Business owners advised to have separate account for business

By PETER ESILA
SMALL to medium enterprises (SMEs) in Papua New Guinea have been encouraged to have two separate bank accounts for tax purposes.
Deloitte senior manager tax and business services Maygen Turliu said during the 2019 PNG Start-Up Convention in Port Moresby yesterday that this would keep separate a private and business account.
“Two bank accounts, one private and the other for business use ,” she said.
“In tax, anything you spend for yourself like cars, holidays, jewelry, the government doesn’t allow you to take tax deductions. So they will disallow it.
“We encourage you to keep separate accounts. In PNG, what we get in the business we use it for the family. But if you are serious about business, you keep business and private/personal use separate.
“Have two bank accounts. One for private use and the other for business use.
“Keep your records. In our laws you must keep records for seven years as the IRC could come knocking anytime. And at the end of every year you will need that information.
“When you spend and get all the receipts, keep it in a box or file and file all the receipts because you will need it to report your tax returns.
“If you have a company, the government will tax you on 30 per cent of your net profit.
“If you do business name or partnership, the highest tax rate is 42 per cent.”
She also encouraged SMEs about tax registration.
“If you’re thinking of opening a bank account, today the banks will not allow you to open an account until you show your tax certificate, TIN (tax file number) registration.
“So you need to go to IRC and register.”