Author Archives: Aristotle Consultancy

Why You Should Hire A Virtual CFO

A Chief Financial Officer (CFO) is an experienced professional who oversees management of finance and provides direction necessary to produce timely and accurate financial information which improves decision making, reduces business risk and provides peace of mind.

Most of the small to mid-sized organizations do not have the resources available for hiring a full-time CFO. Moreover in such organisation, a CFO is often required only on a part-time basis, supported by a team of accountants for processing of day-to-day and accounting and financial transactions Hence a part-time CFO is an ideal match to the needs of many small and mid-sized organizations.

Improvements in modern technology have contributed to the rise of the virtual workforce. A Virtual CFO Solution means providing expertise of a CFO on a shared basis. A Virtual CFO can provide the level of expertise you need as a part-time contracted resource. Virtual CFOs will work with you to manage and build your business by ensuring that your financial resources are well managed and available when you need them.

Below listed are few reasons to consider hiring a virtual CFO for any organisation:

1:- Experience and Perspective
Virtual CFO is trained for this position. He has experience in managing finances for multiple companies, and is confident in offering financial solutions for your specific company. Virtual CFOs are able to provide the services which are best suited for the company.

2:- Flexibility and Scalability
One of the benefits of hiring a virtual CFO is flexibility. Virtual CFO allows you to specify the number of hours depending on requirements, which means you will only pay for the time they are spending on the project. Ramping up and down is much easier with virtual CFO as compared to Full Time CFOs.

3:- The bottom line – Cost efficiency
You can hire a virtual CFO at a fraction of the amount it would be to hire full time CFO. It ends up saving you from paying for extra office space, computer equipment, a full salary and other perquisites.

4:- Independent perspective
Sometimes you just need a fresh pair of eyes to see a situation clearly. A virtual CFO gives an objective look at your financial situation to help you resolve any issues efficiently and resolve them in a timely and cost-efficient manner.

5:- Making strategic decisions
With a trained accounting professional explaining the details of your business’s financial situation, you will be better informed about your status and your options for moving forward. This will allow you to make more effective strategic decisions every step of the way, thus ensuring that your business will be as profitable as possible in the future.

Hiring a virtual CFO is substantially less expensive than hiring the wrong “in-house” candidate. You won’t have to leap into a full-time salary, or negotiate stock options and other perks and benefits that typically go along with keeping an in-house CFO happy and motivated.

There are always pros and cons to hire any executive, whether internal or outsourced. One of the biggest advantages of hiring a virtual CFO is that is gives you time. This is the time to organize and vision for your company’s future.

Making the right choices to hire a virtual or outsourced CFO may be the difference between success and stagnation in your business. Consider it carefully.

Learn more about Finance and Accounting Outsourcing at Aristotle Consultancy

The Role and Responsibilities of the CFO

The basic responsibility of the Virtual CFO (Chief Finance Officer) is to act as a guardian of the company by taking absolute responsibility of ensuring the financial internal processes being followed. CFO’s monitors the cash flows of the company and explore the different business opportunities in comparison with the market trend. Further he helps in strategizing the financial aspects of the organization by analyzing the strengths and weaknesses and thereby leading to take corrective actions against any identified threats.

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Forecasting and Strategizing: CFO is responsible to monitor the global and domestic economy trends, in order to formulate strategy matrix and modulate business plans for meeting the business expectations. He capitalizes the business information and making it into business opportunities for future growth.

Budget Mentoring: It is the responsibility of CFO to supervise and oversee and compare the company’s actual performance with that of the estimates defined. It is his responsibility to have a vigilant approach in case he assesses material deviations from the defined standards (budgets).

Treasury and Liquidity: CFO is responsible for evaluation of Company’s present financial position, exploring the best investment opportunity considering the risk & rewards in line with available source of funding & optimum composition of capital structure.

Financial Discipline & Compliance: It is the responsibility of CFO to adhere to the timelines with respect to the financials of the company as the stakeholders entirely rely upon the accuracy & appropriateness of the financials of the company. He is responsible to prevent fraud and depict true & fair view of the financials of the Company.

Risk Management and Mitigation: The CFO is responsible for analyzing and understanding the risk involved in the company’s profile and thereby taking preventive measures for its mitigation by implementing appropriate insurance coverage and applying steadfast control systems.

Business Relations: It is the responsibility of CFO to maintain healthy and strong relation with the employees of the organization in order to identify their needs and seek full range of business solutions. He acts a mediator between the stakeholders and the board of directors by timely sharing the accurate analysis of budgets, forecasts and other financial obligations.

Financial Engineering: It is the responsibility of CFO to aggressively restructure the source of funds available with the company and allocating the same for optimum results.

Learn more about Finance and Accounting Outsourcing at Aristotle Consultancy

Last minute checklist for filing income tax return

With only four days left for the deadline for filing income tax returns to expire. Here’s a checklist to help you file your ITR successfully.

Keep required documents handy
The most important thing to start with ITR filing is getting the required documents together. Documents you would need would vary depending on the types of income you have.

Documents commonly required (depending on your situation) include: Form 16 from your employer, Interest statement for interest earned on savings bank account and fixed deposits, TDS certificates, Proof of various deductions (80C to 80U) to be claimed, statement of Interest paid for home loan etc.

Switched jobs? TDS certificate or Form 16 from employer is needed
If you have switched jobs in the last financial year, then you must have received two Form 16 this year – one from current employer and one from the previous one. Most people find it difficult to deal with 2 Form-16s as they find it confusing to figure out how much is total TDS deducted etc.

Matching TDS certificates with Form 26AS
Most salaried employees receive salary from employers after tax is deducted. To ensure that every TDS instalment deducted from your salary is deposited in government’s account on your behalf by your employer, you must match the amount mentioned in TDS certificate with that of Form 26AS.

Form 26AS is the annual tax credit statement reflecting all the taxes deposited under your name.

Paying all dues before filing ITR
Before filing ITR, you must ascertain the total amount of tax to be paid by you. Once you have correctly determined the total amount of tax you, you need to subtract TDS from this total and then pay the balance. The balance tax payable can be paid using net-banking facility of your bank or by visiting the bank branch and paying taxes using Challan.

Once you have paid your dues, ensure that the tax paid is reflecting in Form 26AS too. However, it is to be mentioned that normally as the deadline for ITR filing nears there is a gap of several days between the date of tax payment and the date by when it starts reflecting in the Form 26AS.

Getting the ITR form correct
Make sure you file your tax return using correct form applicable to you as otherwise it would be treated as a defective return. If you file ITR using the wrong form for you, you might receive notice under section 139(9) from the department asking you to file ITR again within the stipulated time.

If you fail to file revised ITR within the given time, then it will be treated as if you never filed the ITR.

Reporting all interest incomes
As a taxpayer, it is your duty to report all the interest incomes earned by you in the previous year – in this case financial year 2016-17 – while filing ITR. Many people tend to forget mentioning the accrued interest earned on fixed deposits linked to bank lockers, recurring deposits, or interest earned on savings bank account.
Remember that for interest earned on bank savings accounts you can claim a deduction up to Rs 10,000 under section 80TTA.

Tax exempted income details in ITR
Income exempted from tax such as interest earned from PPF account or tax-free bonds etc. must be reported in your ITR under the ‘Exempt Income’ schedule.
Also remember that the last budget has made it mandatory for you to file ITR even if your total income plus exempted long term gains exceeds the minimum exemption limit of Rs 2.5 lakh.

Verifying the ITR
The last step to complete the process of filing the ITR is verifying the uploaded return. Your return won’t be considered ‘Valid’ until it is verified by you. The I-T department has made the process of verifying ITR easier by offering 6 ways to verify your return including using Aadhaar OTP, net-banking.

Filing the ITR before deadline
Filing ITR before the deadline has an utmost importance as by doing this you ensure that you do not lose certain benefits. It is also advisable to develop this habit as starting next year there will be late filing fee, maximum up to Rs 10,000 if return is filed after the notified deadline.

Learn more about Tax Compliances and Finance and Accounting Outsourcing at Aristotle Consultancy.

Source – ET WEALTH

Myths about GST busted

Rumour mills have gone on an overdrive since the launch of GST. Here’s a reality check for both GST supporters and its detractors

NOW IT’S ONE NATION ONE TAX

MYTH: Since GST will replace all other taxes on all goods and services, we are in a single tax regime.

REALITY: Though this was the original idea, petroleum products—petrol, diesel— are still outside GST’s ambit and, therefore, their tax rates vary significantly across states. For example, petrol is still sold in Mumbai at `74.30 per litre (as on 5 July) compared to `63.12 in New Delhi. Similarly, some other items, such as liquor, have also bee kept out of GST for now.

SMALL BUSINESSES WILL SUFFER

MYTH: The life of small businessmen will become difficult under GST because of computerised billing, need for Internet connectivity.

REALITY: Shops can do manual billing under GST and Net connectivity is needed only at the time of filing monthly return and can be managed from a cyber cafe.

NO TAX OTHER THAN GST IS NOW A REALITY

MYTH: For every good or service that has been brought under GST, there won’t be any additional tax.

REALITY: GST only subsumes central and state taxes and the levies charged by local bodies are still outside its ambit. Using this loophole, the Tamil Nadu government has allowed its local bodies to charge 30% tax on movie tickets over and above GST. GST is 18% for movie tickets up to `100 and 28% for tickets that cost more than `100. But be-cause of local body levies, tax in Tamil Nadu will be 48% for tickets up to `100 and 58% for tickets that cost more. Not surprisingly, the cinema hall owners in the state went on strike. “Action of the Tamil Nadu government is against the spirit of the GST and the GST council should take action against it,” says Amit Sarkar, Partner and Head, Indirect Taxes, BDO India.

PRICES WILL SHOOT UP

MYTH: Personal expenses will go up on account of GST making it inflationary because tax rates have been fixed at higher levels—18%, 28%.

REALITY: Though the GST rates seem high, it is only because the entire tax is now visible to the consumer. Earlier most taxes—central and state excise, additional excise, purchase tax, etc.— did not reflect on your bill. If one adds up all the taxes, it would have been more for most items (ie effective tax rates will be lower for most products). For example, the price of chicken dish in Kerala should fall because there was a 14.5% tax on live chicken earlier, which has come down to zero now under GST.

ECONOMIC GROWTH WILL RISE

MYTH: GST will push up the economic growth.

REALITY: Real economic growth comes from both organised and unorganised sectors. Tax evasion becomes diffi-cult in GST, so cost advantage of unorganised sector goes and this will result in some businesses shifting to the or-ganised sector. So, what happens will not be an in increase in ‘real’ economic growth but an increase in ‘recorded’ economic growth. However, there will be a small uptick in ‘real’ economic growth due to the improvement in the ease of doing business.

CORPORATES MAY TRY TO PROFITEER BUT GOVT WON’T

REALITY: Some state governments are also acting greedy and not passing on the GST benefits to consumers. For example, the Maharashtra government has increased the vehicle registration tax by 2% after auto firms passed on the GST benefit by cutting prices by 2-3%.

PAY GST TWICE FOR CARD PAYMENTS

MYTH: GST will be charged twice, if you make payments via credit card.

REALITY: There is no additional GST for credit card payments and the confusion arose only because there is GST on additional fees—convenience charges—levied by companies. For example, you make a `10,000 payment and a company charges `50 as convenience fee for helping you make the payment via the credit card, you have to pay 18% GST on that fee too—earlier you paid a 15% tax on it. So the 3% increase is very small—just `1.5 on `50.

Learn more about Tax Compliances & Accounting Outsourcing at Aristotle Consultancy.

Relax! Penalty for filing income tax return after due date is only applicable from FY 2017-18

The government has introduced a maximum fee amount of Rs. 10,000 for delayed filing of income tax return by individuals in the last budget presented in February this year.

However, you need not worry just yet. This fee is applicable with effect from April 1, 2018 and will not apply for returns filed for FY2016-17 for which the deadline is July 31, 2017.

A new section 234F has been inserted by the government in the Income Tax Act. As per this section, an individual would have to pay a fee of up to Rs 10,000 for filing income tax return after the due dates specified in section 139(1) of the Act.

The fee to be levied is based on the time period of delay which is as follows:
(i) A fee of Rs 5,000 in case returns are filed after the due date but before the December 31 of the relevant assessment year or
(ii) Rs. 10,000 in case it is filed after December 31 of the relevant assessment year.

However, as a relief to the taxpayers earning not more than Rs 5 lakh the maximum penalty will be Rs. 1000, says Abhishek Soni, CEO, Tax2win.in

For the purpose of filing income tax returns, financial year (FY) refers to the year in which you have earned the income through various sources such as salary, rent etc.

The financial year immediately following the above mentioned year is the assessment year for the preceding FY. You are required as per income tax rules to file your income tax returns for the income earned in a financial year in the related assessment year.

This penalty will be applicable from assessment year April 1, 2018 and onwards and therefore apply to returns filed after this date. This means that all income tax returns to be filed for the financial year 2016-17 or assessment year 2017- 18 and before will not come under the purview of this section.

Currently, section 271F allows an assessing officer at his sole discretion to levy penalty of Rs 5,000 only if an individual fails to file his/her return before the end of relevant assessment year. This section will not be applicable from assessment year 2018-19 and thereafter but will be applicable for returns filed for FY2016-17 and before.

However, the current provisions of section 234A will still be applicable along with the newly introduced fees. According to Section 234A, simple interest is levied at the rate of 1% per month or part of it on any tax amount if not paid within due dates.

This interest will be payable for the period starting from due date of filing return till the date the return is filed. In case the return has not been filed at all then interest will be calculated from the due date till the date of completion of assessment order passed by the assessing officer.

However, the amount already paid via advance tax or TDS will be subtracted from the total tax payable plus interest along with the fees, applicable from April 1, 2018, as per section 140A of the Act.

Abhishek further adds, “You will also be required to pay this fees along with the self-assessment tax.”

If you have claimed a refund in your return which is filed after due date even then, fees provision will be applicable under section 234F.

Since all the new changes will be applicable from assessment year 2018-19 and onwards so even if you have missed the deadlines for earlier income tax returns, the penalty of maximum of Rs 10,000 will not be applicable, says, Soni.

Learn more about Tax Compliances & Accounting Outsourcing at Aristotle Consultancy.

Source – ET Wealth