Optimising tax for your business

21 November 2018

Don’t let the tax season stress you out. This time, try seeing it as an opportunity to optimise your return. We sat down with Alister Siew, our head accountant to compile some simple and useful tips for getting this right:

The very first thing to do is to ensure that you are fully tax compliant and be aware what taxes you need to pay! If not, you will not only get unwanted IRD penalties, but you will also have trouble finding investors, obtaining expansion capital from lenders and attracting new clients. Usually you will need to pay Income tax and Goods and services tax (GST), but don’t forget that you also need to have tax obligations like PAYE (if you are an employer) or Fringe benefit taxes (FBT) figured out. If your turnover (revenue before expenses) was less than $60 000 in the last 12 months or will be less than $60,000 in the next 12 months, you don’t necessarily have to be GST registered. However, voluntary registration has its benefits, as you may be able to claim GST refund. If you’re not sure, talk to your accountant!

Know what you can claim for. Usually small businesses can claim for most expenses incurred through generating income for, and maintaining, their business. Getting a tax agent or accountant to complete your GST and income tax returns may end up saving you money – we know all the things you can claim! For some basic guide on what you can claim by the Ministry of Business, Innovation and Employment, click HERE.

Remember to keep an accurate and up-to-date record of all the expenses, including any till slips or invoices that are related to them. Make sure you keep these in logical order and safely filed away so that you can avoid the madness the tax season is known for. It might also be a good idea to scan these documents and save them on your laptop or in the Cloud in case hard copies are lost. I am an avid fan of keeping things paperless, so I utilise apps like “Google Drive” as much as I can.
Did you know: You can take photos of receipts and upload them straight into your Google Drive app on your smartphone or tablet? Check out a quick how-to guide HERE. Time to get rid off that nasty shoe-box full of faded receipts!

For Fixed Assets, check the correct deprecation rates used. Your computers, your air conditioning unit in the office and all other assets have different depreciation rates. There is a depreciation rate finder on IRD’s website that you can use to confirm the rates.

Last but not least, getting your Tax Structure right is EXTREMELY important, especially when you have multiple businesses, investment properties, and/or trusts. Simple things like having an LTC (Look-Through-Company), or giving 1 share to your non-working spouse (to distribute shareholder salaries) may save you thousands in tax every year. It is best to have these discussions and planning sessions with your accountant as early in your business journey as possible to maximise your tax savings and asset protection. If you need assistance in this matter, please feel free to give us a call on 09 320 8516 for a non-obligatory chat!