Plenty of operational activities in a startup can get chaotic quickly if not properly handled properly. In the beginning, tax consideration is resource-consuming, particularly when it includes GST registration, ITR, timely filing, etc. It’s also one of the things you can’t forget as a creator. Although profitability is the centre of focus as the business begins, every penny saves as a penny. And one of the best ways to do this is to create your company tax strategy, much like how you would holistically manage your business operations.
This will allow you to create a hedge against potential losses while making sure that you take advantage of the tax benefits.
Check out these tax-saving tips that can help your startup to prepare for filing income tax returns effectively.
Understand your business structure
It all starts with getting to understand your business framework and how it is related to tax constraints as public tax policy will always change. It is also best to stay up with the company framework to see what it provides best. This lets you cherish the privileges you possess as a taxpayer and holds any future advantages such as a 100% exemption from income tax in the first three years, for example.
The only option is to pay an alternative minimum tax of 18.5%. You may also claim an exemption as long as your business is registered under the Startup India program.
Improve your tax knowledge
Tax planning requires that you have the right knowledge. It is important to consider tax laws and how they affect business operations. The first step towards this understanding is to learn about tax standards. You can do this by learning about companies, and link to a blog by tax experts at your easy. Learn about applicable tax legislation and regulations before moving forward to compliance. Understand that regulators oversee income tax and carry out strict price controls. Try to know the tax requirements of your company to get started.
Start to document your deductions
Startups are eligible to remove expenses for their “normal and necessary” operating costs.
Expenditure includes;
- Business Travels
- Stationary expenses like purchasing paper, pen, pads, etc.
- Rent and home office equipment (only parts pro-rated).
- Training materials and other company programs expenditures.
The only thing you can do is secure receipts or documents if you make any business expenses. This will help you when you file your income tax returns and stays applicable for the possible deductions if available.
Hire or consult tax professionals
Recruiting corporate services providers is a great way to deal with corporate tax. You won’t need to worry about things such as GST returns, account records, etc. Working with tax professionals ensures that the business meets all necessary criteria and makes sure the smooth nitty-gritty operation. Your expertise will also help you in making crucial business decisions.
Many times all that your startup need is proper tax advice and full tax-related compliance done for your business. It’s also an amazing way to plan unforeseen contingencies for your company.
ITR Filing made Easy
With LegalSalah
Conclusion
Though most startups are careful about taxation still some are uncertain. That is because taxes have many sub-branches, which are a little hard for entrepreneurs and takes a lot of time. Moreover, Restarting the wheel is not a feasible option for individual businesses. Onboarding professionals would lessen the departmental hierarchy and thus increase operational costs if the company’s secretaries and chartered accountants were in-house.
Hiring in an external team of tax consultants makes sure fulfilling business compliance and helps to break down your corporate obligations. You can focus on your core business transactions and keep regulatory issues in control.
Leave a Reply