Why it makes sense to file monthly rather than quarterly tax returns
The majority of business owners in the Netherlands “ go with the quarterly flow” where it concerns the filing of their turnover tax returns. Have you ever considered switching to monthly filing? You may find it surprisingly helpful!
As soon as you register your newly launched sole tradership, general partnership or private limited-liability company (these being the most common business formats) with the Chamber of Commerce, the latter conveys the information concerning the type of operation your business is involved in to the Tax and Customs Administration, for the latter to define your tax liability (usually for turnover tax and possibly also for corporation tax) and decide on your filing frequency (usually at quarterly intervals). You may prefer filing your tax returns at monthly intervals, however, in which case you simply ask your accounting consultancy to instruct the Tax and Customs Administration accordingly.
Although your first instinct may urge you to dismiss the monthly rather than quarterly filing of turnover tax returns as a hassle you could do without, we would advise you to consider the upside, in that the monthly rather than quarterly updating of your financial records will ensure continual accounting transparency as well as enabling you to pay your taxes in smaller (albeit more frequent) instalments, which will benefit your cash flow.
If running your business on the basis of the latest financials is one of your top priorities, this may be the moment for you to join the growing numbers of business owners who have switched to the monthly updating of their accounts and monthly filing of their tax returns. An added bonus of this “piecemeal” approach would be that your accounting consultancy at year-end would need much less time to produce your financial statements for the year under review, which again would give you greater control of your operations.
No increase in workload
It is a popular misconception that increasing the filing frequency cannot but translate into an inflated workload for the accounting consultancy and thus, into bigger accountancy bills. This is most definitely a fallacy. The “progressive” approach enables the accounting consultancy to carry out its work as the year goes by rather than having to perform a year-end catch-up exercise, added to which it is quite simple and not at all expensive to get the Tax and Customs Administration to change the tax period.
If you too are looking forward to gaining greater financial control of your business, why not contact us now and ask us to take the necessary steps to sort you out?
Please contact your adviser today!