In starting a business, tax-related costs are among the least costs you plan or even think about incurring, especially if you start your business informally. The informal running of the business entails you, being the CEO, the finance officer, the operations officer, the accountant, the quality assurance officer, the marketing officer, and any other role including a cleaning role once in a while.

This is usually done to reduce the costs incurred in running the business and usually, and the saved money on the potential costs, are usually plowed back into the business. It gets interesting when even the very person that executes all these activities doesn’t earn a decent income or allowance from the business with the mindset of ensuring that the business grows first before any expenditure related to human resources is incurred.

What that usually breeds is the burn-out of the owner of the business, a high level of entitlement, and complications associated with separating yourself from the business. And until that is done, the business can barely take off. Just like weaning a baby, there are pains associated with weaning yourself from the business, if it has to grow by a certain magnitude. Not separating yourself from the business results in sharing your bank account with your business, business money kissing with personal money, which most times births an unwanted bastard child. This child is called “business stagnancy” and/or at worst, “business failure and closure”.

In such a scenario, the tax man might not get to know about you, leave alone get interested in even knowing about you. The tax man gets interested in knowing you when your bank account starts getting busy, but with the above description of the situation above, your bank account can never get busy with such an arrangement. When the business tries to stretch and get busy, the owner usually hits it on the head unknowingly. Most of the businesses are run with such an approach and the guise that they are saving by not earning a salary or even employing staff, not knowing that it’s a matter of when & not if, the business is going to close.

At such a stage, all the entrepreneur needs is a mentor who has run that business and run it well and profitably. Such caliber of people, are not only rare but they are usually very busy running and growing their businesses. The few non-busy ones, are the likes that might not tell you the actual pros and cons of the business, entice you to keep it as is, smear cream on the venture, and you eventually learn the hard way or even crash if you are not lucky enough.

The former category sometimes charges for their time and the pieces of advice they give and this helps them a lot in sieving serious students from the non-serious ones. It also saves them a lot of time they could waste on someone, who might not even implement the few ideas given to him. The last time I checked, I treasured a course that I paid for by myself at the university more than the one that was paid for by my parents and/or the government. In the latter, I could afford to dodge a few lectures with excuses ranging from early morning heavy rains to having a wedding party to going to a social gathering. On several occasions, I could even come late for lectures.

In the former case, whether it rained or not, I would make sure I attend lectures, try to concentrate in class, and do the assignments. Most times I could even get in class before lecture time to catch up with fellow students as well as try to read ahead. In some instances, I could not even have some weekends to myself because I could be busy reading and discussing with my colleagues. It therefore will most times take someone to charge you to value their time and the material or practical lessons they get to share with you. It is this someone, who will instruct you to separate your personal money from company money, operate your personal account from the company account, employ a few professional officers and concentrate on working on your business rather than working in your business. It will take that individual and you have to value their advice since they are doing what you intend to do, or they are where you intend to be. Much of that advice is practical and if not followed, might cost you a lot of school fees. School fees in some businesses like money lending are very costly that it might actually cause the closure of your business. You therefore must take such pieces of advice seriously.

It’s such an individual that will force you to think about the tax man. This is not for his good but for your good. If you plan to grow in business, you have to be in good books with the tax man.

Most of the excuses cited by entrepreneurs for not paying their tax obligations include the misuse of money and corruption tendencies by government officials, dilapidated infrastructure, and poor services to the public, among others.

Colleagues, let me share this bitter truth with you, whether the government meets its obligations or not, you are obliged and must pay your taxes. Such an excuse will not save you when the tax man knocks at your door, and it’s not “if” but rather “when” that time reaches. A profound caution in the Bible reads, “Give to Caesar what belongs to Caesar and to God what belongs to God.” So, you have two choices at hand, to grow and face the tax man or keep stagnant and avoid the tax man. Whatever is not growing must be dying, so in a few years, we shall bid your business fare-the-well from your industry, if you refuse to grow in a bid to avoid the tax man. The last time I tasted, I would rather grow and pay the tax man than keep stagnant or even die in the guise of avoiding the tax man. Here below, I share with you a few advantages that come along with being tax compliant:

1. Peace of mind. There is nothing that beats having peace of mind at any particular moment in time. A number of terminal illnesses like cancer have been highly attributed to high-stress levels that are contributed to by lack of peace of mind. Though not valued by most people, this should be the first on the ladder. It’s a very relieving and cool feeling to know that anytime the tax man knocks at your door, you don’t have anything to hide around. This frees your mind to think about your business growth. Thus, this alone should push you to be tax compliant.
2. Entrance to bigger projects and business deals. Tax compliance is one of the first requirements you will be required to present in case you need access to any tangible project or business deal. This is usually asked through a tax clearance certificate and until this is presented, you cannot be awarded most or even any tangible contract for the project. So, if you anticipate playing with the big boys, bidding for those big projects, execute those fat contracts, you must be tax compliant.
3. Attracting equity and affordable capital to scale up your business. This will help a lot if you have liquidity issues, especially for businesses with high cash-flow requirements. Such businesses include manufacturing, processing and refining, and real estate, among others. Such ventures not only need patient capital but also need affordable or cheap capital, and the easiest qualifier of your business to angel investors or such cheap capital, is you being tax compliant, among other requirements. The quick question that comes to mind is, if you can’t pay the government, which you are obliged by law to pay, how will you pay the investor? That alone can cause the investor to pull out! Go and be tax compliant for your sake and for the sake of your business.

Thanks for reading this and I hope it was worthwhile and helpful. Leave your comment or feedback in the chatroom if this article was helpful in any way.

For any questions on personal and business finances, money lending business, and related ventures, check us out at: www.jonakeeholdings.com