Introduction
Imagine you work in a boutique, and your role is to collect the cloth hanger whenever a customer makes a purchase. At the end of the year, you are meant to return all the hangers you’ve collected for the year, and your return is used to measure how many units of clothing were sold in a year.
That’s how it is with filing your company tax returns. Filing your tax returns is a legal obligation that every taxpayer must fulfil at the end of a stipulated period of time.
If your business is in Nigeria, the regulating body is the Federal Inland Revenue Service (FIRS), while state agencies like Lagos Inland Revenue Service (LIRS) also demand an annual tax returns filing from taxpayers who conduct business in their territory.
A tax return is a report prepared by a taxpayer containing information on his business affairs for a given period for the purpose of complying with the tax laws.
Filing of annual tax returns mostly kicks off at the start of a new year and runs until the month of March of the year. Escape the last-minute rush! Contact Taxpal today to swiftly complete your Annual Tax Returns filing.
Two major types of taxes can be filed with FIRS
- Companies Income Tax Returns
- Personal Income Tax Returns
For both categories, documents and information are needed for a successful filing process. And it’s always a long daunting process but that shouldn’t be your experience, because you can always count on Taxpal to offer you ease, convenience and speed with filing your annual tax returns.
Key Steps in Filing Tax Returns
- Update Your Financial Records:
- Before diving into the filing process, ensure your financial records are up to date. This includes your balance sheet, profit and loss statement, and other relevant financial documents.
- Verify Shareholding Details:
- Confirm that your company’s shareholding details are accurate. Any changes in ownership or structure should be reflected in your annual returns.
- Prepare Director’s Report:
- Draft a comprehensive report highlighting the company’s activities during the financial year. This should include achievements, challenges faced, and future plans.
- Financial Statements Audit:
- Engage a certified auditor to review and audit your financial statements. An audited report adds credibility to your annual returns.
Benefits of Timely Filing Your Tax Returns:
- Legal Compliance:
- Filing your annual returns on time ensures your business remains compliant with Nigerian laws, avoiding penalties and legal complications.
- Access to Business Opportunities:
- Many government and private entities require evidence of annual returns before engaging in business transactions. Timely filing opens doors to various opportunities.
- Maintaining Good Standing:
- Your company’s reputation and standing in the business community are positively impacted when you consistently file your annual returns.
- Securing Public and Private Contracts:
It’s important to highlight that a significant portion of contract bids, whether in the public or private sector, generally necessitate the submission of an annually updated report as a crucial prerequisite. To meet this requirement, an entity must ensure that its records are consistently kept current and in line with the stipulated timelines.
Penalties for Late Filing
Missing the deadline for tax filing can cost a lot. If you file late, you’ll have to pay extra money. For every year you don’t pay, there’s a 10% interest added to your unpaid taxes. This means the amount you owe can grow really fast. It’s important to file on time to avoid these big costs.
Consequences of Non-Compliance
Not doing your taxes is a big problem. It’s not just about paying more money. It’s actually against the law. If a company keeps ignoring this rule, it can be removed from the official business list. This is really serious because it means the company can’t do business anymore. Also, the people in charge of the company, like directors, could be held responsible. They might have to pay for the company’s mistakes with their own money or even face legal trouble. That’s why it’s super important to follow the tax rules.
How Taxpal Can Help
Ready to streamline your annual tax returns filing process and ensure FIRS or LIRS compliance effortlessly? Contact Taxpal today, and our dedicated team will assist you every step of the way.
Whether you have questions, need guidance, or want expert support in filing your annual returns in Nigeria, we’ve got you covered.
Learn more about business compliance and taxes here.
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