F&O is a popular trading concept but usually the concept of Future and options is blurred in the minds of people and reporting the same for tax returns is a hassle concept even in the minds of many accounting expertise. The enlisted points will help you know all in detail about how to report Future and Options trading in tax returns. Go through the same and expand you knowledge depth.
- What is Future and Options (F&O) trading?
Future refers to a contract of buying or selling an entity or item in future at a price that is agreed upon today.
An option refers to the contract where one of the contracting parties has an option to execute or not to execute trade in future.
- Reporting F&O trading as business
When one opts for tax returns, F&O is reported as business. When you report the same as business you can always claim expenses that you have incurred. You must follow the under mentioned steps to report the same as business:
- Calculate your total income
- See if you lie on the profit side or on the loss side.
- Calculate all the expensed which means your rent, commissions and all your personal and business costs.
- Deduct the same from your income.
- The remaining income is regarded as the profit or the loss from F&O trading activity.
- Know what is ITR-4
Once you have earned business income, you must file Income Tax Return-4 which would demand your profit and loss sheet, balance sheet. If you have an issue over here you can always take the help of an expertise for the same.
- Do not run from reporting losses
Losses always carry tax benefits and reporting the same should be done mandatorily. Usually two types of business losses occur, namely speculative and non speculative losses. F&O loss falls under the category of non speculative loss. The loss can be adjusted from other sources of income except for the salary. In case your F&O loss remains unadjusted, it can carry forwarded for 8 years.
- Application of Tax Audit in F&O trading
- In case of profit: The tax audit is applicable in case the turnover is greater than Rs. 1 crore or 8% more of the turnover, then only the income is taken into consideration and IOTR has to be filed. In this case maintaining book of accounts is not mandatory
- In case of loss: The tax audit is applicable if loss is less than 8% or turnover exceeds Rs. 1 crore, than tax auditing can be done and in order to carry forward the process, maintain books of accounts as per norms is must.
- Maintaining books of accounts in F&O trading
Since F&O trading is considered as normal business income, the rules which are applicable to normal business are applicable here. The important rules for profit and loss are same as mentioned in the case of tax auditing. Keeping accounting records is otherwise mandatory for every business. You need to calculate the turnover and the positive and the negative sum you are carrying. Every business has a return filing ate and you must get your returns filed by the same and submit the tax audit report you have prepared.
Today the accountant is no longer confined to the traditional accounting activities like bookkeeping and preparing books of accounts. Today accounting services are beyond your imagination and extends its hands in all the domains be it payroll management or tax planning. Today every business sector sees the need of accounting services and you can be an effective an impressive accountant without really being an expert.
Usually when people hire an accountant what they look forward to is profit maximization and the queries related to the risks of investments. In simple terms they look forward to be on the safer side with profits and benefits weighting heavier. You can build lifelong relations with your clients by going beyond accounting without really being an expert in the under mentioned ways:
- Prepare the FAQs
If you have been in working in the domain for some time, you might be aware about the general set of questions clients always arise and you must be well prepared with at least the certain forms in an impressive format, be it text, audio or video. The time you save can be used to handle your clients better and moreover add quality to your work.
- Go Technical and make the best use of technical software products
In the virtual era you can just keep all your work in any cloud storage which will facilitate for you easy dealing with the client in multiple forms be it emailing your client, share documents and software etc. You can also make use of skype and other software to communicate with your clients. To quote in a nutshell, go virtual with your work.
- Do not leave your clients unanswered
What your client is going to ask you certainly has no boundaries however on the other hand it is true that you might not have answer to all the questions at once. But it is your duty to look into the matter and prepare the answer to the same within minimum time span as this would help your client to take valuable business decisions and moreover realize that you are really an asset he has found.
- Understand the market and other environmental factors
While you are working as an accountant and even beyond that you must not keep your knowledge and growth limited. Instead take time to study the market conditions, the growth being offered to the kind of industries you are working for and moreover what the customer demands from your client. In order to guide your client best you must also be aware about the working environment of the firm as the transition will happen only if the human resources are adaptable in nature. This is something which will help you stay ahead in game and turn the competition to your side.
- Be a trusted advisor for your client
You are not merely an accountant but also an advisor whom the client will seek at every point of time. You can take time but you should be ready with the piece of advice or the resource your client currently requires. The advices you render to your customer will be an outcome of experience, it might not be something happening today but will certainly happen over years. You are going to have a major extent of control of your client’s business, be ready for that.
Accounting and Bookkeeping are the two business aspects that helps to keep a measure of financial activities of business such that the performance of the business is always on the rise. In order to maintain the accounts and other legal works aptly, people usually prefer opting for an accountant or even outsourcing their accounting and bookkeeping. This helps to regulate the blood of business, money in an error free fashion.
The bookkeeping and accounting are the two sides of the coins that make the other smooth functionally. They are not limited concepts but have broader outlook, the most important facets in accounting and bookkeeping are:
Know Bookkeeping – Bookkeeping is like a sub section of accounting which actually implies collecting and organizing all your financial information so that it can be used for business growth. The art of bookkeeping is performed by the professionals who would help you to do much more in business than you can imagine. It helps one get tax returns, prepare legal statements, business auditing and moreover deciding that which way is actually the business going. Bookkeeping is the initial step of every accounting system.
Financial analysis and management – Finance is the most important aspect of any business and financial analysis and management is the accounting procedure that must be executed at regular intervals of time. Bookkeeping and accounting helps perform this easily. In case your finance is being delayed or it is not being managed as per the predefined credentials, accounting can help you realize the breakpoints and moreover work on it.
Plan your business – Business is one of the riskiest occupations that can never go unplanned. Bookkeeping and accounting performed by professionals help every businessman plan his activities in a timely fashion, which helps to achieve better results. The accountings statements include profit and loss statement, balance sheet which helps monitor overall profitability.
Bookkeeping and accounting should aim at profit enhancement – Accounting services are diverse in nature, but the center facet of every business activity has always been profit enhancement. The organized records and subsidiary book of accounts would certainly help you climb up the ladder of profit enhancement.
Save Taxes – Tax planning can save you money that you would not have thought otherwise. Tax panning comes with the right bookkeeping as it involves recording your financial matters in a smart way that usually known only to the expert accounting service providers. Summarizing your accounts efficiently can help you save taxes considerably.
Saving taxes involves other accounting activities like minimizing the number of documented errors and investing more time in tax planning.
Accounting is the elder brother – Accounting is an expert based job which cannot be handled single handedly, unless and until one is experienced enough in the domain. Once the bookkeeping is done, the overall business aspects are taken into consideration in order to reach the final steps. Handling all your complex reports and money related issue becomes simpler with the right accounting choice. Bookkeeping forms a section of accounting, whereas accounting ranges all the way from arranging finance to profit enhancement.
To summarize, bookkeeping and accounting are the two activities that go hand in hand. Better bookkeeping always means better accounting services, if the base of any activity is laid strong the results will certainly be better. Same is the scenario for bookkeeping and accounting.
An accountant is an expertise who will provide you assistance to manage your business accounts and maximize profit to every bit. They can prove out to be gold gem for your business as they can help you get the maximum of tax returns which otherwise would not have been possible. All you have to do is choose the right accountant who would cater to your business needs and work to provide you the maximum business profit as if working for his own.
No matter if your business is small scale or large scale; you must choose an accountant to get the maximum tax returns. An accounting professional can help you for your tax return in the under mentioned ways:
- The accountants help you minimize the deductions in your tax returns
Accounting professionals are expertise who knows ways to minimize the deduction in tax returns and minimizing deductions implies that you can get maximum profits with you. The deductions can be minimized in form of MIDs which is also known as Missing Information and Documents. Accountants are return experts who would make every possible effort to cut the deductions in tax returns. MID can also help to maximize tax credits which means taking returns to a new level.
- Eliminate the errors in tax returns
Many times in registering the documents or bookkeeping there is a scope that there are errors in tax returns. Accountants take time to check these documents in depth so that each of your tax return documents is prepared error free. Eliminating of errors and mistakes would help you maximize tax returns and ultimately profit.
- Prevent audits from occurring
An accountant reduced the chances of audit triggering which otherwise is difficult to perform. An accountant expert in his domain would make an effort to increment your tax return every year and not try to keep it same. An expert accountant would create timely audit trails in order to maintain your records in an ordered fashion.
- Accountants are experts who would help you plan and strategize tax returns
If you hire an accountant at the beginning of the session it would certainly help you be with maximum profits throughout the year. He would be the one who would take all the important tax decisions and would even provide you beneficial advices at every step. You can take your business to new heights with expertise accountant’s help.
- The key areas that can fetch you Tax returns
The tax returns are not confined one single factor rather a number of areas can be summed to get maximum returns. An accountant has knowledge about these areas and would help you get returns from these areas. Some of the major tax return areas on which an accountant works is Charity annual returns, corporate tax returns, IT professional’s tax returns, investment income returns, commission earners tax returns etc. An accountant would cater to all these areas and get all the benefits for you.
Tax returns should not be an ignored section instead should be taken with proper care and maximizing tax saving plan can help you perform a lot better in your business and maximize your profit to every bit. An expert accountant is aware of all the tax saving plans and choosing an accountant would be a wise decision.
Managing accounts and tax is a business aspect that helps determine overall profitability of any firm. There would be high and low times out there when it would not be easy to go for you with all the accounting issues. The accounting professionals based on Milton, Oakville will help you find a complete solution to all the tax and accounting issues you are going through at every step of your business activity. If you seek the expertise help, it would certainly prove out to be fruitful at your part as your accounts will be managed well and solutions to all your problems will be provided at its best and earliest.
You need not worry anymore about your accounting and tax problems as H&T Accounting services cater to the following problematic areas:
- Arrange for business finances
If you look forward to launch your startup and have an innovative approach but are yet not done with the financial arrangement then H&T Accounting services can help you arrange business finances. Even if you want to expand your business we can help you provide a solution with the same. We follow a two step approach in the same. We would prepare a business plan and would also help you present this business plan to the lenders who can help you arrange finances.
- Plan taxes at its best
Tax Evasion is never considered as tax planning. All the tax related issues you face can be solved by our accounting experts who have been providing assistance in the same for years. We would help you minimize or cut down the errors in tax planning you have been committing for years and maximize the plans that would help you save considerably. There are different tax saving plans for all the places and we will help you achieve the same.
- Find the solution to all your tax return problems
There are numerous areas in business which generally people do not know about tax returns. We would help you identify those areas which include charity tax returns, estate planning and trust returns, investment income returns, IT professionals’ tax returns etc. Planning tax returns is never considered as tax evasion and we would make the best efforts to grant you with best benefits.
- Manage your accounts in an error free fashion
Bookkeeping is an important task that is done by every agency be it small or large. Managing different accounts of books is a tedious task and requires work of accuracy. We allow bookkeeping to our customers as per their convenience based upon the location and type of service they want. Our accounting professionals perform bookkeeping in such a way that tax saving becomes easier at later stages.
- Maximize the profit
Profit enhancement or earning maximum profit is what every organization aims at. Profit can be maximized only if the basis of accounting is strong in any organization. We are also glad to help you in developing a proper business plan as well as proper marketing strategies such that you can conveniently cut off the extra costs you have been investing and maximize your profits to every bit.
Any accounting problem that has been bothering you for a while can now be solved with our accounting experts.