How does business maintain tax records?

How does business maintain tax records

Every year, tax payers have to go through the ceremony of collecting all the required information in order to file their tax return. And, after completing these records, they are filed along with the tax records of previous years either by the tax payer himself or his tax agent (Also see What to expect from your tax agent?).

Taxpayers must maintain their tax records for a long period of time. No matter if you own a small business or a big one, you must keep a correct, sufficient, and complete business record of your taxes. This can determine the profit or loss of a business depending on the Income Tax Act 1967.

Individuals who have their own business are called a partnership or sole proprietorship in business. This type of business must maintain their business records in order to aid in business accounts, assist in auditing reviews, and monitor and assist the development of the business, according to the IRB (Internal Revenue Board) Malaysia.

Furthermore, maintaining tax records also makes it easy to fill out the forms of tax returns. In order to keep track of all your business records, you must make a complete set of your accounts, which should include the sufficient records of all your business transactions. The business records and updates should be kept for a specific time period (Also see Tips for maintaining proper accounts).

Even if there are business transactions without any records, then they should also be recorded and noted as withdrawals of stock of cash. For this, there must be supporting documents, which includes purchases and sales invoices or receipts, cash bills, payment vouchers, bank statements, check butts, bank-in slips, and other such related supporting documents. Additionally, you must keep all your account books, documents, and tax records for 7 years after the year ends in which you receive the tax return form (Form B).

If you are a person who does not run a business, then you must declare your taxes on or prior to April 30 of the subsequent year. If you are a person who runs a business, then you must declare your taxes on or prior to June 30 of the subsequent year. And, if you are a person who is employed somewhere and also runs a business, then you too must declare your taxes on or prior to June 30 of the subsequent year.

If you run a business or are a partner in a business setup, then you can be prosecuted for not maintaining your tax records. You may also have to pay a fine of a minimum of RM300 and maximum of RM10,000. You can also get imprisoned for one year. Even it’s remote, don’t give a single chance this could happen by engaging a professional taxation service in Malaysia.

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