4 Tips For Organizing Taxes

June 4, 2021

4 Tips For Organizing Taxes

What are the tips for organizing taxes?

  1. Go digital
  2. Keep every document
  3. Track payment dates
  4. Set up a separate account for taxes

Many entrepreneurs in the Philippines often find it hard to organize their taxes. With all the documents and forms, you might find the process quite tedious as well. However, knowing the tips for organizing taxes is essential as it can help you pay your taxes on time and avoid hefty deadline charges. It can also help you back up each expense and justify your deductions if necessary. All these are among the reasons why successful business entrepreneurs always organize their taxes.

Taking steps to avoid disorganization with tax documents should assist you in bookkeeping. In this article, you’ll find some helpful tips for organizing taxes. Continue reading to learn more.

Go Digital

Go Digital

An important part of tax filing is regularly updating your BIR registered account books. These books will contain essential financial statements and transactions. These will also include entries such as assets, sales, expenses, and many more. You can view these books to check if you are filing the right tax return. In addition, the BIR may check your books to see if you are paying your taxes dutifully.

While you can always hold onto physical tax documents, this carries a risk for potential damage and loss. Thanks to today’s highly technological era, you can easily organize and protect your documents by keeping a digital copy. This also decreases the chances of losing or mixing up the documents in your filing cabinet.

If you choose to store your accounts digitally, register using the BIR Form 1900. It will grant you authority to use a computerized book of accounts. Then, you can simply find a suitable system to organize your taxes. You can scan your documents, save the PDFs, and keep the receipts. The BIR can audit your computer system to collect your books.

Keep in mind that it would always be better to have a backup for your digital tax documents as well. You can use an external drive or a cloud storage platform to stay organized and paperless.

Keep Every Document

Being consistent and keeping a close eye on all your tax documents is important as these act as proof of transaction. By doing so, you can be sure you are declaring the correct amount and not overpaying or underpaying tax amounts.

In the end, keeping documents can also ensure you minimize penalties. Depending on the severity of your offense, you may end up paying a fine of not less than P10,000 and worse, imprisonment of not less than one year.

Track Payment Dates

Track Payment Dates

One of the key steps to reduce stress when organizing taxes is to look at it just like any other important business task. Tracking payment dates is a procedure that needs attention all year round. Ensuring you know the payment dates mandated by the government can avoid fines and make organizing smoother.

Below are some of the business taxes in the Philippines and their payment dates:

  • Income Tax
    • April 15 (if you have annual payments)
      May 15, August 15, and November 15 (if you have quarterly payments)
  • Withholding Tax
    • 10th day of every month (deducted from the salaries of employees)
  • VAT (Value-Added Tax)
    • 20th day of every month (if you have monthly payments)
    • 25th day of the month right after the quarter (if you have quarterly payments)
  • Percentage Tax
    • 20th day of every month (if you have monthly payments)
    • 25th day of April, July, and October (if you have quarterly payments)

Set Up A Separate Bank Account For Taxes

Business taxes and personal records should never mix. This is why you should set up a separate bank account for organizing your business taxes. By ensuring this, you are not only minimizing the risk of paying late, but you can also easily request the bank for a comprehensive bank statement. Use the bank account to itemize your transactions, deposit money, and pay for your taxes.

Key Takeaway

Being disorganized with your business taxes may lead to missing payment deadlines and receiving heavy fines. Avoid them by following some of the helpful tips for organizing taxes listed above.

As one of the successful business entrepreneurs in the Philippines, Benito Keh can assure you that organizing taxes is a crucial part of managing a business. If you need any help in managing yours, Benito Keh can help you get started. For more information, click here.