How to Avoid Tax in 2026?

If you still run your business in your personal name, you are quietly walking into tax troubles in 2026 and

the tax man will deal with you. Why?

Assuming your monthly sales is just N500,000 running a small provisions or medicine shop/store, with you as the proprietor and your children as your workers.

With the new tax regime that will commence in January, 2026, you are going to be affected negatively because every business activities will be carried out in your personal name.

This is how many small business owners will enter tax man wahala next year. Not because they are making millions and do not want to pay taxes but simply because they are doing business the wrong way. Remember, ignorance is not an excuse in Law.

By operating a business in your personal name and bank account, you will be taxed under the Personal Income Tax (PIT) Law. This means that all cash inflows into your bank account will be recognized as incomes. And according to the new Nigerian tax laws, any person who earns above ₦800,000 per year is taxable. So, once your bank account shows a total inflow of more than N800,000 in a year, you will pay tax on the excess. It does not matter whether you are selling moin-moin or akamu, or chin-chin or you are an artisan or a contractor, or a POS operator.

So, a small business with a total inflows of N500,000 monthly will be subjected to tax because the inflows will be recognized as personal income. That amounts to N6,000,000 in a year. This means that N5,200,000 (N6m-N800,000) will be subjected to tax where graduated tax rates will be applied after adjusting for necessary allowances like Rent (max. of N500,000).

If you are however living in your personal house, you will not enjoy this allowance. So, the entire N5.2 million will be subjected to the tax rates and your tax per annum will be about N870,000!

From January 2026, transactions monitoring will be more strict than before. Don't even think of opening many bank accounts to receive inflows from your business. More bank charges will be paid. And BVN will be used to link them as being owned by you.

This tax can be avoided by taking the following steps:

Step 1 - Quickly register your business as a Limited Liability Company (LTD), not as a business name or an enterprise.

As a limited liability company, that N6m inflow is a peanut and will not qualify for tax payment.

This is because under the new tax rules, a company with a turnover below ₦100m will pay Zero income tax. It means your business will be completely exempted from company income tax.

Step 2: Open a bank account in the name of the company. The bank should be used for all transactions relating to the company. The bank statement for the account will later show inflows (sales revenue) and outflows (expenses) of the companies.

There should be no spending or transfers for personal use from the account.

Anytime you want to spend money on the activities of the company

(rent, restocking, transport, POS charges, data, food for staff, repairs, etc.), use the bank account. This will automatically create a clean financial history.

Step 3 - Ensure you keep receipts of ALL expenses of the company. Once the expenses are wholly for the purpose of the company, they will be referred to as 'Allowable expenses' and removed from revenue.

So, you must keep receipts of your shop rent, goods purchase, haulage fees, transport cost, data purchased, generator fuel, POS charges, etc.

Step 4: Hire a professional accountant to help you prepare and audit your account, using your records and bank statement. For your category of business, it costs less. The benefits far outweigh the cost.

At the end of a year when you file your annual returns, your taxable profit be zero and no tax to be paid! Yes, no tax payment on the N6 million because the amount will be subjected to Company Income Tax Laws and it is not up to N100 million, which is the minimum turnover for a company to be qualified to pay taxes, starting from 2026.

Hence, before January 1st 2026, register your business as a Limited Liability Company, separate personal money from business money; keep receipts of all company's expenses; and file annual returns (you can do it yourself at any FIRS office).

My name is alexdphenom I hope this piece of information is useful to you

How to Avoid Tax in 2026?

If you still run your business in your personal name, you are quietly walking into tax troubles in 2026 and

the tax man will deal with you. Why?

Assuming your monthly sales is just N500,000 running a small provisions or medicine shop/store, with you as the proprietor and your children as your workers.

With the new tax regime that will commence in January, 2026, you are going to be affected negatively because every business activities will be carried out in your personal name.

This is how many small business owners will enter tax man wahala next year. Not because they are making millions and do not want to pay taxes but simply because they are doing business the wrong way. Remember, ignorance is not an excuse in Law.

By operating a business in your personal name and bank account, you will be taxed under the Personal Income Tax (PIT) Law. This means that all cash inflows into your bank account will be recognized as incomes. And according to the new Nigerian tax laws, any person who earns above ₦800,000 per year is taxable. So, once your bank account shows a total inflow of more than N800,000 in a year, you will pay tax on the excess. It does not matter whether you are selling moin-moin or akamu, or chin-chin or you are an artisan or a contractor, or a POS operator.

So, a small business with a total inflows of N500,000 monthly will be subjected to tax because the inflows will be recognized as personal income. That amounts to N6,000,000 in a year. This means that N5,200,000 (N6m-N800,000) will be subjected to tax where graduated tax rates will be applied after adjusting for necessary allowances like Rent (max. of N500,000).

If you are however living in your personal house, you will not enjoy this allowance. So, the entire N5.2 million will be subjected to the tax rates and your tax per annum will be about N870,000!

From January 2026, transactions monitoring will be more strict than before. Don't even think of opening many bank accounts to receive inflows from your business. More bank charges will be paid. And BVN will be used to link them as being owned by you.

This tax can be avoided by taking the following steps:

Step 1 - Quickly register your business as a Limited Liability Company (LTD), not as a business name or an enterprise.

As a limited liability company, that N6m inflow is a peanut and will not qualify for tax payment.

This is because under the new tax rules, a company with a turnover below ₦100m will pay Zero income tax. It means your business will be completely exempted from company income tax.

Step 2: Open a bank account in the name of the company. The bank should be used for all transactions relating to the company. The bank statement for the account will later show inflows (sales revenue) and outflows (expenses) of the companies.

There should be no spending or transfers for personal use from the account.

Anytime you want to spend money on the activities of the company

(rent, restocking, transport, POS charges, data, food for staff, repairs, etc.), use the bank account. This will automatically create a clean financial history.

Step 3 - Ensure you keep receipts of ALL expenses of the company. Once the expenses are wholly for the purpose of the company, they will be referred to as 'Allowable expenses' and removed from revenue.

So, you must keep receipts of your shop rent, goods purchase, haulage fees, transport cost, data purchased, generator fuel, POS charges, etc.

Step 4: Hire a professional accountant to help you prepare and audit your account, using your records and bank statement. For your category of business, it costs less. The benefits far outweigh the cost.

At the end of a year when you file your annual returns, your taxable profit be zero and no tax to be paid! Yes, no tax payment on the N6 million because the amount will be subjected to Company Income Tax Laws and it is not up to N100 million, which is the minimum turnover for a company to be qualified to pay taxes, starting from 2026.

Hence, before January 1st 2026, register your business as a Limited Liability Company, separate personal money from business money; keep receipts of all company's expenses; and file annual returns (you can do it yourself at any FIRS office).

My name is alexdphenom I hope this piece of information is useful to you