Do you have a Limited Liability Company registered with the Corporate Affairs Commission (CAC) that you do not use?
Do you have a bank account for that company?
I have an advice for you.
Stop Using The Account For Personal Money Transactions.
You know why? Very soon, the Federal Inland Revenue Service will knock on your door for tax returns. They will ask you for your financial accounts and carry out an audit on your company. They will ask you for proof of your VAT remittance. If you say your business is not active, they will not believe you because they can see movement of money in your account. Very soon, tax officials will trace all corporate bank accounts using Bank Verification Number (BVN) to the owners.
Even if you have an active business, it still makes sense to avoid using your corporate bank account for personal transactions because those transactions will be assumed as business income by the tax man. The onus on you is to prove it is personal. How do you prove it? It will be hard.
What is the way out?
The answer is obvious. Stop using it for personal transactions. If you have a corporate account but the business is not active, there is no need to open a bank account for it yet. If your uncle wants to send you money to buy a car for yourself, receive it with your personal account. With personal accounts, you do not need to worry about FIRS. You only have to worry about your personal income tax which you will be paying to your state’s Internal Revenue Service.
If you absolutely want a corporate account, why don’t you register a business name with the CAC? A business name is viewed like an individual and your liability is not limited. With a business name, you deal with your state’s Internal Revenue Service. Register it with just your name as sole owner and you can use your personal Tax Identification Number (TIN) as the company’s TIN.
This will save you a lot of trouble in future. All you need to do is ensure you are up to date with your personal income tax in your state of residence.
This article was written by Akin Alabi and culled from here.
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