax return and the process carried out for it.
As we all know that taxes are important, and not paying taxes can be illegal. But some of the business owners don’t have knowledge about how much taxes they have to pay and how much they owe to the government. Everything has become taxable nowadays. So being tax efficient will give some sort of credibility to your business which in return will help you to keep a track of all the exhausted resources and any scope of expansion.
Also, many of the business owner don’t even know what sales tax filing is. So, this article will help them understand it better.
Tax Return is the completion of documentation which calculates income earned by an individual with the amount of tax payable to the government, government organizations and to any other potential taxpayers.
Though there are three parts of a tax return: (1) Income (2) Deductions and (3) Tax Credits.
- Income mostly consists of the sources of your revenue. This includes payments, profits, any independent work pay, etc.
- Deductions are a sort of decline in tax debt. Your expenses are deduced and the remaining balance will be your gross salary.
- Tax credits are sums of your balanced liabilities or some of the duties which you owe to the government.
Importance of Tax Return as a Business Owner:
By filing for tax return, a business owner can earn some great benefits for themselves as well as their business. Below mentioned factors will help to understand why tax return is important for business owners.
- Helps the business to get government tenders: If you are having a construction business or you have a contractor hiring business then you can earn some sort of credibility with the government by filing for tax return. The government might even hire your business for some of their projects.
- You can carry forward your losses: Every business keeps a balance sheet in which they calculate their annual accounts. These help them learn how much loss they have suffered and they can carry forward their losses to the next year. But they can only do that if they have filed their tax returns in the given period of time.
- Decrease in value: You can also claim your assets which are in your name or one your business name, for devaluation. But you can only do this if you are a business owner by the Income Tax Department. But your assets can be used only for business purposes. You can claim the assets at the same time as the filing of tax return.
- Help you to apply for loan: If you pay your taxes and apply for tax return, then it will look good on your profile as well as your business. So, you won’t have any problem applying for loan if you have some sort of credibility from the government by paying your taxes.
- Hold back on penalties: Every business is liable to pay taxes. As mentioned before not paying taxes is illegal and you can face legal problems due to that. So, file your tax return to refrain from problems like these in the future.
These are the five main factors which shows why tax returns are important for the business owners.