Tax and business

There are a lot of expenses that businesses have to pay out, there is payroll expense, accounts payable expense, and so many more. Tax is one expense that is of particular importance to business, and business must closely monitor the receipts and payments of tax. This is because of the statutory duty that is implied on the business and the business owner.

There are two types of taxes that a business pays out, direct and indirect tax. The direct tax that the business pay is the tax charged on the income of the business and its shareholders. This tax is charged on the amount that is left after all the operating expenses of the business have been paid. As the income of the business in calculated at the end of the year so the business’s income tax calculated at the end of year. As the tax payed is recorded in the business accounts, there need to be submission of proof as well with the government that the business has paid the taxes that were liable on the income. This is done through the income tax returns. Which is a form that is used to submit the information of taxes to the government.

The other type of tax, the indirect tax that is paid by the business is sales tax. Sales tax is charged on the sales of goods and services, as portion of the price. We have all seen the term “GST” which is the tax that is charged to consumers, as the tax rightful collector is the government. Businesses merely collect the taxes on behalf of government and then file those taxes with the government, because the business is making sales, the tax is collected by the business through the sales tax registration. After the sales tax registration is done the government issues a sales tax registration number to the business. Without the SRTN (Sales Tax Registration Number) the business would not be able to carry out most of its transactions, as in Pakistan it is required by government to have the SRTN (Sales Tax Registration Number).

To get help with your taxes and registration of taxes to prevent any sort of legal action from the government over taxes contact Sayub & co. now.