After registering a company, how should you manage corporate accounting and tax planning?

Why do entrepreneurs and business owners need to maintain company accounting and plan for corporate taxation? 

According to the Accounting Act B.E. 2543 (2000) and relevant laws, all juristic companies are required to prepare accounting records and annual financial statements by an accountant registered with the Department of Business Development (DBD). Failure to comply may result in fines and retrospective penalties.

Aside from legal requirements, proper accounting also provides many benefits, such as:

• A clear view of the company’s true financial position and cash flow.
• Using financial data as a foundation for strategic planning and business decision-making.
• Enhancing credibility when applying for loans or engaging with investors.

Moreover, corporate accounting is one of the key responsibilities that every business owner must pay close attention to. It is not only related to legal compliance but also serves as a critical tool for financial management, tax planning, and transparency, which helps enhance the organization’s credibility. As experts in corporate accounting systems and tax planning, this article provides essential insights and recommendations that business owners should know, enabling new entrepreneurs to gain a deeper understanding of corporate accounting. 

Understanding the taxes that juristic persons must comply with.

Withholding Tax : Companies are required to withhold tax when paying for services, rent, wages, and professional fees, and submit the tax to the Revenue Department by the 7th of the following month (Forms PND 3 and PND 53).

Value Added Tax (VAT) : If annual revenue exceeds 1.8 million THB, the company must register for VAT (Form P.P.20) and file the monthly VAT return (Form P.P.30) by the 15th of the following month. In cases of selling goods or services abroad, the company must file Form P.P.36. 

Corporate income tax: Companies must file Form PND 51 (half-year) and Form PND 50 (year-end) along with financial statements audited by a Certified Public Accountant (CPA). The tax is levied on the company’s net profit,with the standard maximum rate of 20% for net profits exceeding 3,000,000 THB (except for SMEs, which are eligible for reduced tax rates according to the Revenue Department’s criteria).

Specific Business Tax and Stamp Duty : Applicable to certain businesses such as banking, finance, lending, and pawn services, depending on the nature of the business, such as loan agreements or financial activities. Tax is imposed at a specified rate in place of VAT. 

Import–Export Tax (if applicable).

• If a company is engaged in import–export business, it must comply with customs laws.
• Pay customs duties and import VAT, along with any related fees.

Souce : The Revenue Department

Recommended Steps for Planning a Corporate Accounting System.

For corporate accounting and tax planning, there are six main preliminary steps, which may vary depending on the company’s structure and type of business or services. These steps include defining objectives, creating an accounting framework, selecting software, controlling documents, managing monthly and yearly taxes, and planning taxes with continuous system improvements. By following these steps thoroughly, business owners can ensure legal compliance, reduce financial risks, enhance transparency, and facilitate smoother business operations.

1.Start by clearly defining the objectives and goals of the company’s accounting system.

It should be able to answer why the system is needed, ensuring that the accounting system aligns with the business’s objectives and additional specific goals, such as cost control, tax reporting, and profit–loss analysis. 

2.Design and create the Chart of Accounts.

You may start with a simple structure and gradually make it more detailed as the business grows. The Chart of Accounts serves as an “account code map” for categorizing income and expenses, divided into five main categories: assets, liabilities, equity, revenue, and expenses. 

3.Choose an accounting method, including selecting the appropriate tools for the work.

This may include using double-entry accounting,which is the international standard, or utilizing online accounting software that is user-friendly, especially programs designed for SMEs, which can significantly reduce paperwork.

4.Set up a document management system that is as simple and organized as possible.

This includes storing important documents such as tax invoices, receipts, invoices, and payment vouchers, which must be kept for at least five years according to tax laws. 

5.Establish a system for controlling cash and bank accounts. 

Business owners must strictly separate personal accounts from company accounts. Every transaction should go through the company’s bank account for easier verification, and a monthly cash flow report should be prepared. 

6.Have personnel who understand accounting and taxation, or engage the services of accounting system and tax planning consultants. 

This ensures operations are thorough and accurate, helps reduce risks, and provides more comprehensive guidance on tax planning. 

These steps serve as preliminary guidance. Each business should study the details or consult experts to ensure operations are carried out more efficiently and systematically.

Benefits of Establishing an Accounting System and Tax Planning. 

1.Ensures legal compliance and reduces the risk of penalties.

Accurate accounting and taxation in accordance with the Accounting Act B.E. 2543 (2000) and tax laws help ensure the company avoids fines or interest charges for late submissions, while also reducing concerns about audits from government agencies.

2.Facilitates easier control and monitoring of the company’s financial status.

An organized accounting system allows business owners to clearly track income and expenses, monitor cash flow, costs, and monthly profits, thereby reducing errors and financial leakage.

3.Enables more effective tax planning.

With accurate accounting data, a business can plan its taxes, such as utilizing deductible expenses and planning investments to take advantage of tax exemptions (e.g., BOI or R&D incentives), which helps reduce tax costs in the long term. 

4.Supports business decision-making and provides important reports and information to management.

Accurate accounting data serves as a “mirror of the business.” Business owners can use this information to analyze financial status, plan investments, control costs, and make more precise strategic decisions. Additionally, this valuable data can be used for planning business expansion. 

5.Helps build credibility with business partners and financial institutions.

Financial statements that are accurately prepared and audited by a CPA give business partners, investors, and banks confidence in collaborating or considering loans, as they reflect the company’s financial transparency and stability.

In summary,establishing a proper accounting and tax system is not just a “legal obligation” but also a vital tool for business management, from cost control and tax planning to strategic decision-making, as well as building credibility and long-term sustainability. 

If you are an entrepreneur just starting out or expanding your business, establishing an accounting and tax system is highly recommended. It not only ensures legal compliance but also provides financial transparency, enables effective tax planning, and reduces the risk of audits. You can manage it yourself if you have basic accounting knowledge, but consulting experts like FDI Accounting & Advisory, can provide a system tailored to your business, helping you grow more securely and efficiently.

Contact us for a free consultation on accounting and tax systems!

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