Owning a small business is a hugely fulfilling labor of love. But there are a lot of things to think about, and it can be hard to keep up with all of the rules, regulations, and best practices, particularly where finances are concerned. So, we will look at 7 facts businesses need to know about taxes and accounting. 

First, you should know that financial advisers exist to make all of this easier for you. Moreover, hiring an accountant is always better than trying to do the books yourself. On top of that, you should try to have a basic understanding of income tax, payroll tax, corporate tax, sales tax, and tariffs.

1. Professional Financial Advisers Are Here to Help

The complex world of VAT, taxes, and accounting can be a lot to get your head around as a small business owner, but the good news is that there is plenty of help out there.

If you need support, advice, or professional bookkeeping services, you can reach out to a registered consultancy and seek their expert services. As explained by the team at https://www.taxconsultancy.ae, experienced professionals can help start-ups, sole traders, limited companies, and landlords with their taxes, vat, and books. Rule number one of managing your business’ finances is to seek the help of experts, as this takes all the pressure off you!

2. Hiring an Accountant is Better Than Doing it Yourself

While it is possible to do your own bookkeeping, it makes a lot more sense to hire an accountant who can take your company through every quarter with well-managed books that comply with all local laws and regulations.

It can be easy to miss something important when sorting your incoming and outgoing finances and this can result in some taxes being unpaid or some earnings unaccounted for. To avoid messy mistakes and legal issues, use a professional accountant.

3. Understanding Income Tax

Income tax is a percentage of the income generated by an individual or a business that is relinquished to the state or federal government. It is a legal requirement that all taxpayers file an income tax return annually to determine their tax obligations. Your income tax is used to fund government obligations, public services, and other goods for citizens. 

4. Why Payroll Tax is Withheld

Payroll tax is withheld from your employees’ paychecks and paid to the government by you, on their behalf, to fund social security programs. Payroll tax does not exist in every country, but it is implemented in the USA, UK, Australia, and several other world powers. If your business has premises in any of these countries, you will need to know about this kind of tax.

5. Businesses Need to Pay Corporate Tax

Corporate tax is tax paid on the profits of a corporation. This tax is paid on the company’s taxable income, including revenue, minus several operating costs. Corporate tax rates vary hugely from country to country, with some countries being referred to as tax havens, as they have very low rates.

Various deductions can apply to corporate taxes, such as government subsidies and tax loopholes, so the amount actually paid by corporations is usually less than the statutory rate.

6. Companies Also Pay Sales Taxes

Sales taxes are taxes paid to the government by retailers for the sales of goods and services that they make. A business with a brick-and-mortar premise in a jurisdiction, or a salesperson or an affiliate there, might be liable for sales taxes in that location. 

Make sure you know whether you are obliged to pay sales taxes based on these factors in any jurisdiction where you do business.

7. How Businesses are Affected by Tariffs on Imports

Last but not least in this quick guide to taxes and accounting, we have tariffs. Tariffs are political tools used by governments to apply pressure on their trade partners. These taxes are imposed on one country for the goods they receive from another country. This is a political bargaining tool.

Tariffs affect businesses when they are imposed on the products they are importing or exporting, as it makes their business much more expensive and challenging to run. However, if you are a domestic producer, you might find more people paying for your goods as they are more accessible than imported goods.

Hopefully, this brief look at 7 things all businesses need to know about taxes and accounting has helped you to get your head around your finances. The key takeaways from this guide are that financial advisers are here to help you and that you are always best to hire the professional help of an accountant. As you can see, taxes can be complicated and there are a lot of different taxes to keep up with. From income and payroll taxes to corporate and sales and even tariffs, businesses need to stay on top of their finances at all times. Use the experts and save yourself the hassle of working it all out alone.