NTEEP 4.0: Accounting and Taxation

Introduction

• Host: Anu Singh
• Speakers: Mr. Ikenna Nebo
• Organization: NTEEP (supports entrepreneurs and startups)
• Purpose: Today’s session focuses on accounting and taxation.

Speaker Background

• Mr. Ikenna Nebo
  • Beneficiary of NTEEP's transformative program.
  • Seasoned accountant with a Bachelor’s Degree from Inu State University of Science and Technology.
  • Dynamic entrepreneur, founder of Kelz Nebo Home Improvement.
  • Executive of Africa’s business.
  • Experience: Rich knowledge for community support.

Key Topics Discussed

What is Accounting?

• Process of measuring, processing, and sharing financial and other information about businesses and corporations.
• Importance: Engine of the business for growth.

Types of Accounting and Bookkeeping

1. Cost Accounting:

   • Assigns cost to company’s products, services, and activities.
   • Benefits: Optimizes pricing, reduces expenses, and improves profitability.

2. Financial Accounting:

   • Summary, analysis, and reporting of financial transactions.
   • Key Statements: Cash flow, income statement, and balance sheet.
   • Importance: Determines profitability by detailing expenses and income.

3. Marginal Accounting:

   • Uses account information for decision-making and managing performance.
   • Common Areas: Cash flow analysis, budgeting, forecasting, job costing, and inventory turnover.
   • Importance: Helps in calculating profit margins.

4. Petty Cash:

   • Tracks day-to-day transactions.
   • Importance: Critical for business owners to maintain accurate records of small cash transactions.

Importance of Accounting

• Modes: Routine daily calculations for operating a store or business.
• Benefits: Reduces stress and fatigue by maintaining organized records.

Taxation

1. Definition:

   • Imposition of compulsory levy on individuals or entities by the government.
   • Purpose: Raises revenue for government expenditures.

2. Controversy: Different nations have varying tax laws, policies, and enforcement.

3. Two Key Terms: Year of Commencement and Year of Cessation

   • Year of Commencement: The first year of business operations.
   • Year of Cessation: The year a business decides to close down and settle outstanding taxes.

Methods of Calculating Income Tax

1. Preceding Year Basis (PYB): Taxes are based on the preceding year's profit.
2. Election Rule: Assesses tax on actual profit for the second and third years of operations.

Types of Income Taxes

1. Earned Income: Income from trade, business, profession, etc. (e.g., salary, bonuses).
2. Unearned Income: Income from royalties, trademarks, patent rights, etc.

Reasons for Taxation

1. Government Services: Funding for administration, defense, law and order, and social services.
2. Support for Companies: Reducing specific tariffs to lower production costs.
3. Redistribution of Wealth: Helps in countering inflation and funding social utilities.

Tax Tools

• Example: Tally.ERP 9 software
• Features: Petty cash book, inventory tracking.

Questions and Answers

• Discussed the timing for paying taxes, improving cash flow through accounting, and the differences between various tax-related terms and exemptions.

Closing Remarks

• Key Tip: Always keep accurate records for better management and compliance.
• Benefits: Helps in future business transactions and government interactions.

Final Note

• The session emphasized the importance of meticulous record-keeping and understanding tax obligations as a foundation for successful business operations.