Typically, businesses prepare financial statements at the end of the year to summarize their business performance, submit them to the tax authorities, and fulfill their tax obligations. However, Starting to prepare financial statements early, right after the end of Q3, will bring many benefits in balancing tax expenses for the business!
Below, Expertis will analyze the benefits to further clarify the effectiveness of balancing tax costs for businesses. First, let's begin by answering the question. Why is preparing financial statements at the end of the third quarter more effective in balancing tax expenses?
Preparing financial statements immediately after the end of the third quarter will help balance tax expenses effectively for three reasons.
First, Only when the financial statements for the first three quarters of the year are available will the business have sufficient information. basis and time Implement tax balancing plans in the final quarter. If we wait until the end of the fourth quarter, it will be impossible to complete on time.
Monday, This is the time to Inspect, detect, and correct. To promptly identify errors and malfunctions in internal accounting, so that at the end of the year, the accountant and the business owner are not overwhelmed with work.
Tuesday, The Tax Accounting department has time to reconcile the data with the Labor - Payroll - Social Insurance department. Minimize the risk of tax arrears. according to the new regulations
(See more: Reviewing social insurance participants through data from the tax authorities. )
What benefits would preparing financial statements immediately after the end of Q3 offer in terms of balancing tax expenses?
► Business owners have a solid basis to create a balanced plan for the fourth quarter as desired, thanks to their understanding of the production and business situation.
Typically, businesses only summarize their annual business results at the end of the fiscal year, providing a basis for evaluation and planning for the following year.
However, if business owners know the business results for the first three quarters of the year, they can better balance production, sales, and costs for the fourth quarter. This avoids the situation where profit and loss results are only known at the end of the fiscal year, at which point any adjustments or corrections are too late and cannot be achieved.
► Optimizes payroll costs for businesses because data has been reconciled between Accounting and Social Insurance agencies.
Right at the end of the third quarter, if the business prepares its financial statements, it will be an appropriate time for the accounting department to check and reconcile data between the tax authorities and the social insurance agency.
Before settling personal income tax, businesses should review the reasonableness and consistency of salary expenses between the Accounting and Human Resources departments. This process helps businesses minimize errors in social insurance contributions, avoiding retroactive collection and penalties. More importantly, it provides specialized departments with a basis for balancing and optimizing salary costs based on the results of the reconciliation between tax and social insurance data.
If businesses wait until the end of the fiscal year to implement this, departments will not have enough time to review, check, and balance this type of expense.
► Reduced 80% of disallowed expenses during tax settlement for businesses due to a well-balanced budget plan for Q4.
The main reason for expenses being disallowed during tax settlement is the incorrect identification of deductible and non-deductible expenses when determining taxable income. This results in expenses being disallowed, leading to higher corporate income tax payments for businesses. Furthermore, the annual financial statements may not accurately reflect the business's operational performance.
Therefore, to avoid having expenses disallowed during tax settlement, businesses should make reasonable adjustments for the fourth quarter, with the ideal time to do so being right at the end of the third quarter. At this time, businesses have a basis for balancing the fourth quarter, adjusting expenses appropriately, thus minimizing the risk of expenses being disallowed during tax settlement.
Refer to the necessary business documents to use as a basis for balancing tax expenses.
► Input and output invoices
► Detailed ledger versus summary ledger (general ledger)
► Data entered for customs tax declaration on input and output invoices, and tax declarations.
► Corporate payroll
The above analysis is intended to help businesses make informed decisions about when to prepare their financial statements.
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