Taxation refers to the monetary levies imposed by governments on individuals and businesses; tax planning, on the other hand, involves making strategic use of legal loopholes such as exemptions and deductions. No matter how confusing it may seem, all companies must deal with taxation at some point. To do so, every startup should have some basic ideas on how to deal with taxation or tax planning. Here are our top 5 taxation tips for start-ups:
1. Hire or Consult Tax Professionals
A wise strategy for dealing with company taxes is to use corporate service providers. Working with experts in the field can help you get through all the red tape and focus on the core of the issue at hand. Hire experts in the field to keep tabs on your company’s tax compliance. Bringing in an expert consultant can also help you get ready for the unexpected. Compliance-related tax questions are best answered by consulting an expert.
2. Deduct Tax at Source
According to the Indian Income Tax Act, certain transactions necessitate that the purchaser or service recipient withhold tax at the source before making payment to the vendor or service provider. Failure to do so renders the expense non-deductible and may result in a higher tax bill.
3. Tax Holiday for Start-ups
If a company is incorporated on or before March 31 st, 2023, and its annual revenue does not exceed Rs 25 crore in any financial year, it will be exempt from paying taxes for three years. It will be a boon to India’s budding entrepreneurial scene. Start-ups can get the cash they need to grow by taking advantage of tax credits.
4. Compliance With Tax Norms Makes Life Easier
To succeed as a start-up, your primary focus should be on providing superior services to your clientele. The point of ensuring that your firm is compliant is so that you can devote your attention where it is most needed to running the core of your operation. Businesses can benefit from established tax policies by better understanding the monetary effects of taxes. The final goal is to improve financial planning by factoring in all taxes and other compliance-
5. Choose a business structure wisely
It is important to consider the company’s tax liability when deciding on a business structure. Taxes will be increased for corporations, and as the leader of a new business, you will work hard to minimize this cost.
Because of the complexities of taxation and tax planning, the majority of start-ups frequently lack clear information. If you can’t afford to hire tax professionals to oversee your business’ compliance management system, then you should educate yourself on taxation and tax planning in accordance with your industry.
Dobiz Solutions is proud of its team of highly qualified tax experts who help clients with all aspects of paying taxes and planning for taxes.