Why Fixing Your Tax Impediments Will Save Your Freelance Business From Collapse
The only way online business owners can succeed in 2021 going forward is by getting used to paying taxes. If you a have tax impediment, fix it. That’s a responsibility most online business owners find hard to accept.
Many people thought that online Freelance businesses boomed during the Covid-19 pandemic because most people were working from home. Fact is, it was only in some niches that business boomed. Otherwise, most of ‘then booming‘ online businesses went under and no one dares to talk about them because the tax man is involved.
So, what do I mean when I say many online businesses owned by freelancers went under?
This is one of the biggest disruption in the digital workspace and no one has control of. 5 years ago, a freelancer or a business owner operating online could get away with all their earnings without paying any dime to the Taxman.
There are many reasons why this was possible;
- No proper laws to govern online businesses was in place thus it was hard to penalize someone for not remitting their taxes from their digital earnings.
- There was no local agents to international foreign companies selling their services locally. A foreign company cannot file returns using their PIN number when selling locally in a given territory.
- Lack of proper systems in place to trace transactions coming to Kenya or getting out of the country as a result of a Kenyan making a purchase overseas.
In 2021, the story has changed. Banks are now able to process most transactions being made online. Banks have all your details including your ID, PIN and active phone number for Mpesa transactions.
If you are trying to carry out business online without putting proper tax measures in place, the taxman will come for you. The tax man can access your transaction statements both for mobile and bank.
Its important to note that government institutions utilized the lockdown period to tighten their online presence. Its now easier to access most government services at the comfort of your home. This is including procurement of services.
Also, most governments internationally used the period to enhance partnerships with companies like Amazon, Microsoft, Facebook e.t.c. This way, they are able earn tax revenues from the sales these companies make in their territory.
So What’s is The Way Forward?
If you did and still do illegitimate business online targeting unsuspicious users, then you need to stop and put yourself together. Fraudulent businesses are now being targeted by security forces in a crackdown to make internet workspace safe. Its therefore important to focus on doing legit business that you can proudly charge tax.
Ask yourself? Which category does your business fall in? is it entertainment, trade, travel, e.t.c?
Remit Relevant Taxes From Your Digital Income
Run a business that qualify to be taxed. This is unless you are operating an NGO and you are offering humanitarian activities. Government institutions love and promote businesses that are tax compliant. When you pay taxes, you support your governments vision and they will love to do business with you.
Which One is Easy?
If you have had your business collapse in the past, ask yourself, am I remitting taxes? Forget about the political story of ‘your taxes end up in the pockets of the corrupt few.’ Paying or fixing your tax impediments may be the solution to your collapsing business.
On the other hand, do a self analysis;-paying taxes vs not paying taxes; which is easy? In my own analysis, paying tax is easy. Its better to be honest and declare NIL return than not do it at all.
The analysis here is based on my personal experience doing business online for now close to 10 years. After looking at the amount of information that the taxman can access about my transactions via bank and mobile money transfer, I saw there was no way to escape unless I declare my taxes and pay.
That’s it from me. Until next time, take care start fixing your tax impediments.You will thank me later.
You can follow me on twitter @cheptiony