Tax returns are usually done on requisite forms that are filed by every citizen of a country.
In Jamaica, there are specific forms that represent the various tax returns. Examples includes:
- Declaration of AssetsAssets are tangible and intangible items owned by the business. Tangible assets are equipment, property, motor vehicles and office furniture... More – AT01 and AT02
- Income Tax – IT01-5 and IT07-9
- Payroll – S01 and S02
- G.C.T – Form 4A-E
There are two ways in which businesses can file their tax returns. They can undertake an internal filing (self-assessment) or an external filing. An internal ‘self-assessment’ or voluntary compliance means businesses and individuals calculate and file their returns without being assessed by the government. An external filing means the business contacts an outside party (a freelance accountant or an accountingAccounting is the art of identifying, recording, categorizing, summarizing, analysis and interpretation of financial transactions. More firm) to calculate and file their tax returns.
There are pros and cons to both of these methods. To find out which suits you best keep reading…
Benefits of Filing Your Tax Returns Internally
- You will have fewer delays in completing the calculation of your taxes. This is because you will not have to communicate with parties outside of your business. Doing your returns internally mean you won’t be explaining your companies unique operational culture or having meetings to discuss your books. You are most familiar with your business’s ins and outs, therefore filing your tax returns should not take as long as it would if you outsourced this function.
- Self Assessments do not cost you a dime.
- You have direct access to current company records to verify any issues that may arise between the tax office records and company records. An external party would not.
- You have control over your information as your records do not leave your office.
Drawbacks of Filling Your Tax Returns Internally
- If your are not well versed in accounts you may be prone to errors that delay the process. Luckily, you can submit a revised version to the tax office if you make a mistake.
- Self Assessments are prone to bias and it is harder spot your own mistakes.
- You are more prone to make assumptions that are not accurate.
How to avoid the pitfalls of Self Assessment:
- Have an internal accountingAccounting is the art of identifying, recording, categorizing, summarizing, analysis and interpretation of financial transactions. More system established with functional protocols for your business. Audit these protocols occasionally to ensure they are doing what you set them up to do.
- Fill out all your tax forms properly!
- Also, make sure you use accountingAccounting is the art of identifying, recording, categorizing, summarizing, analysis and interpretation of financial transactions. More software that helps you to track and organise your books in one place. Check out HeadOffice; it’s an online accountingAccounting is the art of identifying, recording, categorizing, summarizing, analysis and interpretation of financial transactions. More software that helps you to track and organise your books in one place. HeadOffice also allows you to pre-fill your tax return forms and print them. All you have to do after that is get it to the tax office.
Benefits of Filing your Tax Return Externally
- Reduces the occurrence of misstatements and errors.
- As filings are done independently, bias and subjectivity will likely be avoided and the chance of discrepancies will be lessened.
- If needed council can be provided for tax compliance issues and other services can be rendered during the contractual period, such as tax compliance certificates.
- External Filing also allows you to focus on other sections of your business instead of pouring over your books.
Drawbacks of Filling Your Tax Returns Externally
- As information is not readily available to outsourced accountants/firms, the computation process may experience delays.
- External filing costs.
- In the event that errors do occur, lack of immediate access to records will cause delays in processing. This can prove costly as penalties and interest may accumulate and it is hard to appeal for them to be revoked.
- There are some security concerns involved if your records have to leave your business place.
External Filing Tips:
When contracting an external party to do your returns ask them for references; people you can call and ask about their experience with that entity. Also, provide the accountant with ALL the necessary information to save time. Remember the longer it takes to calculate your returns, the more you spend.
We hope this has made it a little easier for you to decide whether you should do a Self Assessment for your tax returns or an External Filing. Which do you think is better for you? If you have any tax returns tips of your own, share them in the comment section.