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.
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
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
Maintain employee salary records
Calculate monthly payroll taxes
Generate payslips
File salary statements (where required)
Deduct applicable withholding taxes on supplier or service payments
Maintain WHT certificates
Ensure correct tax rates are applied under the Income Tax Ordinance, 2001
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
Prepare profit and loss account
Generate balance sheet and cash flow statements
Provide performance dashboards
Support decision-making with financial KPIs
Estimate quarterly advance tax liability
Deposit tax using Challan Form IT-3
Avoid interest and penalties by timely payments
Estimate yearly tax liabilities
Recommend tax-saving strategies
Advise on eligible deductions, rebates, and credits
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
Prepare audited or management financial statements
Follow IFRS or SME accounting standards
Attach with SECP or FBR filings if applicable
File Form A (Annual Return)
File Form 29 (Change in director/shareholding if any)
Ensure compliance with Companies Act, 2017
Support in selecting external auditors
Provide reconciled ledgers and documentation
Coordinate with auditors to complete the statutory audit
Calculate zakat on inventory and assets
Maintain CSR contributions, donations, or employee welfare records
Register sole proprietorship, partnership, or private limited company
Obtain NTN and STRN from FBR
Enlist with provincial revenue authorities for services
Convert sole proprietorship into company or AOP
File relevant SECP or FBR amendments
Draft replies to Section 176, Section 161, Section 122 notices
Assist in audits or assessments
File appeals or rectification requests
Apply for exemption under Section 153/148
File applications for reduced tax rates
Manage exemption certificates with relevant authorities
Claim tax credits under Section 65
Deduct depreciation, donations, research, and welfare expenses
Manage foreign remittance or export-related tax claims
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
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
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
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.
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.
