Many business owners are not professionals in accounting. They might have knowledge relating to accounting but might not be perfect when it comes to accounting for taxation. If you are one of the business owners that do not have a strong understanding of accounting concepts, standard, and principles, do not do it yourself; you may engage an accounting firm in Johor Bahru to organise your documents. Alternatively, you might want to check out the thoughts below.
At the end of accounting duration, some company owners boast of a variety of wacky tax deductions. How to accomplish this while following the same accounting guidelines in Malaysia? The trick is to comprehend the ordinary and necessary business expenses (Also see Three Simple Ways to Manage Your Bookkeeping).
The expenditures that you incur for your company or primary employment are what we call ordinary and necessary expenses. They need to be recorded and categorised precisely. This will allow you to use your accounting function to reduce the tax burden. The ordinary and necessary expenses are considered as tax deductible every year.
The ordinary and necessary business expenses should be necessary and relevant to your business. The ordinary expense is one that prevails and accepted in your trade or business, whereas the necessary expense is appropriate and useful in your business. A business expense does not need to be vital to be considered as necessary. You have to keep the receipts for these transactions because you might need them when submitting your business tax returns (Also see What to expect from your tax agent?).
In the regular course of your company operations, comprehending ordinary and necessary business expenses will allow you to minimise your business tax. To do so, you need to have great understanding relating to acceptable accounting practices that discuss taxation. You can make use of these practices to take advantage of tax reductions. Do not break any accounting principle or standard, or else, you will discover yourself in serious problems.