What business owners should know when filing taxes

by Jon Carlos Rodriguez, ABS-CBNnews.com

Posted at Feb 17 2014 05:29 PM | Updated as of Feb 18 2014 11:33 PM

MANILA, Philippines – As the deadline on filing income tax returns looms, a tax expert is reminding business owners to list down necessary and ordinary expenses that are deductible.

Atty. Hardy Aquende described these expenses as the assets needed to make your office operational.

Doctors, for example, may list rent, staff salary, utilities, and transportation as necessary and ordinary expenses.

“For business owners, make sure you deduct all the necessary and ordinary expenses because you are entitled to it and if you don’t want to go through the hassle of listing down all the expenses that you need to deduct, just avail of the 40 percent optional standard deduction,” Aquende said on ANC’s “On The Money.”

Aquende also reminded business owners of the new income tax form under Bureau of Internal Revenue (BIR) Regulation 2-2014.

Aquende said the new BIR form is an expanded version of the old form, and is now machine readable.

He said several pages were added to include the list of necessary and ordinary expenses for business owners.

Disclosing passive income, however, is now optional after several lawmakers and businessmen said this is a violation of bank secrecy laws and privacy laws.

He also reminded business owners to pay taxes ahead of the April 15 deadline to avoid paying a 25 percent surcharge and a 20 percent interest.

“The practical reason for filing early is because you avoid the stress of rushing through it and you avoid all the lines when it’s April 15. But on the legal side, if you missed the April 15 deadline, you’re immediately subject to a 25 percent surcharge, that’s a big amount of money. You’re also subject to a 20 percent interest on the tax liability that you are supposed to pay,” he said.