Businesses Trust Us

SMEs in Pakistan – Essential Throughout the Year



Consult Now



Small and Medium Enterprises (SMEs) are the backbone of Pakistan’s economy, contributing nearly 40% to the GDP and employing a significant portion of the labor force. While SMEs are agile, innovative, and growth-driven, they often lack the internal capacity to manage bookkeeping and tax compliance effectively. Without proper financial records and timely tax filings, SMEs can face penalties, cash flow problems, and missed growth opportunities.

This blog outlines the critical bookkeeping and tax-related services an SME needs throughout the year to stay compliant, informed, and profitable.

Why Bookkeeping and Tax Services Matter for SMEs

  • Regulatory compliance with FBR and SECP

  • Accurate financial reports for decision-making

  • Tax savings through proper planning

  • Smooth cash flow and budgeting

  • Avoidance of penalties and audits

Monthly Services Required by SMEs

1. Bookkeeping and Data Entry

  • Record all sales, purchases, expenses, and receipts

  • Reconcile bank accounts and payment gateways

  • Maintain petty cash logs

  • Ensure transactions are recorded under the correct chart of accounts

2. Payroll Management

  • Maintain employee salary records

  • Calculate monthly payroll taxes

  • Generate payslips

  • File salary statements (where required)

3. Withholding Tax Calculations

  • Deduct applicable withholding taxes on supplier or service payments

  • Maintain WHT certificates

  • Ensure correct tax rates are applied under the Income Tax Ordinance, 2001

4. Monthly Sales Tax Filing (if registered)

  • Maintain sales and purchase tax records

  • Prepare monthly sales tax returns

  • File on IRIS or PRA/SRB/KPRA/BRA portals depending on jurisdiction

  • Ensure input tax adjustments are correctly claimed

Quarterly Services Required

1. Management Accounts and Financial Reporting

  • Prepare profit and loss account

  • Generate balance sheet and cash flow statements

  • Provide performance dashboards

  • Support decision-making with financial KPIs

2. Advance Income Tax Payments (if applicable)

  • Estimate quarterly advance tax liability

  • Deposit tax using Challan Form IT-3

  • Avoid interest and penalties by timely payments

3. Tax Forecasting and Planning

  • Estimate yearly tax liabilities

  • Recommend tax-saving strategies

  • Advise on eligible deductions, rebates, and credits

Annual Services Required by SMEs

1. Annual Income Tax Return Filing

  • Prepare and file income tax return under Section 114

  • Submit wealth statement and reconciliation (Form 116)

  • Attach audited or unaudited accounts as required

  • File returns for individual, AOP, or company depending on structure

2. Financial Statement Preparation

  • Prepare audited or management financial statements

  • Follow IFRS or SME accounting standards

  • Attach with SECP or FBR filings if applicable

3. Filing of SECP Forms (for companies)

  • File Form A (Annual Return)

  • File Form 29 (Change in director/shareholding if any)

  • Ensure compliance with Companies Act, 2017

4. Audit Support and External Audit Coordination

  • Support in selecting external auditors

  • Provide reconciled ledgers and documentation

  • Coordinate with auditors to complete the statutory audit

5. Zakat and CSR Documentation (if required)

  • Calculate zakat on inventory and assets

  • Maintain CSR contributions, donations, or employee welfare records

One-Time or As-Needed Services

1. Business Registration and NTN Acquisition

  • Register sole proprietorship, partnership, or private limited company

  • Obtain NTN and STRN from FBR

  • Enlist with provincial revenue authorities for services

2. Change of Business Structure

  • Convert sole proprietorship into company or AOP

  • File relevant SECP or FBR amendments

3. Responding to FBR Notices

  • Draft replies to Section 176, Section 161, Section 122 notices

  • Assist in audits or assessments

  • File appeals or rectification requests

4. Tax Exemption Certificates and Filings

  • Apply for exemption under Section 153/148

  • File applications for reduced tax rates

  • Manage exemption certificates with relevant authorities

5. Consultancy on Tax Credits and Deductions

  • Claim tax credits under Section 65

  • Deduct depreciation, donations, research, and welfare expenses

  • Manage foreign remittance or export-related tax claims

Software & Tools for SME Bookkeeping

  • QuickBooks Online / Xero / Wave for bookkeeping

  • Excel with structured templates for small-scale tracking

  • Point of Sale (POS) systems integrated with sales ledgers

  • Payroll software or add-ons for employee management

  • Tally / Peachtree / SAP Business One for midsized businesses

Benefits of Outsourcing These Services

  • Cost-effective compared to hiring full-time staff

  • Access to tax professionals and compliance experts

  • Reduced risk of errors or penalties

  • Scalable services as the business grows

  • More time to focus on business operations and sales

Choosing the Right Accounting and Tax Partner

  • Look for registered tax practitioners or firms

  • Check experience in SME sector

  • Ask about cloud accounting capabilities

  • Ensure availability during tax season and deadlines

  • Confirm understanding of both federal and provincial tax regimes

Frequently Asked Questions (FAQs)

Q: Do all SMEs need to register with FBR?
Yes. All businesses earning taxable income must register with FBR and obtain an NTN.

Q: What is the penalty for not filing income tax returns?
Minimum Rs. 40,000 for companies and up to Rs. 20,000 for individuals or AOPs. Additional penalties may apply.

Q: Should SMEs file sales tax returns monthly?
Only if they are sales tax registered. Otherwise, this is not required.

Q: Can I do bookkeeping manually?
Yes, but it’s less efficient. Digital tools or outsourcing are preferred for accuracy and speed.

Q: When should SMEs hire a tax consultant?
At the time of registration, during tax season, when responding to FBR notices, or planning to grow/raise investment.

Conclusion

SMEs cannot afford to ignore bookkeeping and taxation. These functions are crucial for legal compliance, strategic decision-making, and financial health. By maintaining monthly records, filing accurate returns, and preparing timely reports, SMEs in Pakistan can build a stronger foundation for growth. Whether done in-house or outsourced, a proactive approach to accounting and taxation will always pay dividends.

Scroll to Top