If you want to succeed in business and attract a loyal client base, then make sure honesty is one of your top priorities. Around 84% of clients feel that this quality is a positive trait for businesses to possess, and 85% said they were more likely to support brands they considered to be honest.
Businesses display their honesty in many ways—from transparency regarding aspects such as sustainability matters and supply chains. Tax matters are another area in which businesses can prove they have nothing to hide. Simply by complying with tax laws and regulations, they can ensure that their name is never tarnished nor put into question. If you have just launched a business, and you are seeing ways to strengthen your commitment to honesty and transparency in tax matters, read on.
Ticking All the Legal Boxes
Before manifesting your commitment to tax honesty, ensure you are fully compliant with all laws and regulations. There are four main areas in which you will need to actively manage your tax obligations. The first is tax registration—ensuring your company is registered for tax purposes. The second involves filing your returns on time.
The third is centered on tax reporting—you should be ready to answer tax reporting questions if required by the Tax Department at any given time, and that includes identifying necessary data sources.
Finally, you should be ready to make the required tax payments by having pertinent amounts in your bank account. If you are paying tax in other jurisdictions, then you may need to open a local bank account, since paying from a foreign bank account can occasionally make adjustments difficult.
Publicly Sharing Your Tax Policies
By publicly disclosing your tax policy on your website, you can provide clients and stakeholders alike with a clear understanding of your approach to taxation—including your commitment to compliance, responsible tax planning, and engagement with tax authorities.
You can provide clear financial reporting that stakeholders can consult. Your reports should contain information on the tax provisions that apply to you, the tax rates you are paying, and any information on tax questions or disputes. You can also regularly send out press releases or public statements showing your commitment to transparency.
Finally, if you operate in various countries, you can publish individual country reports, each of which indicates your activities, profits, and tax payments in each jurisdiction.
Educating Your Employees
Around 73% of Americans consider themselves lifelong learners, and research has shown that investing in lifelong learning in business improves employee retention. What’s more, 63% of people who are working are professional learners—that is, they have taken a course or received additional training in the previous 12 months to improve their job skills or boost their chances of career advancement.
As an employer, there are many training courses you can offer your employees, but if tax honesty and transparency are a priority, then include training on tax matters in your list of offered courses.
By boosting your team’s financial literacy and ensuring they are tax-compliant, you can enable them to stay on top of their obligations and reduce stress in their lives. Tax literacy is vital in high tax paying countries like Canada and the USA, where total lifetime takes paid amount to $873,345 (in Canada) and $532, 900 (in the US). Within these countries, tax amounts vary considerably from province to province.
All this information is food for thought for employees wishing to reduce the percentage of tax they have to legally pay. Courses can also include handy advice on how employees can pay less tax—for instance, by negotiating non-cash awards, asking their employee to set up a scholarship program for their children, or setting up an office at home (which entitles them to deductions).
Obtaining Third-Party Assurance
Companies that really prioritize transparency can seek external verification of their tax practices from reputable auditing firms or tax advisors. An independent valuation that is subsequently published can provide added credibility and reassurance to stakeholders regarding the commitment of a business to full compliance.
A third party can help you comply with various requirements, including reporting and auditing requirements such as SOC 1, 2, and 3 reports, custody rule, agree-upon procedures, and more. They can reduce the number of requests to for audits by important customers and their auditors. Finally, a readiness assessment can provide you and other managers with the insight and tools you need to deal with any reporting requirements that may come your way. They can also identify areas in which you can improve, help you reduce compliance costs, and streamline reporting.
Prioritizing honesty in tax matters is crucial for business success. Clients value honesty, with 84% considering it a positive trait and a vast majority considering it to be a good reason to do business with a company. Compliance with tax laws is essential to maintain a good reputation, but savvy companies can go a step further by investing their time and effort in transparency.
Sharing tax policies publicly and disclosing information on tax provisions, rates, and disputes show that your company is fully compliant.
Moreover, educating your employees on tax matters improves financial literacy and prevents financial stress. Finally, obtaining third-party assurance from reputable auditors reinforces credibility and compliance, and reduces risks for business owners and stakeholders alike.
