The SME Guide to Paying Taxes Without Stress

Running a small or medium-sized enterprise (SME) in Nigeria is not easy. Between chasing customers, managing staff, and keeping your business afloat, paying taxes often feels like an extra headache.

But here’s the good news — tax season doesn’t have to be stressful. With the right information and a simple system, you can pay your taxes, avoid penalties, and focus on growing your business.

This guide breaks down how Nigerian SMEs can handle taxes in a simple, practical way.

1. Know the Taxes That Affect Your Business

Before you can pay your taxes, you need to understand which ones apply to your business. Here are the main ones for SMEs in Nigeria:

• Company Income Tax (CIT): Paid by registered companies on profits earned.

  • 0% – If your annual turnover is below ₦25 million

  • 20% – If your turnover is between ₦25m and ₦100m

  • 30% – If your turnover is above ₦100m

• Value Added Tax (VAT): A 7.5% tax on most goods and services, collected from customers and remitted to FIRS.

• Personal Income Tax (PIT): For business owners running sole proprietorships or unregistered businesses.

• Pay-As-You-Earn (PAYE): Deducted from employees’ salaries and sent to the tax authorities.

• Other Levies: Depending on your sector, you may also need to pay withholding tax, stamp duties, and local government levies.

Pro Tip: Check your business size under the Finance Act. You may be eligible for tax exemptions or reduced rates.

2. Register Your Business and Get a TIN

If your business isn’t properly registered, you’ll struggle with tax compliance. Here’s what you need to do:

• Register with CAC → Gives your business legal status.

• Get a Tax Identification Number (TIN) → Required for all tax payments.

• Link your TIN to your business bank account → Makes remittance smooth.

Without a TIN, you can’t file your taxes properly, and you may lose business opportunities, especially with corporate clients and government contracts.

3. Keep Good Financial Records

For many Nigerian SMEs, poor recordkeeping is the reason tax season feels stressful. If you don’t know your income, expenses, or VAT collected, filing returns becomes a nightmare.

Here’s what to do:

• Track all your income and expenses
• Keep receipts, invoices, and bank statements neatly filed
• Separate business and personal finances
• Use simple accounting tools or hire a professional accountant

Pro Tip: At Taisha Associates, we help SMEs set up proper bookkeeping systems that make tax compliance easy and stress-free.

4. Don’t Miss Tax Deadlines

The fastest way to get penalties from FIRS or your state tax authority is to miss tax deadlines. Here are the key ones you should know:

Set reminders or work with a tax consultant to avoid last-minute panic.

5. Work With a Tax Professional

Handling taxes alone can be tricky, especially with Nigeria’s ever-changing tax laws. A professional accountant or tax consultant can:

• Make sure you’re paying the right taxes

• Help you claim exemptions and incentives

• Keep you updated on tax law changes

• Handle communications with FIRS and state tax authorities

Think of it as an investment, not an expense — it saves you time, stress, and possible fines.

6. Use Tax Incentives to Save Money

The Nigerian government supports SMEs with tax incentives. Many small businesses are unaware of these, and as a result, they end up overpaying.

• Businesses earning less than ₦25m yearly → 0% Company Income Tax

• SMEs earning ₦25m to ₦100m yearly → 20% reduced tax rate

• Startups in key sectors may qualify for pioneer status with tax holidays

Understanding these incentives can reduce your tax burden significantly.

Paying taxes as an SME in Nigeria doesn’t have to be stressful. With the right knowledge, proper bookkeeping, and timely filing, you can stay compliant and focus on growing your business.

At Taisha Associates, we specialize in helping Nigerian SMEs simplify tax compliance and avoid costly mistakes.

Call us today or book a free consultation: CLICK HERE