Master Strategies for Successful & Efficient Tax Planning

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You need to get your finances settled especially now that the calendar year is coming to a close. You will have to deal with your year-end accounting, bookkeeping, and your tax planning. Accounting services in the Philippines remind you that you must carefully weigh and analyze the different available tax options for you to identify and determine the most beneficial way to run your business.

If you efficiently do your tax planning, you will definitely get the advantage of saving on taxes as well as reducing your tax exposure during audits and tax examinations that are conducted by the Bureau of Internal Revenue. If you are not sure where and how to start, there are many strategies that could help you. With these strategies, you’ll be able to achieve efficient tax planning and help your business succeed.

1. Use all of your available tax credits

If you have withholding tax certificates, that means you have made advance payments for your income tax liabilities. If you have evidence for the advance payments you have made, you can get those deductible from your annual income taxes.  Tax services in Manila said you must ensure that if you make advance payments, you need to have a creditable withholding tax certificate for your claims to be supported.

2. Maximize all your allowable deductions

There are some deductible expenses that may require specific proof so it is very important for you to have documents that can serve as proof or evidence such as sales invoices or official receipts. It is also very crucial for you to withhold the right tax if there is an expense subject to withholding taxes or else it will not be allowed as a deductible. Supporting documents are very important. Without those, you might be fined and penalized by the Bureau of Internal Revenue or BIR.

3. Itemized Deduction or Optional Standard Deduction

Itemized deduction or OSD, which deduction method is better and most beneficial for your business? Itemized deduction will allow you to claim a higher proportion of expenses as long as you have supporting documents as proof of your claims and if your expenses fall under the BIR allowable deductions. Optional Standard Deduction, on the other hand, refers to the number of deductibles that don’t exceed 40% of your business’s gross income for the taxable year. If your business has a low cost of sales, Optional Standard Deduction is the better choice since a high tax base results in lower income tax due. 

4. Know the recipient of the donations you have made

You need a certificate of donation that contains the donee certificate and the donor’s statement of values so that you can claim the deductible of your donations. The Bureau of Internal Revenue provides a list of all the acceptable charity institutions if you want to deduct charitable donations.

5. Choose the best way to address your excess income tax payments

You can either carry-over your excess credit on your next tax payment or you can carry it over to the next taxable year. You can also either get a refund of your excess income tax payments or apply for a tax credit certificate. If you choose to carry it over, you cannot revoke it anymore. If you apply for a refund, you will be exposed to audit investigations. Make sure to think of the refund cost and the time it will take to get it. Consider all of these to make sure you are able to address your excess income tax payments effectively.

6. Make sure you don’t tax the non-taxable

Make sure your receipts and invoices are stored and kept properly with correct bookkeeping services in the Philippines. Monitor all of your transactions so being taxed in excess will not become an option. That’s why being consistent in your accounting and bookkeeping is crucial. When you are organized, you are less likely to miss out on important things and you can avoid audit investigations.

7. Avail the tax treaty relief if you are a tax treaty country resident

You need to apply for a tax treaty relief if you have transactions that can be covered by a tax treaty. You may check the BIR website and see what treaties can apply to you. There are many treaties and incentives you can make use of if you are a foreign company doing business here in the Philippines.

Ready to optimize your tax planning for a successful year-end financial strategy? Our expert accounting firm is here to guide you through efficient tax planning strategies. Don’t miss out on valuable tax credits, deductions, and treaty relief opportunities with our help. Contact our accounting services in Pasig today and secure your financial success!