I suggest that all Small and Medium Business Owners in Nigeria should read this blog and share it with their friends in all social media. The common mistakes I listed here are so common that majority of Small and Medium Business Owners in Nigeria are ignorant of it and ignorant is not an excuse.
It has cost many so much pain and cost that many Small and Medium Business Owners in Nigeria do not know how to come out of it.
I feel with deep pains when I see these Business Owners making these mistakes on weekly and monthly bases.
Below are some of the common mistakes.
1. USING CORPORATE BANK ACCOUNT TO MAKE PERSONAL TRANSACTIONS.
We had a client that we were preparing documentation for her business/ company Tax Clearance Certificate. The company has been registered for few years but has not done business transaction.
We saw that several millions have flowed in and out of the account. Some of the inflow transactions came in from corporate organization’s bank account (e.g ABD Business ltd). He explained that he uses his business bank account to receive rents for his uncle that is leaving outside Nigeria. And, as soon as he receives the rent, he will shares the money to his uncle’s relatives.
We find out that the total accumulated tax (VAT, Educational tax, income tax, etc) on his business that have not started business is running in millions.
2. The second pain that the above mistake causes Small and Medium Business Owners in Nigeria is it makes their business commencement date to be counting when they have not started business and this will be attracting several tax liabilities to the business when it not to be so.
3. NOT FILING OF MONTHLY VAT RETURNS.
When once your company has commenced business, you are mandated to be filling your VAT with Nigerian Federal Inland Revenue Service (FIRS) on monthly bases whether there is financial transaction or not in the month. Failure to fill this VAT after 23rd of the next month will attract N5,000 every month times the number of years the company commenced business. This N5,000 penalty can be calculated cumulatively.
Read: Business/ Company Registration Service in Nigeria
4. NOT FILING COMPANIES INCOME TAX RETURNS. Every company is required to file Returns with FIRS even if exempted by the law from paying tax.
For newly registered companies, such returns should be filed within eighteen (18) months of incorporation or six (6) months after the accounting year end which ever come first.
For old and existing companies, the returns should be filed within six (6) months after the accounting year end.
Failure to fill this within the time attract N5,000 every month times the number of months/ years the company did not fill the returns. This N5,000 penalty can be calculated cumulatively.
Read: Business/ Company Formation Service in Nigeria
5. Employing unregistered Agents to prepare their Business Permits and Certificates.
Governments agencies are now penalizing businesses who make application of any kind with fake paper. Some of the penalties are in money, imprisonment or ban from participating in business activities with such organization for number of years.
E.g. When registering with Nigerian Petroleum Exchange (NipeX), presentation of fake DPR Permit/ certification either for Product/Service addition or registration of company is disqualification from the NipeX system for two (2) years.
You know what this will cost your organization.
6. The sixth one is common mistakes we have observes when people go into business partnership with others. This is peculiar so, I will not share it in this public place.
In conclusion, we discovered these common mistakes in the cost of our business support to Nigerians and foreigners. These mistakes can be avoided by keeping good diligent and hiring experts in the industry to do your job or in partnership.
Read: Debt Recovery Service in Nigeria
We leave our door open for free enquiries on what and how to start legitimate business in Nigeria. Also, you can start make corrections in some of the areas that you have made mistake.
Remember to share this post, you can never tail how many millions Naira and time it will save the business community in Nigeria.