Business
JM | May 2, 2021

Small businesses benefit from legal and tax advice at FLOW Business webinar

/ Our Today

administrator
Business owners encouraged to consider the most suitable vehicle for their trade. (Photo: flowbusiness.co/jamaica)

Over 200 small business owners benefitted from free legal and tax compliance advice at the first instalment of the FLOW Business webinar series.  

Legal expert, Debbie-Ann Gordon of DAG & Associates discussed legal considerations in accounting for taxes and the tax write-off rules intended to relieve financially distressed businesses. Entrepreneurs and business owners in attendance were encouraged to contemplate the most suitable vehicle for their trade, whether sole proprietorship, partnership or limited liability company, as the tax implications vary with each business type.

The business attorney states that, “it is important to be clear on your business form, as this has tax and legal implications. For example, sole proprietors should be aware that in a legal dispute they will be sued personally, while in the case of a limited liability company, the company will be sued and not the shareholders or directors. A limited liability company offers the greatest legal protection.”  

Legal expert, Debbie-Ann Gordon of DAG & Associates. (Photo: Food For the Poor)

Distinguishable benefits for differing business types

In making the distinctions, Gordon explained that, “on the topic of extracting profits, the Sole Proprietor may withdraw cash from the business without any taxes beyond what is paid on the profits of the business. This is because the Sole Proprietor and the business are one for purposes of income tax. However, in the case of a company, the company is a separate person from its shareholders and directors and so amounts withdrawn from the company are taxed separately, whether as salary or dividend etc.” 

FLOW Jamaica’s Director Legal Affairs for the Caribbean, Sola Hines, who also spoke at the webinar, added that the provision of legal advice to small businesses is an untapped area.

She made the point that, “small business owners often wear many hats but understanding the legal landscape is not very easy. We wanted to fill this gap by providing general legal advice in all our FLOW Business webinars.”

While acknowledging that most businesses in Jamaica are considered small or medium-sized, Gordon encouraged those experiencing financial hardship to pursue the legal avenues for relief including write off of their debts and insolvency.

“In cases where a business is dormant or has ceased trading with no intention to revive the trade, you should remove the company or business from the register at the Companies Office of Jamaica. This will also prevent you from incurring future taxes,” Gordon advised.

Advice on business resumption 

She further advised that whenever the decision is made to resume business, striking the entity from the register may not be necessary or efficient, “but in that case, you will need to continue filing your Income Tax and GCT Returns as well as your filings at the Companies Office.” 

Hines congratulated Gordon for a stellar job of discussing taxes and their legal implications, pointing out that there are several more topics to be covered in upcoming webinars.

Legal Affairs Director for FLOW in the Caribbean, Sola Hines. (Photo YouTube.com)

Virtual attendees had many questions regarding their legal responsibilities when running a business and the implications of not paying taxes.  

One attendee asked how to manage a business that was newly inherited. Gordon encouraged owners of newly inherited businesses to quickly seek clarity on the business form, that is whether it is a company, partnership or other and conduct a deep dive into its finances.  

According to Gordon, “Assuming the overarching business model is understood, special attention must also be paid to the income and expenditure of the business. This knowledge will inform whether you are able to offset, carry forward or deduct expenditures from your income so that the company operates as tax-efficiently as possible.” 

Comments

What To Read Next