The Law Behind the Hustle: Modified Cash Basis—When You’ve Outgrown the Tax Stamp - Part Two

-

  

So, your business is growing. You’ve passed the GHS 20,000 mark and now the Tax Stamp system no longer applies to you. Don’t panic, the law still has something in place to help you stay legal and  structured. It’s called the Modified Cash Basis.

This system is part of Ghana’s Modified Taxation rules, made for small businesses that have moved beyond the informal level, but aren’t yet big enough to handle full accounting requirements.
 
Here’s how it works:
Under Modified Cash Basis, you only report income you’ve actually received, not what you’re owed. If you sold goods in December but got paid in February, you only declare it in February. It’s a cash-first, reality-based method that helps you stay honest without being overwhelmed.

You may qualify if:
• You are a resident for tax purposes
• Your income comes only from Ghana
• Your turnover is more than GHS 20,000 but not more than GHS 500,000
• You’re not registered for VAT
• You’re not in a partnership or company

If you meet these criteria, your tax is simple: 3% of your turnover.
So if your business earns GHS 100,000 this year, you pay GHS 3,000 in tax. No audited accounts, no profit-and-loss stress.

The more your business grows, the more structure it needs and now you know that Modified Taxation is one of the tools the law has put in place to help you grow right whiles staying legal. You don’t need to fear the system. You just need to understand it.

In our next post, we will  shift gears and talk about something every business owner will deal with at some point, CONTRACTS. What they mean, why they matter and how to protect yourself with your words.

Until then, keep building smart. The hustle is yours and  the law is learning to walk with you.


www.tweneboahkoduahlegal.com

https://linktr.ee/lawyerTKay 

 

 


Comments

Post a Comment

Popular posts from this blog

The Law Behind the Hustle: Ghana’s New MSME Classifications

-
Image
  Every thriving economy has its silent architects. The businesses that may never make headlines but keep entire families afloat, create jobs and build communities. In Ghana, we’ve long called them “small businesses,” but that name has always felt incomplete. Because let’s be honest, what’s “small” about carrying the weight of the economy on your back? Ghana has introduced a new Classification of Micro, Small and Medium Enterprises (MSME) Regulations, 2023 (L.I. 2470) and it’s a game changer. So, how does it work? The regulation breaks businesses down into four categories- Micro , Small , Medium and Large , based on three simple criteria: 1.      How many permanent employees you have 2.      How much money you make in a year (turnover) 3.      The value of your fixed assets So, if you have 1 to 5 employees , and your business brings in an amount less or equal to   GHS 150,000 , you’re officially a Mic...
Read more

The Law Behind the Hustle : Tax Avoidance vs. Tax Evasion—Know the Difference

-
Image
  #TheMSMESeries  When it comes to taxes, most business owners just want to survive without losing everything they’ve worked for. But in trying to save money, many people unknowingly walk a fine line and sometimes, cross it. That’s why today, we’re talking about something crucial for every entrepreneur. The difference between tax avoidance and tax evasion . Two terms that sound similar, but carry very different meanings and consequences. So, what exactly is tax avoidance? Tax avoidance is when you legally reduce your tax burden by arranging your business affairs in a smart, efficient way. You’re not breaking the law, you are using it to your advantage. And yes, that is   allowed. Imagine this: Kofi registers his company in an area with special tax incentives. Adzo delays an income-generating activity until the next tax year for planning purposes. All of these are forms of tax planning and they fall under tax avoidance. It’s completely legitimate. It’s intent...
Read more

The Law Behind the Hustle - Ghanaian business (MSMEs)

-
Image
  In Ghana today, hustle is everywhere. From the young woman selling handmade wigs on Instagram, to the team building a startup from a small container, to Instagram shops, delivery riders to freelance designers, Momo merchants to event planners, we are building dreams every single day in Ghana. But for many of us, there’s a major gap. We know how to hustle but we don’t always know how to protect it.  While we’re busy securing the bag, there’s one thing most business owners forget to secure: THE LAW And that’s how too many people end up burnt, scammed, sued or stuck. The Law Behind the Hustle. This series is here to make sure your grind doesn’t become your downfall. It’s law for the everyday Ghanaian business (MSMEs) owners, broken down clearly, honestly and in language you don’t need a law degree to understand. Here are some of the topics to expect:   • What makes a contract binding? • Business Forms and Taxation of Small businesses. • “What I ordered ...
Read more