Starting a new business is an exciting and challenging endeavor, but it can also be risky. Legal and tax mistakes are common among startups and can lead to significant financial losses and legal trouble. In this article, we will discuss five common legal and tax mistakes made by startups and how to avoid them.
1. NOT INCORPORATING: One common mistake made by startups is failing to incorporate their business, which can lead to personal liability for the company’s debts and legal issues.
2. NOT PROTECTING INTELLECTUAL PROPERTY: Startups often overlook the importance of protecting their intellectual property, such as trademarks and patents, which can lead to legal disputes and financial losses.
3. NOT KEEPING ACCURATE FINANCIAL RECORDS: Many startups fail to keep accurate financial records, which can lead to legal issues and difficulty in obtaining funding.
4. NO UNDERSTANDING TAX LAWS AND DUE DATES: Startups often make the mistake of not understanding the tax laws and regulations that apply to their business, which can lead to penalties and fines.
5. NOT HAVING A CLEAR EQUITY SPLIT AMONG FOUNDERS: Startups often make the mistake of not having a clear equity split among the founders, which can lead to disagreements and legal issues. It is important to have a clear agreement in place from the beginning.
To avoid or remedy these pitfalls, contact us today
January 2nd 2023, The Federal Inland Revenue Service via its social media platforms gave Business Owners a beautiful Happy New Year Gift: Get Your Tax Clearance Certificate In One Click. Waoo! what a relief, what a joy to business owners. Industry experts showered praises on the Revenue Service, they said it is a giant boost to the Nation’s Ease of Doing Business.
We compiled Five (5) Take Homes from this development
1.NO LIABILITY FROM PRECEDING YEARS: Only Companies with no liabilities including already due VAT will have access to download the Tax Clearance Certificate.
2.PREVIOUS ACCOUNTS/STATEMENT OF AFFAIRS: Preceding Years’ Audited Financial Statement or Statement of Account must have been filed.
3. TAXPROMAX REGISTRATION: If you have not completed your TaxProMax Registration, then you can’t have access to the platform. Issuance of Tax Identification Number (which recently comes with CAC Registration) doesn’t imply the Company is registered on TaxProMax.
4.BUSINESS NAMES: It is worth noting that Business Names can’t apply for or be issued Tax Clearance certificates rather the State issued Tax Clearance Certificate/Document will suffice as the Business Name Tax Clearance.
5. DECEMBER 31ST 2023 EXPIRATION: Unlike the Temporary TCC rolled out some years back which covered only 6 months, this is a full-year tax clearance certificate bearing December 31st 2023 as its expiration date.
This is a beautiful development and we appreciate the management of FIRS for this lofty stride, reducing the bottleneck process of getting TCC from tax offices.
We also want to draw the attention of the Revenue Service to the other missing information on the TCC. A careful look at the downloaded Tax Clearance Certificate as of the 3rd of January, 2023 shows that information for some assessment years is missing. We are sure the Revenue Service has duly noted the anomaly and will rectify same as soon as possible.
For Tax, Tax Clearance Certificates and other Compliance Matters