Fear Factor: Tax Audit.

Small businesses specially those which are operating as non-listed status often feel the fear of falling under tax audit. But there are some simple and zero (minimal) cost ways to avoid tax audit from NBR (National Board of Revenue Bangladesh) or IRS (Internal Revenue Service USA) or IR (The Inland Revenue UK).

You will find it really amazing to know below 3 (Three) simple ways to avoid tax audit:

1. Filing of tax return: Be it Income tax return or withholding tax return or Vat return, make sure it is submitted. A lot of people think that what will happen if we don't file the tax returns. They think no one is going to check issue properly as government servants are busy with their other regular tasks. But this conception is entirely wrong. Everything is somehow linked together. From my practical experience, I had seen one company did not submit any return since its incorporation. But 4 years later when it applied for Provident Fund recognition the tax officials figured out that there is no file for that company. Later the company filed all previous returns along with heavy penalty.

2. Make sure your financials are well balanced: Showing anything out of the ordinary, abnormal figures etc may create diminishing effect on the credibility of the financials. Make sure you are maintaining records properly so that you can furnish your financials on time and accurately.

3. Respect the letters: Authorities issue letters from time to time. Many companies ignore these letters and some may be dare enough to throw them away. But this practice is very dangerous. Whatever letters are issued to your company; be it relevant or irrelevant to your industry; make sure to respond accordingly.

So, what is your suggestion on this fear factor? Comment on your ideas about avoidance of tax audit.