With what was dubbed as a dreadful year in 2020 many business operators are now in disarray as it relates to submitting their tax returns. The struggles faced due to the drastic, vast decrease, and cut in revenue, certainly mounted stress levels as it relates to taxes. Many will wrongfully opt to put aside or suspend the filing of taxes until they feel that some leverage or ease has been sustained. Kmar Henry the CEO of BIZcare Consultation & Accounting Firm Ltd urges business owners to file their COVID losses.
What does filing at a ‘loss’ means?
A ‘loss’ means that no profits were made throughout a year of operation thus, your expenses have comprehensively outmatched your revenues and you have operated at a negative (-). This is primarily a nightmare for all business owners, especially if there are not many cash reserves to fall back on. This forces entrepreneurs to cut back on operating costs which mostly involves that of salaries, hence why we see so many persons becoming unemployed throughout a crisis or recession. Business owners are then forced to implement various pricing strategies that involve amending and cutting final prices in order to facilitate customers who also experience major problems or a decrease in spending power.
Submitting a tax return with a ‘loss’ or ‘nil’
It is important to understand that although a loss was made, this does not give business owners the right to not file a tax return by the extended date, March 31st. This will leave the proprietor liable or obligated to pay late penalties of $5000 per month based on how long the tax return is or was out for. It is far cheaper to ensure that all revenues and expenses are compiled properly and given to your accountant on time to complete your financial statement to submit your tax return. This gives you the ease of mind to know that you are early and free of all penalties.
Submitting your tax return with a subsequent loss which should or will be shown as a negative will give the proprietor marginal ‘Tax Credit’ which can be transferred to previous or proceeding years to leverage tax payments as the ‘carry forward’ rule will now be applied. Also, it is important to note that this ‘Loss or Tax Credit’ can also be refunded, but bear in mind that this may or can lead you to get audited by the Tax Administration. However, once you have everything in order as it relates to invoices and accounting operations, you should have nothing to worry about.
Do the New Tax Credit and Capital Allowances still apply?
Many are still wondering what does this new Tax Credit of $375,000 means for taxpayers or business operators of small, medium, and micro-businesses. Simply put, a tax credit is applied to ease the burden of taxes and can be a figure that is credited to an amount after Income Tax figures were or are calculated. This amount will mainly affect the notion of ‘Income Tax’, which is great for Limited Companies that earn below the $500M revenue quota, that was stipulated by the Government. This will therefore lead to more losses or tax credit for business owners, with the added submission of capital allowances for or from assets owned.
The year of the pandemic has flipped the normality of business operations, as we now see a vast increase in online presence via social media platforms and website launches. Also, there has been an upsurge within the transportation industry, as the birth of many couriers can be seen. Let us not brush aside the lessons learned and positive gains that the business year of 2020 has plunged onto us. Many businesses within the areas of food, groceries, and chemical supplies have seen high increases in revenues and profits thus, implementing the proper tax filing procedures for this year will certainly be one that should be an epidural and break mortar for greater things to come soon.
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Telephone: 876-669-5634/ 876-833-5444
BIZcare Consultation & Accounting Firm Limited is a consulting agency that operates within the parish of Clarendon in the beautiful land of Jamaica. They are geared towards educating the minds of upcoming entrepreneurs on the important aspects that must be considered before starting their businesses. They operate under the slogan ‘Your Business is OUR Priority’ and the tagline ‘Helping Small Businesses & Individuals to better Organise their Business Functions.