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Month: July 2021

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How To Become A Tax Expert

Every person who dreams to earn millions faces taxes, companies plan elaborately to handle…

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Every person who dreams to earn millions faces taxes, companies plan elaborately to handle taxes, a common person goes through millions of web pages to understand taxes, but even after all of this, Tax is an elusive topic. For some taxes are a necessary evil for others a sign of equal treatment, but what is important is understanding taxes. These are the reasons why being a tax expert is so sought after.

Having the skills to understand an elusive topic like taxes, can take you to higher places in life. From small businesses to large MNCs, everybody is filing taxes. As a tax expert, your role will be to hold your client’s hands and teach them to maneuver the “tax world”.

You will also play a middle man role between tax authorities and your client when they prepare their tax papers. Being proficient in the tax laws of your country is essential to succeeding in this role. You will be studying lots of calculations, various rules and regulations, and the various schemes the country offers to taxpayers. Your primary task will be to measure taxes, inform your client of rules and regulations and coordinate with tax authorities.

Like any other profession, becoming a tax expert is not the result of reading a few blogs, but a quest for understanding. You will have to pursue professional courses from a recognized University along with nurturing a few key skills that we shall discuss later.

Courses To Swear By!

Ideally after your higher secondary your quest to become a tax expert starts. You will have to complete your undergraduate first and then pursue a post-graduation in taxation. There is a second path too that can be pursued after graduation. Let us have a closer look at what you should be doing;

  • Under Graduation
    Once you have completed your higher secondary, look for undergraduate programs related to taxation. Finding a bachelor’s course that offers specialization in taxation might be difficult. You can go for other related fields that you will need to become a successful tax expert, like taxation courses in Ahmedabad.

    Pursuing your bachelor’s from a reputed institute is also preferable. Choose carefully the institute to pursue a bachelor’s degree, as it will be the base to you becoming a good tax expert. Exposure and quality are the important factors while choosing an institute and not an advertisement.
  • Post Graduation
    The ideal choice after graduation is to pursue post-graduation. In this step, you set yourself for success as a tax expert. Your post-graduation should be in taxation. It will give you all the information you need on how the tax world functions. Keep in mind to get as much exposure to the real-world scenario as possible. An internship under a tax expert will set you up perfectly for your tax expert journey. Again, a reputed institute is advisable, but exposure and quality of education are key factors.
  • Chartered Accountant
    If you want to become a tax expert. Chartered accountancy course is most preferable course in India. The course includes in-depth knowledge of direct as well as indirect taxation. The course offers you to become expert in the field of taxation.

    There is also compulsory internship requirement.  You have to undergo with 3 yeas training under qualified chartered accountant so that you will get the practical exposure to the taxation and accounting. If you are not getting the work related to taxation in the internship you can also prefer to join taxation course in Ahmedabad.

Additional Skills To Add On!

So you have the required qualifications, but without skills, you will not be able to find employers. Let us see some essential skills that a tax expert must possess to become successful.

  1. Leadership
    As a tax expert, you will be in charge of the entire taxes of a huge MNC or a billionaire client. You must have the leadership skills to maneuver challenges and issues that your clients face during their filing of taxes. You might also be required to lead other departments and guide them through the process of tax filings. Thus, a tax expert who can lead from the front and find solutions to problems is bound to succeed.
  2. Up to Date
    The Legislature is always alive coming up with new tax regimes to better fit the society. A tax expert must have the skills to keep up to date with all these changes. A habit of reading newspapers, participating in discussions, seminars, etc. are a few ways to develop these skills. The client is only as aware as the tax expert handling them. Being up to date is crucial for a tax expert to make sure their clients can steer clear of fines and sanctions.
  3. Technical expertise and exposure
    As a tax expert, if you have early exposure to the tax world you will benefit a lot. An internship or a project that you were a part of during your education can help build the expertise needed to succeed. The world of taxes can get complicated with different sectors of the market subject to variable tax regulations. Technical proficiency is a must to understand and find out faulty metrics and partially informed tax filings. Having said that, there are many elite coaching institutes that provide taxation training in Ahmedabad that you could benefit from. Consider checking them out. 

Conclusion

Taxes are a tool deployed by the government to support the development of the country. As a tax expert, you have to make sure that your client pays their taxes without any hassle. You will essentially be the bridge between the government and the client. People might say that taxes are unnecessary, but you must know better. You will also have to be clear and educative with clients and help them better understand the tax regime. A tax expert must be abreast of all the changes in the tax regimes. They must also have the proficiency to deal with mishaps and the composure to work with teams. At the end of the day, a tax expert has to be the one who can see right through the elusiveness of the “Tax World”

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Learn Commerce structures IV: Public Limited Company

An organization that functions as a single entity formed and owned by shareholders is…

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An organization that functions as a single entity formed and owned by shareholders is called a Public Limited Company. It constitutes a company that can freely sell its shares in a public domain and all its decisions are governed by strict rules and regulations.

In the Indian Republic, a Public Limited Company is the largest method of doing business available under the law. Often a group of people who have a great business idea, register for a Public Limited Company and generate capital by offering shares that can be bought by the public. In the present economic scenario, Public Limited Company is very profitable and thus gaining further education in Public Limited Companies after BCom course in Ahmedabad, proves beneficial.

What is a Public Limited Company?

A Public Limited Company in layman’s terms is a company formed and by the people and makes profits for the people. Thus, a company that is registered as a Public Limited Company cannot and will not have a specific owner. This makes sure that a one-head monopoly is avoided in the company.

Let us take an example of a famous Public Limited Company in India, The State Bank of India. Founded in 1955, as an amalgamation of the three princely state banks in British rule, The State Bank of India is one of the most prominent examples of a Public Limited Company. All the shares of the State Bank of India are listed on the National Stock Exchange and the Bombay Stock Exchange for sale to the public.

There is no owner of the State Bank of India and all the profit generated is paid to employees and shareholders as dividends. The presence of the State Bank of India makes sure that the banking sector is free of monopoly by a mogul or one single private bank.

Who is the owner of a public limited company?

The most distinctive aspect of a Public Limited Company is its ownership. In a private company, the owner is either a parent organization or a group of people who founded the company.

Unlike private companies, a Public Limited Company is purely founded and owned by the public. Thus, a Public Limited Company will not have an owner but rather it will have shareholders. The management of a Public Limited Company is looked after by a Board of Directors (we shall discuss this in the features of a Public Limited Company).

What are the features of a public limited company?

Let us try to analyze the features of a Public Limited Company to gain better knowledge;

Legal Existence: A company that is registered as a Public Limited Company shall have separate legal existence from the members who own the company. This means that if a group of people come together and create a Public Limited Company then once the company is formed, it gains a separate identity. All legal documents like GST invoice, court notices shall be issued in the name of the company and not the owners or the management.

Capital: A Public Limited Company has to collect capital for its expenses and procuring its raw materials. Most Public Limited Companies collect capital by selling shares to buyers in the public domain. When you buy a share in a Public Limited Company, you own a certain percentage of the company. The capital generated by selling public shares is called the share capital.

Shareholders: A Public Limited Company is owned by shareholders. This means that no person can claim the company as their own private company. But shareholders cannot take part in the management decisions of the company. Their sole role is to elect the managerial committee often the Board of Directors that looks after the major business decisions of the company.

When a company is indebted and is liquidated, the shareholders do not have to pay the creditors of the company. Rather they have to pay only the face value of their shares. For example, say you hold a thousand shares in a company each worth ten rupees. If the company goes bankrupt, you will have to only pay the face value of the shares that is; ten thousand rupees.

Board of Directors: Almost all companies today, public or private, establish a board of directors to look after major business decisions of the company. The difference here is, the board of directors in a Public Limited Company are selected by the shareholders and they represent these shareholders during meetings with other companies. The decisions taken by the Board of Directors use a majority rule and this ensures unity in the management.

What are the merits of a public limited company?

Public Limited Companies are often the largest companies in a business. Let us analyze a few of the merits of a Public Limited Company;

Leadership: As stated earlier, Public Limited Companies have a board of directors. This ensures that the company is led by a consensus rather than the whims of a single leader. The main advantage of having a board of directors is that these directors are selected from the shareholders and by the shareholders.

Large Capital: One of the largest advantages of a Public Limited Company is that they can generate huge capital investments. By selling their shares in the public, Public Limited Companies generate a huge capital for their expenses. Once the Initial Public Offering (IPO) is over and the share capital has been generated, Public Limited companies can release bonds and debentures through the stock market to generate additional capital. Thus, Public Limited Companies that have a strong performance can generate greater capital over time.

Financials: Public Limited Companies are strictly governed by rules and regulations. Thus, they are required to publish their financial records every year. Unlike private companies, Public Limited Companies have to make sure that their investors know the financial happenings and position of the company. This adds an element of safety to Public Limited Companies and helps them in attracting potential investors.

Limited Liability: Shareholders in a Public Limited Company are protected from incurring the company’s losses. What this means is that shareholders have to pay only the face value of the shares they hold in a company if it goes bankrupt. This facet also makes sure that Public Limited Companies are separate entities on their own and can also be sued on their own without the involvement of the shareholders.

What are the demerits of a public limited company?

Though there are many advantages to a Public Limited Company, there are few disadvantages too that we need to discuss;

Public Books: On the one hand publishing financial records every year, helps Public Limited Company attract investors but at the same, this also means that their competition knows everything about them. Since the company has gone public, the competition can easily analyze their finance books and see the loss and profit that the company is experiencing. This aspect poses great difficulty to Public Limited Companies.

Greedy Shareholders: Often the public has no interest in the working of the company. Investors today want to make an easy buck and this means that they do not pay any attention to the detailed plans a company lays down to expand. Greedy Shareholders take no part in developing these plans and often prove detrimental to the company’s plan.

Takeover: Unlike private companies, Public Limited Companies are prone to takeovers since the board of directors is selected by shareholders. A hostile party may buy a huge number of stocks in the company and gain a significant voice in the board of directors. This means that a hostile party can gain ruling command in a company and derail the existing chain of command.

Is there any specific member requirement in a Public limited company?

A company that wants to register itself as a Public Limited Company has to have a minimum of seven members. The maximum limit for the number of members in a Public Limited Company does not exist, unlike Private companies that can have a maximum of two hundred members only.

This gives an advantage to the Public Limited Companies as they can have a huge number of members. Specific employee requirements can further dwell in deeper after commerce courses in Ahmedabad.

What are the requirements for Public Limited Company registration?

In today’s time, the Government of India has made registering Public Limited Companies easier as compared to earlier times. According to the Ministry of Corporate Affairs, there are three mandatory requirements that a company has to fulfill to register itself as a Public Limited Company;

  • The company must have a minimum of seven share holders.
  • The company must have a minimum of seven share holders 
  • The company must introduce minimum share capital of Rs 5 Lacs
  • All sections of the company should have a direct impact on its compliances.

What are the documents required for registration?

There are two sets of documents required for registration, one set for the directors and shareholders and the other set for registering the company office;

Directors/ Shareholders

  • Copy of PAN Card
  • Aadhar Card
  • Address Proof (Bank Statement, Mobile bill, Telephone bill)
  • Authorization Form

Registered Office

  • Ownership Proof (Electricity Bill, sale deed, copy of index II, Tax Bill, etc)
  • Utility Bill (Gas Bill, Electricity Bill)
  • NOC

What is the process of registering a Public Limited Company?

The process involved in registering a Public Limited Company is;

  • Identify Seven Shareholders and Three directors (Minimum numbers you may have more)
  • Obtain a Director Identification Number (DIN): Every director of the company must have a DIN allotted to them by the Ministry of Corporate Affairs.
  • Obtain a Digital Signature Certificate for Promoter and Directors: This legally allows the promoters to promote the company and recognizes the directors of the company. It also allows the authorities to authenticate the documents being filed.
  • Identify location and capital of the company
  • Company name application: The company should apply to the Registrar of Companies, to reserve a unique name for themselves.
  • Preparation and submission of the Registration documents to the ROC: Registration documents like Memorandum of Association and Articles of Association have to be prepared and submitted to the ROC.
  • Issuing of the Certificate of Incorporation and allocation of the Corporate Identification Number by the ROC
  • Filing commencement of Business: The company cannot start its business until the directors have filed a declaration stating that all shareholders have paid the share money within 180 days of incorporation.

Conclusion

Public Limited Companies allows making sure that major sectors like banking, finance stay free of the monopoly of huge private industries. Thus, learning about Public Limited Companies after BCom courses in Ahmedabad proves very beneficial in the longer run. It can help create and build Public Limited Companies that can go on to become leaders in their respective businesses.

Part – iii – Learn Commerce Structures III: Private Limited Company
Part – ii – Learn Commerce Structures II: Proprietorship Firm
Part – i – Learn Commerce Structures: All About Partnership Firms

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Qualities Required To Be An Accountant

Introduction An accountant handles one of the most crucial roles in a business regardless…

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Introduction

An accountant handles one of the most crucial roles in a business regardless of it being for a large corporation or a small business. They are the financial backbone of a business and handle monetary records, money transactions, and timely taxes.

There are different types of accountants. Government accountants work for government agencies’ monetary records. Public accountants are either self-employed who work audits, documentation, and tax for clients or they account for firms. Management accountants are employed by a single company and they account for internal financial records of that company only.

Who Is An accountant?

An accountant is a professional who is in charge of the protection and transliteration of technical records and survey of financial statement analysis. They work for firms or big and small companies.

An accountant’s day-to-task mostly depends on their educational background and the designation they hold. Have you ever wondered if there was an accounting centre near me? How wonderful would it be to start your journey towards your dream job!

Most people start their journey by getting themselves into a school followed by a Bachelor’s degree in the same BCom course.

But some firms may demand additional educational certifications after BCom. Some of the common accounting designations are  Certified Internal Auditor (CIA), Certified Management Accountant (CMA), and Certified Public Accountant (CPA). So, for accounting training and placement, one should look for good cl.

What Does An Accountant Do?

Accountant paints a picture of a company’s stand in the global market by using numbers and financial statements. Some of the accountants’ everyday tasks include the following :

  1. Preparation of profit and loss statements and monthly cost accounting reports.
  2. Maintaining and processing monthly payments and stipends.
  3. Completing audits and interacting with auditors.
  4. Analyzing and accounting.
  5. Evaluating and accounting budgets, outlay, payments, and bills.
  6. Settling account discrepancies.
  7. Maintaining computer software and manual filling systems.

Who Hires An Accountant?

Various businesses hire accountants to balance their taxes and audit the financial records. Organizations having complex financial systems and loaded transactions require accountants.

Some examples of such organizations are:

  1. Universities And Schools
    Schools and colleges have complex monetary systems and require professional accountants to manage their profits and expenditures. The accountants hired are supposed to make sure that the capital and funds are sufficient to meet the needs of the institution’s various departments and covers the college tuition expenses.
  2. Hospitals
    Hospitals and healthcare providers work with insurance agencies to help people with medical needs. The job will require working directly with insurance companies and make sure the organization doesn’t exceed its expenses.
  3. Agencies of Government
    This sector needs high-precision accounting and ensuring that the revenue and expenditure get properly recorded. Since the government agencies are so large, the job vacancies are a lot as well. The candidate will be responsible for recordings of various programs and initiatives under the compass of these agencies.
  4. Entertainment and hospitality companies
    These businesses perform thousands of transactions every day and experience a lot of revenue every day. They also need accountants to collect the receipts, records, and tax time rolls. They also involve in managing employee payrolls.

Strengths That An Accountant Should Have

  • Analytical Skills
    “Good accountants can pull the analysis together, great accountants look at the output and judge whether it is reasonable, so as not to waste everyone’s time on an analysis that makes no sense when you take a step back and look at it from a common-sense standpoint.”- Bob Prather

    Accounting is a meticulous task that demands attention and precision. 
  • Organization
    The work of an accountant includes client meetings, deadlines, and following proper guidelines. Each of these works demands a notable amount of documentation and keeping track of all the paperwork. 

    “The best way to stay on top of deadlines is by getting organized”- Logan Alec
  • Critical Thinking
    Critical thinking is an invaluable skill in the accounting profession.
    Accountants face a lot of fallacies, discrepancies, and imprecision in their daily work that needs to be detected and rectified. 
    These fallacies’ can have serious aftermath if not addressed in time. Hence, accountants need to think beforehand and think critically to face all potential risks and solve them in time.
  • Adaptability
    As we know that change is the only constant, it holds for the accounting profession as well.
    It constantly changes and evolves. Accountants should always be ready to readjust to technical advancements, workplace dynamics, and altering standards and protocols.
  • Interpersonal Communication
    Accountants serve as data translators. Accountants work for clients and many of them may not be aware of complex monetary concepts. Thus accountants are required to spell out their work and transform the complex concepts into average peoples’ understanding.
  • Time Management
    “Working on different projects and being able to manage deadlines is a trait that separates passable accountants from their top-shelf peers” – Kyle Bryant

    Multitasking and proper management of all the work are the top skills an accountant should have to provide satisfactory results for their clients in time.
  • IT And Industry Knowledge
    Accountants should understand how software accounting works and how it can be applied to make a change for progress.

Top Accounting Skills For Success

  • Innovation
    The evolving business world demands an evolving accounting system along its side. Companies often look for candidates assuring to create a change for the better.
  • Enthusiasm
    Enthusiasm is contagious and it brings positive energy to the team. It shows that the candidate is eager to learn his/her trade and believes what he/she is working towards.
  • Trade awareness 
    It is the knowledge of where the company stands in the global market, how it is affected by social, economic, and political issues and how to make progress and move ahead.
  • Integrity
    Building trust and reputation get the job done halfway. Credibility opens the door for new opportunities.
  • Communication
    Accounting systems are not understandable by the common people, this is where communication skills come in. An accountant should be well-versed with the task they are working on and the way they have to translate it for the common people to understand. They have to fill the gap between numbers and stories.
  • Understanding
    Comprehending new statistics and data is crucial.
  • Initiative
    Initiative proves that the candidate is an independent thinker and can work on his own. This welcomes more trust and better opportunities.

Conclusion

Accounting job includes transaction and producing of monetary reports. 

Candidates have to develop problem-solving skills, decision-making, and critical thinking. So if you are someone who is considering venturing into the accounting field, be sure to develop these characters to be the perfect match for what’s expected to come your way in this field.

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DEFERRED TAX

The tax effect due to the timing differences is termed as deferred tax which…

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The tax effect due to the timing differences is termed as deferred tax which literally refers to the taxes postponed. Deferred tax is recognised on all timing differences.

Timing Difference can be categorized into two parts namely:
1) Permanent timing difference
2) Temporary timing Difference

PERMANENT TIMING DIFFERENCE
A permanent difference is the difference between the tax expense and tax payable caused by an item that does not reverse over time.

For example if any expense which is booked in the books of accounts but is not allowable under the Income Tax Act,1961 then this amount of difference will cause an entity to pay more amount of tax as compare to amount of tax which is payable as per books of accounts.

This difference is always be present and cannot be reversed as expense is not allowable under Income Tax.

Entity has to pay taxes as per rules prescribed under Income Tax Act, 1961.

TEMPORATRY TIMING DIFFERENCE
Difference occurs due to transactions that create temporary differences are recognized by both financial accounting and accounting for tax purposes, but are recognized at different times.

For example a timing difference can be a rent income. Accrual accounting will only allow revenue to be recorded when it is earned, but if a company receives an advance payment of rental income, it must report this under taxable income on its tax return. As such, this revenue will be recorded on the tax return but not the book income. This creates a timing difference in this period. At a future period when the rental revenue is finally earned, the company will record that revenue under book income but not on its tax return, thereby reversing and eliminating the initial difference.

DEFERRED TAX LIABILITY OR ASSET
A deferred tax liability or asset is created when there are temporary differences between book tax and actual income tax. There are numerous types of transactions that can create temporary differences between pre-tax book of accounts income and taxable income as per Income Tax Act, 1961  thus creating deferred tax assets or liabilities.

Deferred tax liability occurs when Taxable income books of accounts is more than taxable income as per Income Tax Act, 1961.

As per books of accounts company is liable to pay more tax but as per Income Tax Act company is required to pay tax on Rs. 8500 only. This difference arise as there is an difference in rate of depreciation but this will settle in future times.

Deferred tax asset is created when Profit as per books of account is less than the Taxable income under Income Tax Act, 1961.

Let us say an electrical goods Company has a revenue of Rs 5 lakhs and it has expenses of Rs 3 lakhs, thus a profit of Rs 2 Lakhs. However, the expenses are bifurcated as Rs 2.5 Lakhs for the cost of goods sold, general expenses, etc., and Rs 50,000 for future warranties and returns. The Income tax do not consider future warranties as an expense. It is because this expense has not been incurred but only accounted for. Therefore, the Company cannot deduct such an expense while calculating taxes thus, pay tax on Rs 50,000 as well. Therefore, this amount will be part of the deferred tax assets in the balance sheet.

To summarise, the deferred tax asset or liability can be understood in the following manner.

To know more about accounting and treatment in books of accounts you can refer accounting course in Ahmedabad.