Email email@example.com with your circumstances so we can assess this for you. In your email please provide last year’s profit per annum, estimated future profit per annum, number of possible shareholders [example you & your spouse], and a brief background to the type of business you operate.
As a guide if your taxable profit is less than $70,000 you would be better to be a sole trader, but if it’s higher than $70,000 you may benefit from being a company.
Email firstname.lastname@example.org with your query and we will suggest the appropriate action you should take. If the advise is specific or detailed we will tell you how much the cost will be before we start work.
If your sales (technically called taxable supplies) are over $60,000 per annum you need to be GST registered, but you can voluntarily register if your sales are under that limit. Email us if you are unsure and we will guide you.
Email email@example.com with your potential number of staff & we will advise you.
Under New Zealand Tax law you are required to keep invoices and receipts for a minimum of 7 years. Therefore, for the income tax year ended 31 March 2016 you will need to keep documents until 1 April 2023. You are able to store these electronically (i.e: scan), provided you are happy that you have the ability to retrieve them.
Advise your personal Xebra Accounting Representative as soon as possible and we’ll sort it for you.
You will be given a Xero login for your specific business, check your email for this. If you cannot find it email your personal Xebra Accounting support member or firstname.lastname@example.org and we will resend this to you so you can lookup your Xero file to check your income or expense detail. If there is something that does not look right get back to us and we will correct it.
Vehicle mileage claims can be done on a privately owned vehicle up to a maximum of 5,000km per annum. A log book showing the business only mileage done to back up the 5,000km is required. In a company 5,000km can be claimed per each working shareholder. The current mileage rate under IRD rates is 77 cents per kilometre. It is ok to have a business vehicle and claim also on a private vehicle if it is used for business purposes. Of course the business vehicle should only be claimed for its business proportion as calculated from its own log book.
A vehicle log book is maintained to provide a correct allocation between business and personal expenditure for a multi-use vehicle. A log book should be kept for a minimum of 3 months to calculate the business proportion of travel, then this log book can be used for 3 years under Inland Revenue guidance rules. The log book should record every trip & whether it was business or personal. Log books can be purchased at most stationery stores or you can use a computer recorded spreadsheet or equivalent. The GST on a vehicle as an asset should also be apportioned according to the log book. If you believe that there has been a material change in the business or private travel you should complete another log book to accurately reflect the apportionment.
You can claim the percentage area of your house that the office is of the total area of the house. A home office must be a separate room solely used for business purposes. You cannot claim multi use rooms, such as toilets, passages or garages. You can claim the percentage of mortgage interest or rent paid, rates, power & insurance. Any repairs done to the complete house that also incorporate the office can be claimed at the relative business % as well.
An alternative is to claim a market rent at a fair rate, we consider this to be $50 per week for a normal 3m by 3m or equivalent room.
When starting up a business to ensure tax compliance is met you need to consider;
- Business structure (sole trader or company – or sometimes a partnership may be a suitable option) and filing of the appropriate income tax return
- Gst registration (if over $60,000 per annum of sales you must register)
- Employer registration (if paying staff or labour only contractors in some circumstances)
Keep a detailed description of your entertaining expenses. Some of these are only 50% deductible, such as Friday night drinks with staff. However a simple lunch for all staff attending a planning session is 100% deductible.
Any business asset costing under $500 (gst exclusive if gst registered ) can be written off immediately as a tax deductible expense. If you purchase a group of similar assets together you are required to treat them as one group and capitalize for depreciation over time. You can plan to purchase assets costing under $500 over time so that it is not considered a group and you can claim the items as an immediate expense.
If you are GST registered you can claim GST on second hand goods. This could include items you purchased from Trade Me. All you need is proof of purchasing the item & its cost. Further, if you owned assets privately and you intend to use these in your business then you can claim back the GST on the market value at the date transfer into the business. The rules are complex and we suggest to send us details at email@example.com
Filing a tax return if you have withholding tax income is a sensible option that can result often in a reasonable tax refund. Businesses who receive withholding tax income can claim their business expenses against the income received. Like all other businesses you must keep a good record of your expenses for preparation of your tax returns.
If you are a small business (annual turnover of less that $1.3m per annum) and your stock is valued at cost at under $10,000 you don’t need to include this in your annual accounts and tax return.
For supplies under $50, the tax payer must keep records of the date, description, supplier and cost for all purchases (not necessarily keeping the paper receipt). In most cases, if the purchase is made with a debit card direct from your business bank account the detail on the bank statement should be enough for purchases such as entertaining, fuel for motor vehicle etc. If the item purchased is not obvious then get a receipt.
Supplies over $50 and under $1,000, a receipt (or invoice) is required similar to above with a description of the goods purchased and how it was paid for. For example if you buy a mobile telephone it would need to be described on the receipt, and if paid by, say, cash then this should be stated.
Purchases over $1,000 must be similar to above, with the name and address of the purchaser stated on the invoice, along with quantities and the GST rate clearly shown.