Common Tax & Accounting Mistakes Nigerian Businesses Make — and How to Avoid Them
Many Nigerian businesses incur penalties, face audits, or lose cash flow not because they are failing—but because of avoidable tax and accounting mistakes. Understanding these pitfalls and putting the right systems in place can protect your business and improve long-term growth.
1) Mixing Personal and Business Finances
What goes wrong:
Using one account for personal and business transactions blurs records, distorts profits, and weakens audit defence.
Why it’s risky:
Tax authorities may disallow expenses that cannot be clearly linked to business activities
How to avoid it:
- Open and operate a dedicated business bank account
- Route all business income/expenses through it
- Pay owners via salary or drawings, not ad-hoc withdrawals
2) Not Deducting or Remitting Withholding Tax (WHT)
What goes wrong:
Businesses fail to deduct WHT, deduct but don’t remit, or omit WHT credit notes
Why it’s risky:
Unremitted WHT attracts penalties and interest and can be recovered from your accounts.
How to avoid it:
- Identify WHT-liable transactions (rent, consultancy, contracts, professional fees)
- Deduct at source, remit on time, issue credit notes
- Maintain a WHT schedule (supplier, rate, amount, remittance data)
3) Claiming Expenses That Are Not Tax-Allowable
What goes wrong:
Personal or non-allowable costs are claimed as business deductions.
Why it’s risky:
Non-allowable expenses are added back during tax computation, increasing tax payable.
How to avoid it:
- Separate accounting expenses from tax-allowable expenses
- Prepare tax adjustment schedules for add-backs
- Review expenses with a tax professional before filing
4) No Structured Payroll System
What goes wrong:
Informal payroll causes incorrect PAYE deductions and pension non-compliance.
Why it’s risky:
Payroll errors are a common trigger for PAYE audits.
How to avoid it:
- Implement a structured payroll system
- Deduct/remit PAYE, pension, and other statutory items
- Issue payslips and keep employee records
5) Late Filing of VAT, PAYE, and Company Income Tax (CIT)
What goes wrong:
Missed deadlines for VAT, PAYE, WHT, or CIT.
Why it’s risky:
Late filing leads to statutory penalties, interest, and higher audit risk.
How to avoid it:
- Maintain a tax compliance calendar
- Track each tax separately
- File even when there’s no activity
6) No Regular Bank Reconciliation
What goes wrong:
Books don’t match bank statements; errors go unnoticed.
Why it’s risky:
Unreconciled balances distort cash flow and weaken financial credibility.
How to avoid it:
- Reconcile bank statements monthly
- Investigate unmatched items promptly
- Identify errors, fraud, and excess bank charges early
Final Takeaway
Most tax and accounting issues Nigerian businesses face are preventable. The solution is simple: separate finances, keep records, meet deadlines, and use qualified professionals.
Outliers Professionals Ltd helps businesses build these systems—covering bookkeeping, payroll, VAT, WHT, PAYE, and CIT—so you can grow with confidence.
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📩 Contact us today to review and strengthen your compliance framework.