Businesses are required to file returns and pay taxes. However, some owners are often unaware that they have to register to collect and pay their dues, including corporation tax. This is especially true for those who are just starting in the industry. Don’t make the same mistake of failing to register as this can result in costly penalties and fees. It’s important to know more about corporation tax and understand the local requirements to avoid financial setbacks. Use this article as your guide to learning more about it.
What Is Corporation Tax?
Corporation tax is one of the most important taxes you are required to pay to the National Treasury. It is a direct tax paid on your earnings. Your profits are the amount of money your business makes after overheads, salaries, and costs. This tax grows every time income is generated. In other words, it is similar to the personal income tax your employees have to pay.
What Is the Purpose of Corporation Tax?
Just like any other tax, corporation tax is used by the government to run the country. It is also used to affect the economy by taxing various activities with greater or lesser economic standards. For example, corporation tax rates are adapted for startups and small businesses in the form of deductions and other incentives to encourage them to exist and grow.
In addition, taxpayers like you have to submit statements and other documents when paying corporation tax. This collected tax information is beneficial to the Administration and justifies those companies taxed at 19 per cent.
What Are the Mechanics of Corporation Tax?
It’s important to calculate a tax base that measures the need to pay it. As for corporation tax, it will be obtaining income by companies and other entities subject to it. You can always seek help from experienced small business accountants for further information and assistance.
How Is Corporation Tax Generated?
Corporation tax is generated according to specific rules of accounting. However, the rules indicate certain adjustments have to be made, including accounting expenses that can be tax-deductible at a later period, income that can be declared as collections, and accounting income or expenses.
How Do I Determine My Corporation Taxable Income?
Corporate taxable income is the portion of profits your business makes. The amount of corporation tax you have to pay is calculated based on accounting methods. In other words, you have to keep accurate accounting records. You can determine your company’s net income by examining your financial statements.
The rules for the corporation tax calculation apply to individual entrepreneurs who estimate the income through direct estimation. They are taxed under the personal income tax category.
Startups or small businesses like yours have to pay corporation tax. The process involved can be complicated, but you can have an easier time navigating through it using this guide. You can also reach out to seasoned accountants for startups to stay on top of your corporation tax registration. This way, you can have peace of mind knowing you have registered to pay the correct taxes.