If You Have a Corporate Account, You Need to Do this to Avoid Potential Tax Trouble

If you are running a business or you are planning to run a business and you have registered your business with Corporate Affairs Commission of Nigeria (CAC) and you have also opened a corporate account or you intend opening a corporate account in Nigeria, you need to take this post serious to avoid potential trouble with Federal Inland Revenue Service.

You need to take this serious especially if the business you registered with CAC is a limited liability company and you also have a corporate account. If your business is a BUSINESS NAME or an ENTERPRISE, you don’t need to worry so much about potential trouble with Federal Inland Revenue Service (FIRS) because you don’t have any business with them except your state revenue agency. For those in Lagos, it’s Lagos State Internal Revenue Service.

You see the potential trouble you will get is when you are using your corporate account for personal transactions. If you have been using it, you have to stop right now.

As a company, you are required by law to pay taxes including VAT, company income tax among others. Therefore, if you are using it personal transactions, you might have issues with FIRS when you are confronted with the amount of tax you have to remit. How will you prove that such transactions are personal and not business transactions?

The FIRS will soon come to you for evidence of VAT and other taxes remittance and if you don’t have any proof, that is a problem for you.

Nigerian Banks are required by Central Bank of Nigeria to link corporate customer’s account to their Tax Identification Number (TIN). And don’t forget all account holders are required to have their BVN linked their account too.

Therefore, FIRS can easily monitor and check your inflow since your TIN and BVN are linked to your account.

The reason why I am saying this is that I have worked and mingled with a lot of small business owners that always say that they want to use their corporate account to carry out all their transactions (including personal) so that when they want to go for an interview with the USA embassy or any other top countries, they can tender their account statements to show millions of inflow and outflow in order to convince the embassy to get a VISA.

Some small business owners that want to convince a bank for a loan also do the same thing. They carry out personal transactions on their business account to increase inflow and outflow in order to convince a bank that there is so much turnover.

For those using a business name, they don’t have any business with FIRS, they only have to worry about personal income tax with their state inland revenue service and you can easily clear that.

To prove that some of the transactions that occurred in your account are personal transactions when FIRS come knocking will be very difficult.

I have seen businesses closed down by FIRS because of tax issues. So be careful.

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