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The Role That Tax Compliance Plays in Driving Your Business

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Andy

The Role That Tax Compliance Plays in Driving Your Business

with

Andy

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Taxation has always been a divisive issue in the UK, the US, and many other countries. The issue of tax has been one that polarises opinions between the rich and the poor.

The divide between these two demographics grew further recently, with some of the poorest households paying a greater proportion of their income in tax than the wealthiest 10%. Though much of this has to do with the likes of sales tax, VAT, and council tax, which is not usually calculated as fairly as levies on income.

From a business perspective, big or small, taxation is also one of the most important considerations. Failing to do your tax return in time for a deadline can see you or your business punished with fines. Though you do not need to suffer through taxes alone as there are many tax return preparation services that can guide one through the process. Some even offer discounts, such as these h&r block coupons so that the task does not come at great expense.

Besides this, businesses or individuals who owe much more than they can reasonably afford to pay and have landed with tax debt can also be fined or punished. That is why it becomes imperative to learn more about the different aspects of tax. It can help you to both learn about the rules of tax and avoid you from facing an obstacle related to taxation. Take, for instance, the fresh start program, which was known to be created by the United States Federal Government in the year 2011. Select taxpayers who owe money to the IRS (Internal Revenue Service) can receive tax relief through the Fresh Start Initiative Program. The IRS uses compound interest and financial penalties as a means for punishing taxpayers who owe back taxes, and this program is meant to counteract the practice. The tax debt relief or tax forgiveness can indeed come as a support to the ones already distressed with a huge amount of unpaid taxes. It may help them plan their financial transactions for the next fiscal year in a better way. By now, you must be aware that gathering information on taxation can always prove to be beneficial.

However, remember that tax compliance isn’t just about keeping in line with the law. Compliance is crucial to the maintenance of a long-term business,. While it can also deliver a number of unheralded benefits to entrepreneurs. For example:

  1. Tax Compliance Keeps Your Business Active

As we can see here, history has seen a number of businesses and high-profile celebrities who have fallen prey to tax evasion schemes, and the fall-out from these cases can be significant.

In the case of businesses, failure to comply will leave entrepreneurs facing numerous sanctions, usually in the form of an arbitrary fine and the repayment of all outstanding debts.

For those who cannot meet these demands or arrange a progressive payment plan for the future, a lack of compliance can ultimately end with the winding-up of your venture. This is why it is important to understand your liabilities and take steps to ensuring that these are met over time. For instance, if you have a tax-exempt bond issue and need to carry out Arbitrage Rebate Calculation, you can approach the professionals who can help you with the same.

  1. Being Compliant Ensure That Your Are on the Right Band

There are numerous bands of taxation, based on the nature and scale of your business. Choosing the right one not only contributes to a compliant business, but it also ensures that you are paying a suitable amount in taxation.

If you work independently and earn less than 85,000 per year, for example, you should register as a sole trader. This ensures that you only pay basic national insurance and income tax contributions, while remaining under the threshold required to pay VAT.

Over time, this will minimise what you pay and help you to make significant savings, which can in turn be reinvested into your business venture.

  1. Compliance Creates Opportunity to Recoup Money and Reduce Your Burden

As a general rule, compliant people hire accountants to manage and oversee their finances. While this requires a small, annual investment, however, it offers you access to industry expertise that can help you to recoup money and reduce your burden during each financial year.

Accountants achieve this by presenting legal options that enable you to avoid (and not evade) tax, as well as claiming money back on work-related expenses pertaining to travel, hardware and energy usage (for those who work from home).

This is particularly beneficial for small businesses and sole traders, many of whom can significantly reduce their debt burden and maximise the amount of capital that they generate on an annual basis.

Andy McGowan
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