How is Building?
How is your business faring?
Hope you are not pressured by the running hands of time?
There is time enough in this financial year to do exploits still.
Today’s topic serves as a guide or, an insight to what is applicable to authorised persons by law to carry out business transactions in Nigeria.
In Nigeria, your business’s is regarded as a place from the point of registration with the CAC – CORPORATE AFFAIRS COMMISSION. As a person, your company shall be treated as an individual entity and will be addressed separately for obligations outside of its ownership and employees.
If you are not an NGO, you are either registered as a “Big Boy with vibes and all of” an RC or a Business Name, a category of companies mostly used by upcoming businesses and sole proprietorship.
Although the required obligations by law vary slightly, the basis are still very similar.
A company is compliant when it fulfils it’s duty to statutory regulations as spelt out by the guiding principles of the CAC and other bodies empowered to direct the activities of the business operations.
We would focus on the Financial obligations today, and emphasise on the relevant tax requirements on common basis for the categories of businesses.
Pay As You Earn. Other than companies in the petroleum industry and select category of Federal Government Workers, all other classes of companies under each sector are expected to remit on a portion of each employee salary every month to their operational address at the state Government.
There are few adjustments when an employee resides outside of the company’s operational state address. The current tax returns in Nigeria is progressive, and you can refer to (https://lsetf.ng/content/pay-you-earn-paye) for guide on the appropriate amount to be deducted for remittance monthly.
The Value Added Tax. A number of companies, especially entrepreneurs apply this tax as receivables from their customers but do not eventually remit it. It is also expected to be remitted monthly, usually before the 21st of every month. The current rate is 7.5% and remittance is to the FIRS (Federal Inland Revenue Service).
If you have made your enquiries and VAT does not apply to you or the services you offer, you are still expected to file NIL returns monthly.
Withholding Tax. This is tax you hold on behalf of the government. It is very important you remit this if you have been holding government’s money – in any way.
It is categorized into two, and, remittances can either be to the State Government or Federal Government, depending on the nature of company that offers service which one is withholding from, or, the nature of service(s) provided. You can do more research to verify the appropriate Inland Service that should receive such amount withheld.
Although small scale entrepreneurs argue their way sometimes out of this, yet, Pension is a required monthly provision made up of 8% and 10% contribution from employee and employer respectively.
The concept is great, and for the overall good of the employee. In simple terms, it is a retirement fund set up for your employees.
You cannot give your employees an ocean (an allusion) of what they need to survive after retiring, but, you can contribute towards it monthly. One can make research on what portion of employee salary these rates are applicable to.
In recent times, employers that provide health insurance for their employees are able to wiggle their way out of this, although it has not been officially scraped out. The concept however advocates employee safety.
Many employees work under sterile, harsh environmental conditions that provide various threats to their health and life. The fund is an Insurance Trust Fund that was established to help out when hazardous event occurs at work places.
We would draw a curtain on the list today. However, the salient point remains this – keep the expected obligations in view even as a budding entrepreneur.
There are oftentimes consequences for not being complaint. Examples include:
Penalties: By law, non compliance is punishable and financial penalties applies.
Compliance proof are sometimes required by establishments before engaging you on projects.
Overall, it’s a sign that you abide by the law and contribute to the society by paying your tax(es).
I hope you found this piece useful today. Do feel free to raise opinions and suggestions that your company have been complying to, or ask your questions in the comment section.
Till we return with another piece that will aid your entrepreneurship journey, Keep Building!!!