Every business – micro, small or big – is required to file taxes annually. It can be a complicated process; it’s also not a job for your regular bookkeeper, so hiring a tax preparer can save you time and, yes, even money.
This is recommended, considering the complexities of the local tax system in the Philippines.
If you’re a new business, you might think it’s an unnecessary cost for now. But getting your taxes in order right from the start will help you become organized with your finances when you start to grow or scale up.
Also read: Effective Strategies for Scaling a Business
What does a tax preparer do?
What is a tax preparer, exactly? They’re professionals who assist individuals and businesses in preparing and filing their tax returns. Meaning, you won’t need to deal with the nitty gritty of it all.
Their primary responsibility is to ensure that your tax returns are accurate, complete, and comply with applicable tax laws and regulations. Here are the key tasks that tax preparers typically perform.
by a professional.
Calculating tax liability. Tax preparers will collect relevant financial information from your business, including income statements, expense records, and other supporting documentation. They will then calculate the amount of taxes owed or the potential refund due based on the applicable tax rates.
Tax planning. They may offer advice on tax planning strategies to minimize your tax liability legally. This could involve recommendations for deductions, credits and other tax-saving opportunities.
Applying tax laws and regulations. Tax preparers stay updated on current tax laws and regulations at the local and national levels. This is to ensure that your tax returns comply with the relevant laws and you can take advantage of available tax benefits.
Reviewing and verifying information. After completing the tax return, tax preparers will review the information to check for accuracy and completeness. This helps identify any potential errors or omissions that could lead to issues with the BIR.
Filing tax returns. Finally, your tax preparer will file the returns, ensuring that they meet all filing deadlines. If your tax return is selected for an audit, they may assist in preparing documentation, communicating with tax authorities, and navigating the audit process.
5 reasons to hire tax preparer services for your business
1. They can help you save money
Tax professionals are well-versed in the latest deductions and credits available to taxpayers in the Philippines. They can help you identify and claim all applicable deductions and credits, potentially lowering your tax bill significantly and result in potential tax savings.
A professional tax preparer can also analyze your unique financial situation and recommend tax optimization strategies tailored to your circumstances, like tax-advantaged investments or income-splitting strategies to minimize your tax burden.
2. It saves you from costly mistakes
Navigating the intricacies of the Philippine tax code can be tricky. Tax professionals are trained to understand the latest tax regulations and ensure your return is filed accurately and compliantly.
This minimizes the risk of costly penalties and audits. Mistakes on tax returns can lead to penalties and unnecessary stress.
3. It saves you time
Filing taxes can be time-consuming and overwhelming. A professional can handle the entire process for you, gathering necessary documents, completing forms and ensuring timely filing.
This frees up your valuable time to focus on other aspects of your personal or business life. More importantly, it reduces the stress during tax season.
4. You can have peace of mind
Knowing your tax return is in the hands of a qualified professional can offer peace of mind. This is particularly important if you have a complex financial situation or if you’re uncertain about the tax laws that apply to your specific industry or circumstances.
They can also represent you in case of any inquiries or audits from the Bureau of Internal Revenue (BIR), providing expert guidance and support.
are accurate and filed on time.
5. Doing your own taxes is complicated
While there is cost associated with hiring a professional tax preparer, the potential benefits in terms of time savings, accuracy and potential tax savings often outweigh the expense.
The risk of making errors in your tax calculations or improperly filing your tax returns is higher if you don’t have a comprehensive understanding of the tax laws. This could lead to penalties or audits of your business.
A professional can handle the intricacies of tax filing with their expertise, reducing the chances of errors and ensuring proper reporting.
How to find the right tax preparer
When choosing a tax preparer in the Philippines, it’s crucial to find someone qualified, experienced and trustworthy to handle your finances and ensure accurate tax filing.
Qualifications and credentials
- BIR Accredited Tax Practitioner. Verify if the preparer holds a valid accreditation from the Bureau of Internal Revenue (BIR). This ensures they have met the necessary qualifications and passed the BIR examinations.
- Professional Membership. Look for membership in professional organizations like the Philippine Institute of Certified Public Accountants (PICPA) or the Tax Management Association of the Philippines (TMAP).
- Educational Background. Consider their educational background, ideally with a degree in accounting, taxation, or a Certified Public Accountant (CPA).
Experience and expertise
- Years of Experience. Choose someone with several years of experience in tax preparation, especially within the Philippines and in your industry.
- Specialization. If your tax situation involves complexities like self-employment, rental properties or investments, find a preparer with expertise in your specific area.
- Track Record. Ask about their success rate in handling tax audits and resolving BIR inquiries.
Communication and service
- Communication Skills. The preparer should be effective in explaining complex tax concepts in a clear and understandable manner.
- Availability and Responsiveness. Choose someone who is readily available to answer your questions and address concerns throughout the tax preparation process.
- Technology Proficient. Look for a tax preparer who utilizes updated tax software and understands online filing procedures.
Find the right partners for your business
Hiring a professional tax preparer in the Philippines can be a smart investment for your business, especially if you’re looking to maximize your tax savings. You will also avoid errors and penalties, save time and stress and gain access to valuable expertise and advice.
Weigh the benefits and costs carefully, and choose a qualified professional who can help you navigate the Philippine tax system effectively.
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More tax and financial tips for your business:
Accountant vs. Auditor: What’s the Difference?
Take Note of These Tax Exemptions for MSMEs
Online BIR Registration: A Complete Guide
