Value Added Tax (VAT) requires a proper understanding which can be difficult for business owners to understand. Often small businesses are intimidated with the complexities involved in understanding the tax laws and procedures. Many business owners make mistakes by not seeking any professional help to guide them on their taxes because of which they end up making many mistakes that ultimately affects their business operations and face huge penalties by the Federal Tax Authority (FTA).
This is the most common mistake that businesses make by not maintaining their financial records. Some business owners ignore the importance of maintaining each and every record and keep copies of invoices. They get in trouble when FTA conducts an audit and their invoices are missing. Therefore, it is very crucial to have up-to-date bookkeeping records to avoid such errors.
Accurate calculation of your VAT returns is very important. Applying correct VAT rates is significant while calculation. Error arises when relevant rates for goods and services are not identified by the business owners. This leads to disruption in their all payments and their financial system.
FTA provides proper guidelines for filing VAT returns and announce application deadlines to avoid any inconvenience for businesses. Still some businesses fail to meet those deadlines due to some issues or incomplete procedures. It is highly important for businesses to stay up-to-date with the FTA deadlines and complete their procedures timely and accurately.
Businesses are still unaware of the purpose of the adjustment column in VAT filing procedure. They make a huge mistake by misusing it and correcting their mistakes in previous VAT returns. The real purpose of the adjustment column is mainly for bad debts. But making unnecessary adjustments leads to more penalties and questioning by FTA. Businesses should always take guidance from VAT experts to avoid such errors which can significantly impact their business.
