As a Filipino small business in the Philippines, you have a lot. You have to manage your business, but you also have to worry about taxes. Fortunately, there are 25 ways to reduce your tax burden in the Philippines and make life a little bit easier. Keep reading to find out more!
25 Ways to Reduce Your Tax Burden For Small Business in the Philippines
1. Get to know the tax system
The first step to reducing your tax burden as a small business in the Philippines is understanding how the tax system works in the Philippines. This way, you can take advantage of all the deductions and exemptions you’re entitled
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2. Keep good records
Good record-keeping is essential for any business in the Philippines, but taxes are imperative. Ensure you track all your expenses and income to file your taxes efficiently and maximize your deductions.
Related: 10 Tips To Make Your Business More Profitable With Proper Bookkeeping
3. Hire an accountant
If keeping track of your finances sounds like too much work, you might want to hire an accountant. A professional can help you stay organized and ensure you’re taking advantage of all the deductions you’re entitled to.
4. Know your deadlines
Another essential way to reduce your tax burden is knowing the deadlines for filing and paying your taxes. This way, you can avoid any late fees or penalties.
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5. Invest in tax-efficient investments
Particular investments are more tax-efficient than others. For example, investing in index funds can help minimize capital gains taxes.
6. Take advantage of tax holidays
Did you know that there are certain times of the year when you can get a break on your taxes? These periods are called “tax holidays,” They usually coincide with major holidays like Christmas or Chinese New Year.
7. Claim all your deductions
As a small business owner, you’re entitled to some deductions. Make sure you take advantage of them all to reduce your tax bill.
Related: How to Reduce Your Tax in the Philippine
8. Use tax-efficient strategies when selling your business
If you’re planning on selling your business, there are specific tax-efficient strategies you can use to minimize your capital gains taxes. For example, you can sell your shares in an S corporation rather than sell the business’s assets.
9. Hold on to your receipts
Ensure you hang on to all your receipts, whether for business expenses or personal purchases. This way, you can maximize your deductions come tax time.
10. Keep your business and personal expenses separate
It’s essential to keep your business and personal finances separate. This way, you can avoid any tax problems down the road.
11. Get organized early
The sooner you organize your records, the easier it will come to tax time. So ensure you get a head start and get organized as early as possible.
Related: 15 Common Bookkeeping Mistakes Filipino Business Owners Make – And How to Avoid
12. Use software to help with your record-keeping
Some software programs can help you keep track of your finances and prepare for tax time. These programs can help, especially if you’re not good at maintaining paper records.
13. Hire a tax professional
If you want to be sure you’re doing everything right come tax time, you might hire a tax professional. A tax attorney or accountant can help you maximize your deductions and minimize your tax bill.
14. Stay up to date on changes in the tax code
The tax code is constantly changing, so staying updated on the latest changes is essential. This way, you can ensure you’re taking advantage of all the deductions and exemptions you’re entitled to.
15. Know when to file your taxes
There are two different times when you can file your taxes in the Philippines: on April 15th or June 15th. If your business is doing well, it’s usually best to file on April 15th to get your refund sooner.
16. File electronically
Filing your taxes electronically is the easiest and most efficient way. You can even set up automatic payments to avoid worrying about missing a deadline.
17. Use direct deposit for your refunds
If you’re entitled to a tax refund, choose direct deposit. This way, you’ll get your money faster.
18. Pay your taxes on time
Paying your taxes on time is essential to avoid penalties or interest charges. If you can’t pay the total amount owed, make sure you at least pay the minimum amount due.
19. Make estimated tax payments
If you’re self-employed, you might need to make estimated tax payments throughout the year. This way, you can avoid any penalties come tax time.
20. Request an extension if you need more time
If you can’t meet the deadline for filing your taxes, you can always request an extension. However, this will only give you more time to file – it won’t give you more time to pay any taxes owed.
21. Check your math before you file
It’s important to double-check your math before you file your taxes. This way, you can avoid any mistakes that could delay your refund or result in a penalty.
22. Use the correct forms
Make sure you’re using the correct tax forms for your business. If you’re unsure which forms to use, a tax professional can help you.
23. Keep track of your deadlines
Keeping track of all your tax deadlines is essential to avoid missing important dates. You can use a calendar or set up reminders on your phone to help you stay on top of things.
24. File early if you can
If you can file your taxes early, it’s usually best. You can get your refund sooner and avoid any last-minute rush.
25. Relax and don’t stress
Taxes can be stressful, but trying to stay calm is essential. If you feel overwhelmed, take a break and return to it later. You can also ask a friend or family member for help if you need it.
Conclusions
Small businesses in the Philippines, there are some ways you can reduce your tax burden. By following these tips, you can make tax time much less stressful and ensure you take advantage of all the deductions and exemptions you’re entitled to.
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