Smart ways to pay statutory dues and save on penalties

FOR small and medium enterprises, to reach the peak of success and achievement, it is necessary for its owners (entrepreneurs) to chalk out a plan of action and practice smart ways of paying taxes so as to avoid penalties. Entrepreneurs should root out negative attitudes towards tax remittance and start setting priorities on paying tax so as to avoid penalties that can end up leading to closure of business. A smart way of paying tax is a skill that should be learnt, so as to avoid consequences attached to not paying tax.

By Emmanuel Zvada

Taxes act as a major source of government revenue that can be used to fund government subsidies as well as promoting infant industries for the benefit of the economy. Most companies, especially upcoming ones, can think otherwise, especially when it comes to tax remittance of which it is crucial for them to comply for the benefit of themselves and the economy as whole. When most SMEs start operating and begin making profits, they tend to forget to outsource a tax professional, who will often handle financials and tax remittances, as resulting in penalties. Having someone on board, who manages or taxes and finances avoids financial and tax mistakes, however, as for startup that cannot yet afford to hire accountants since they are still small or outsource accountants.

The only way to save, but in the same way delivering what was supposed to be done, is to take advantage of online solutions or software packages that can help in calculating statutory dues. Home offices are quickly becoming a norm for most Zimbabwean SMEs and normally the owners do not have a lot of employees. Home offices are very crucial as long as the owners of the business are well-disciplined to separate work and home issues. SMEs that use their homes as business premises are also obliged to pay taxes to the relevant offices.

Filing your returns on time is another way to avoid penalties. SMEs owners should constantly check all activities and make sure that tax is paid regularly and returns are filed on time. Some SMEs owners may be surprised to discover that they owe dues to authorities and the reason is failure to submit statutory dues on time.

Considering that the month has not been rosy for the company and it does not have money for tax this is what it should do so as to avoid penalty-file a tax return or file for an extension by the deadline for tax paying. Filing a tax return is helpful as the penalty for not filing is more than the penalty for not paying tax. If you do not know how to file a tax return one can outsource or use online e-filing services.

The online filing service is easy to use and it saves you time minimises use of paper-based return and standing in a long queue to submit. The consequences of late or failure to submit statutory returns in time can even go to the extent of propelling the Zimra commissioner, without notice to issue an estimated assessment and charge a penalty or institute prosecution proceedings that can up affecting the company.

Entrepreneurs should also make the process of tax returns an ongoing process rather than waiting for rush hours and start submitting when deadlines are due.

What then it means is that you should start preparing your files now for submission than waiting for an absolute deadline to file. Every employer, who pays or becomes liable to pay any amount by way of remuneration to any employee, shall deduct that amount by way of employee’s tax any amount, which shall be deter-mined in accordance with the prescribed Pay as You Earn tax tables.

The due date for remittance of Paye is the 10th of the following month, but doing it a smart way is not waiting for the 10th, but doing it earlier so that you have time to prepare and submit in time. This is very crucial as it helps SMEs to comply in time, normally when an SME ceases to comply for the first month or two months it will end up not complying and at the end they will end up not remitting and not complying with all statutory dues.

Every registered employer is required to submit returns of all persons employed by him detailing the salaries, wages, allowances, benefits and pension deductions for each person and this is in terms of section 39(1) of the Income Tax Act.

Some SMEs have a tendency to jump from one thing to another, depending on what will be making money at any particular time, an approach referred to as kiya-kiya (patchy/quick-fix), which makes them to fail to deliver the service promise and as a result fail to pay statutory dues.

If you are an entrepreneur, on small business owner you should consider paying taxes on time and that can only be attained by taking into consideration the priority you give to your business. Only SMEs who will be in a position to stand the test of time are those who always pay statutory dues on time.

 Emmanuel Zvada is a human capital consultant/recruitment expert and author. He writes in his own capacity. For comments inbox to emmanuelzvada@webmail.co.za or call +263771467441.

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1 Comment

  1. Yes tax remmitence is good for our economy but the Tax rates here in Zimbabwe are too high as compared to international Community standards and its a burden to both SMES and all private sector employees.Looking at how the employees in the private sectors are struggling,its more than 20% tax on gross on PAYE. Its neither their choice nor negligence to do the so called invading of taxes, they do understand they are penalties,but As it stands the rates are exobitant and counter progressive. They are the commoners in the economic gains circles,whereas are the main cash cows/the hub that our government is surviving on. How can you keep on milking the lesser????

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