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Wednesday, December 7, 2022

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How To Deduct PAYE Tax From Your Employees And Remit To State Govt

It is your duty as a business owner to deduct tax from your employees and pay it to the State Internal Revenue Service, even if you have only one employee.

Most business owners do not know this. They think you must have a lot of employees to start paying their tax.

Then they resist paying employee taxes.

They argue that the employee salary is too small to deduct anything.

Or they argue that govt isn’t doing anything good with the money.

But here’s the right mentality that a small business owner should have towards paying employee taxes:

  1. It doesn’t cost you any kobo extra. If an employee’s salary is 100k, you pay 6500 tax, you pay the employee 93500. No kobo extra to you, so why resist it?
  2. The employee needs you to pay his tax so he can enjoy certain benefits that you may not care about. Your employee might need to put his child in a public govt school, he needs a tax card to do this. You may not need to put your child in a govt school so you do not understand. Same goes for his wife who needs pre and anti-natal care from a govt hospital and needs her husband’s tax card to do so.
  3. You are offering your business the needed stability to grow. Who likes being dragged by the tax man? Who likes the tax man coming to shut down your shop and paste those massive defaulter stickers? Those things disrupt your business.
  4. If you are earning less than the minimum wage or you have small number of staff, what you should do is that at the beginning of every month go to your internal revenue office and file your tax without making any payments. They will open a file for your employees. Do that every month even though you are not paying tax, in that way you will be eligible for TC certificate without any further payment. Same goes for self-employed.

So now that you have the right mentality to paying employee taxes, do not forget to educate your employees ahead of starting and when you are hiring new employees.

Explain these reasons to them.

Deduct and remit their taxes.

Run a stable and tax-compliant business.

Grow your sales and profits.

Be happy!

Make sure to share this so other small business owners can learn too.

We are Accountinghub. A bookkeeping firm and an accounting school for business owners and accountants.

Via Accountinghub

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