One More Month to Go…Some Last Minute Reminders Before the April 15 Tax Deadline
Well, technically, that is “the April 16 tax deadline”. Since April 15, 2012 falls on a Sunday, the deadline is moved to the next working day.
Oh well, but does one day really matter? Well, for us CPAs who are very busy this tax season, a lot of things can happen in one day. A lot of financial statements actually get finalized, printed and released in a span of 24 hours. So yes, one day really matters a lot.
But enough of that. I did say last minute reminders right? So here they are:
One, there are new income tax forms – the 1702 (for corporations) and the 1701 (for individuals). So don’t use the old ones or they will get rejected.
Two, check if you need your financial statements to be audited. The BIR requires companies or individually-owned businesses to have their financial statements audited if their revenues exceeded P150,000 for any given quarter during the year. So even if, let’s say, your business is new and you just put it up around August, if your revenues reached P200,000 from October to December, you should have your financial statements audited.
Read more…
I’m Closing Down My Business…Do I Need to Close It with the BIR?
Want the straight answer? Strictly speaking, YES, you need to close your business with the Bureau of Internal Revenue or the BIR.
I can’t remember the number of times I’ve seen this question in another forum where I’m a member of. The ones who posted these questions are those who found it, the hard way, that they need to close their businesses with the BIR. By hard way, I mean, they incurred huge penalties and interests because they failed to file any returns after they consciously made the decision to close their businesses and stopped their operations.
Okay, for starters, let’s say you stopped your operations because you want to close it down, DO NOT, under any circumstances, stop filing your tax returns. No operations, no sales? No problem. File your tax returns but put there NO OPERATIONS or NO INCOME. Of course, you have to be prepared to substantiate your claim that you have no operations. You can issue an affidavit to this effect or show cancelled contracts or other documents evidencing that you stopped your operations. Make sure, though, that you will be prepared for the BIR to ask you if you are really closing down your business because once you said yes, chances are they will be asking you for the pertinent documents related to the closure of your business.
Benefits of Filing Taxes through the Electronic Filing and Payment System
EFPS Home Page
The Electronic Filing and Payment System or eFPS is the BIR – developed system for the online tax filing and payment. This was launched in 2001, however, I still hear my clients saying that they don’t want to avail of this online service because:
- As the system requires linking a bank account for the online payment, they are afraid their bank accounts will get hacked; or,
- They are not entirely comfortable with online processes; or,
- They don’t want to go through all the hassle of enrolling in the eFPS and filling up all the forms required by their banks before they can link their accounts to the eFPS.
First of all, let me point out that for a lot of companies, particularly those that are part of the top 20,000 companies in the Philippines, are required to enroll and to use the eFPS. Several Revenue Regulations have already stated this.
Other than that, there are a lot of benefits from filing through eFPS. My clients enrolled in the eFPS and they can attest to these benefits.
Accounting and Your Accountant: Don’t Make Us an Afterthought
I just finished finalizing the financial statements of a businessman. He’s not actually my client, I’m not really his accountant, he just asked for my help. He needed the financial statements as one of his requirements for a potential loan. The period of the financial statements? 2010 and these were 5 months past the deadline for the April 15 tax filing season. So yes, he had to file late and yes, he paid the penalties.
And why did it take so long? Because I had to go back to a year’s worth of transactions, record everything, double – check everything and calculate the proper taxes. And this is not the first time it happened; I had other clients in the past with exactly the same problem.
Honestly, I really don’t know why a lot of businessmen wait until the last minute (or even after the last minute) to hire an accountant (or a CPA) to prepare their financial statements for them. I mean, hello! These financial statements cannot be prepared with just a flick of the finger. What are we? Your fairy godmother (or godfather)? There are a lot of things that need to be done before one’s financial statements can be prepared. Also, there are a lot of taxes that needed to be filed and paid during the year and these cannot be done one time only.
And then these businessmen wonder why the BIR people are going after them? Uhm, need I answer that question?
Managing Cash Flows
I sometimes wonder why businessmen who own small to medium – sized companies (and yes, even big companies) would sometimes (okay, often) say that they have no money to spare, that they are always short of money and that they cannot pay this or that because they have no money.
And then there are times when I see businesses with good concepts or saleable products suddenly close down and go bankrupt because they lack the cash to continue their business.
Which leads me to wonder – well why are you in business if you have no money? And why did you go bankrupt if your concept is good or if your products have high demand?
The answer? They were not managing their cash flows well.
There is no doubt that these businessmen are good in what they do. They know how to handle their businesses and they know the ins and outs of their trade. But then again, if they won’t learn how to manage their cash flows well, no amount of business wisdom, knowledge or intelligence will make their business succeed. To make a successful business, one has to know how to manage his or her business cash flows well.
Why is it important to know how to manage cash flows well?
My First Post
Okay. I started this blog last May 6, 2011 and it is only now that I got the time to write my first blog post. So what am I going to write here?
For starters, let me tell you something about myself first. I’m a Certified Public Accountant in the Philippines. I’m 36 years old and I’ve been a CPA for the past 14 years. The life of a CPA is the only life I’ve known and it was only 3 years ago when I discovered I can write online about my work, my thoughts, my professional advice, etc. And yet it took me 3 years to finally conceive this blog.
So let’s go back to my original question, what am I going to write here.
uhmmmm, one is about taxes (although I hated that subject back in college but, oh well, that’s part of my job now). Another one is about the accounting profession and the accounting board exam (which I hope I can still remember despite the fact that I took the exams more than a decade ago). And still another is about business. This is not a business blog, mind you, but since accountants are more or less connected (intimately in some cases) with businesses, and we sometimes become (formally or informally) ‘business consultants’, let’s just say I felt that this subject is an apt one for my blog.
And that’s enough about my first post. Here’s hoping I will be able to continue this blog in the future *fingers crossed*. Ciao!
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