Tax and Small Business
As a business you want to make sure you're paying the right tax.
Here at the Hamilton office we often see clients who are paying the wrong kind of tax or paying at the incorrect rate. Taxation always means you have involvement with the IRD, and they expect you to understand and provide them with up to date information.
If you make changes, you need to inform us as your agents/accountants so we can make sure everything is correct and up to date. There are a variety of structures that affect how much and what kind of tax you pay. These can be filed online with the IRD or you can have Slater Chartered Accountants do the work for you. Here are some of the most basic small business structures. You'll most likely fall into one of these categories:
Sole Trader If you're a sole trader you will need to work out your tax rate on your net profit. This is calculated by working out your gross income then subtracting your expenses. Sounds easy, right? It's a bit trickier than you first think, because getting the most accurate results depends on having an excellent knowledge of your expense entitlements. These can vary from business type to business type. If you're unsure of these don't hesitate to get expert advice from a qualified chartered accountant that knows the full list of deductions that can be claimed by your business.
Partnership If you're planning a partnership or recently joined one, you are required to fill out an IR7 tax return. An IR7 divvies out the net profit/loss to the partners. But it doesn't stop here. You then need to fill out an IR3 tax return for individuals, and you're required to pay tax on your profit share using the standard tax rates for individuals. Slaters or any good Chartered Accountants in NZ can give you these. Partners can also use the PAYE - Pay As You Earn - option so tax is paid as you're paid your wage.
Company If you run a company, you or your Chartered Accountant needs to complete an IR4 form from the IRD. You're then taxed at the New Zealand company tax rate. This currently stands at 28 cents in the dollar from the income 2012 year on. It varies here and there in other earlier years, so it's a good idea to again check with the IRD or with your accountant to make sure you're paying the correct amounts and aren't paying too much or too little. This can all get a little complicated and one of the best things you can do it engage the services of a specialist who's used to working with the IRD and with individuals to sort out the best tax options available.
Help is Available You can speak with Brett for free about your business and tax. You can make an appointment via our website calendar or you can ring the office on 07 838 9700 and book. We look forward to hearing from you.