March is tax crunch time for many Jamaican taxpayers, as several annual returns and payments are due within this month. With the increased efforts of the Tax Administration Jamaica (TAJ) to inform persons of the rules and regulations, we all need to be aware of our tax obligations.

Last week we looked at some of the tax considerations for self-employed persons and individuals who earn extra income in addition to their regular salary. If you generate business income, or make money from investments or part-time sources, you may have to report your earnings at this time.

Some clarifications from our previous article – the tax-free threshold for individuals’ 2014 income is $507,312, while the increase of $557,232 is applicable from January 2015. If you have income to declare but you don’t operate a business, then you should file your tax returns on the IT05 form.

The TAJ recently noted that taxpayers should file the relevant returns on or before the March 15 due date to avoid a $5,000 penalty which may be charged for each month the return is late. For tax assistance, contact the TAJ at 1-888-TAX-HELP or use their website at www.jamaicatax.gov.jm.

Accounting is integral to business success

Paying taxes is just one of the various accounting tasks that business persons will encounter in running their operations. For many entrepreneurs, dealing with accounting procedures can be an onerous exercise, especially if they have to be heavily involved in the daily trading activities.

Some persons pay little attention to maintaining the business accounts, focusing more on making sales and managing staff. However, ignoring tax obligations will only add more problems for the business, as the penalties for non-compliance or reporting inaccurate information can be costly.

While you can hire someone full- or part-time to deal with your bookkeeping, it is still advisable for you to learn about certain key elements of the accounting process. You should play an active role in managing your accounts so that you can understand what the figures mean for your enterprise.

For example, monitoring your data can allow you to keep track of delinquent customers or quickly recognise when your input costs have increased. Knowing your monthly profit position can help you to adjust your prices or processes, and make strategic business decisions on a timely basis.

Keep proper financial records

When operating a business, it is critical for you to maintain accurate and timely records of your income and expenses, as well as payments to your employees. Without a system to capture this information, you may find it challenging to keep up-to-date on your tax-reporting requirements.

Put all the bills from your purchases and expenses in manila files in proper date order, and keep copies of all the invoices sent to your customers. Maintain detailed records of all staff matters, including statutory deductions and correspondence relating to their conduct or performance.

You can buy an accounting package that allows you to record your accounting transactions in-house. However, if your operation is complex, it may be worthwhile to engage the services of an expert accountant, as it will be difficult for you to know all the intricacies of the tax system.

Whether you input your own accounts or use a professional bookkeeper, you are responsible as the owner for adhering to the tax requirements and reporting guidelines. Ensure that you store the stamped tax returns and payments to retain proof that you have fulfilled your obligations.

Secure your records

Once you have gathered and recorded your financial records for a year, it’s important to keep them in a secure location. You are required to retain all your documents for seven years, in the event that the tax authorities decide to audit your records to ensure that you are compliant.

It would be advisable to store your documents in a filing cabinet or sturdy container that will repel insects or prevent damage from the elements. You could also scan important documents and retain the information in an electronic format, or email them to yourself for extra security.

Use an appropriate filing mechanism to store your records, so that they can be easily located if the need arises. You should also make clarifying notes on any documents that may contain unusual transactions, so that someone else can understand what may have transpired years ago.

Despite all the work you have to do in ensuring that you keep your business afloat, it is essential that you take the time to keep meticulous and clear records of all your financial information. This will not only help you to plan for the future, it may protect your enterprise from tax challenges.

Cherryl is a money coach, business mentor, and founder of Financially S.M.A.R.T. Services. Her upcoming book, “The 3 Ms of Money” will reveal all the secrets she learned about financial success. Get more advice on money and business matters at www.financiallysmartadvice.com and www.entrepreneursinjamaica.com. Email comments to cherryl@financiallysmartonline.com.