All of us face two inevitable situations in life – death and taxes. But some people fail to prepare and panic at the last minute. For taxpayers, some only act at the last minute when it is almost a deadline.
We have two months before the end of the year, and we know that at the start of January of every year, deadlines for taxes (not only national but local taxes as well) are looming near. For tax payments to the Bureau of Internal Revenue (BIR), this applies to those whose calendar year ends Dec. 31, where most of the taxpayers maintain their period of cut-off for tax purposes and for other regulatory agencies’ compulsory documentary requirements. Other businesses maintain their reporting periods on a fiscal year basis.
A few suggestions are to make every taxpayer a systematized process rather than a horrifying, panicky process. First, taxpayers should not wait until the start of the tax season to start preparing for their compliance. Every month, try to make sure all receipts and necessary documents and records are in order and properly filed and recorded. Second, software is a huge support in maintaining the proper records. Just make sure to purchase the right one; many are available software on the market that does not require businesses to shell out a sizable amount of money. \
There are taxpayers who are required to pay through the Bureau of Internal Revenue Electronic Filing and Payment System (EFPS) but even if you are not required you can apply for an EFPS payment mode which is a time-saver since you will avoid waiting for hours in a bank just to pay. There is also the risk of not meeting the deadline since banks have limited number of returns for the day to be accepted.
Third, use online banking to monitor your expenses and bank balances aside from making payments. In preparing bank reconciliations, you can have more frequent periods of reconciling when you use online banking. Gone are the days when you have to request hard copies of bank statements to reconcile your bank accounts. Simply download from your banking applications your bank statements anytime you need figures to reconcile with your book records. If you have a check disbursement facility with the bank, they can even print checks or make payments directly to your suppliers.
Fourth, target a deadline to complete your financial reports a month or earlier before the
deadline so you will not be prone to errors and incomplete information.
For auditors like us, we would appreciate it if our clients also submitted their reports on time. If you need help strategizing how to complete your reports on time, talk to your auditors or accountants. They will be very glad to help.
For us in the audit and accountancy profession, we usually miss the beauty of cherry blossoms (I have not seen cherry blossoms whether in Japan or South Korea) because they blossom during the months of April and May, and tulips in Amsterdam because their last blooms end in May. These are the months that are the peak of the tax season, which can extend up to May since the deadlines for the submission of reports to the Securities and Exchange Commission can still extend up to May.
But I had gotten used to it since I was exposed to this kind of work when I used to spend my time when I was just in my grade school days at the office of my father, who started our audit firm. I remember helping with checking whether the expenses were according to the crop year method of sugar accounting (my high school years) and was exposed to the business and stress that tax season brings. For me, at that time, that was a normal thing during this season, but now I realize it can take a toll on our health if we are not careful.
Working smart not hard should be our goal with the proper strategies we should have in place to handle the tax season effectively.
Let us not be “firefighters” facing challenges or solving problems in a crazy scramble when the problems are there or when the deadline is near, but let us be “fire preventers” foreseeing the problem and strategizing on how to prevent it or cope with it - even extinguished it completely before it happens.
Our Firm Inventor, Miranda & Associates organized a webinar on December 19, 2024 with the topic ‘YEAR END TAX REMINDERS’ to help taxpayers how to prepare for this tax season.
For details, please check our FB Page: https://www.facebook.com/audit.inventormiranda?mibextid=ZbWKwL
Wilma Miranda is a Managing Partner of Inventor, Miranda & Associates, CPAs, Chair of the Ethics Committee of FINEX and member of the Board of Directors of KPS Outsourcing, Inc. The views expressed herein do not necessarily reflect the opinion of these institutions.