Does your company have tax debt? In this case, it is important to seek good practices to settle them as soon as possible. Because they can become a real snowball, resulting in fines, significant losses, and even punishments by inspection entities. Check out our tips to deal with the problem!

1) Avoid tax debt! Do tax planning!

First, an obvious tip: don’t do anything that leads to tax debt i.e., pay taxes on time! They have a high cost and compromise business activities. The tip is to opt for automation tools to help with the regularity of taxes. There are many solutions on the market and annual tax planning is critical.

2) Look for a trusted accountant

Another tip is to have efficient accounting advice that manages these demands for your company. The lack of a good framework can make you pay taxes unnecessarily. In this way, talk to the tax specialists and survey the situation of your company.

3) Recognize the different types of debt and understand the timing of your company

In principle, there are two types of debt: tax debt is majorly related to taxes; and non-tax, which includes the payment to the government that does not involve taxes, such as royalties, dividends on government investments in state-owned enterprises and stock portfolios, etc.

In addition, you need to know what taxes are related to your type of business and whether they are in arrears. If they are in arrears, you need to consider the amount and the best way to pay off the debt. Again, the trusted accountant plays an important role in this process.

4) Understand the cause of indebtedness and don’t make the same mistakes

It is not enough just to settle tax debts. You need to recognize what causes your delays. For this, it is enough to survey the debts to identify the causes. This helps to prevent new debts from arising and old debts from increasing.

The main causes of indebtedness are:

• Disregard the company’s accounting principle.
• Poor fiscal and tax management.
• Non-existent or incorrect planning.
• Uncontrolled working capital.
• Unfavorable economic scenario.
• Uncontrolled customer delinquency and lack of ineffective collection management.
• Lack of integration of company financial data.
• Lack of efficient accounting advice.

5) Cut expenses

If your company has tax debts, it’s because you couldn’t honour them on time, and one of the reasons is the lack of money. Therefore, one of the first attitudes to improve your conditions is to cut expenses.

For this, it is necessary to identify which bottlenecks compromise the profit of your business – for example, the existence of raw material waste in production processes, idle workers, inadequate product delivery logistics, expenditure on inputs, lack of planning, inventory problems, etc.

Tax planning is one of the ways to avoid expenses in all company processes. In addition, the lack of knowledge about the company’s tax configuration leads to unnecessary expenses.

6) Integrate your company’s processes

In many cases, tax debts are due to the way your business is structured. Sometimes it is necessary to adjust the processes. But it is essential to recognize that their integration is necessary in an increasingly competitive world. Integrating processes is to make them more agile and optimize access to company information and data.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.