Good tax management takes a considerable amount of stress out of running a business. Many businesses - especially new businesses - find complying with tax obligations a burden. A distressing number of businesses get into difficulties because they fall behind with tax payments and/or fail to keep good records. This guide offers you some ideas to help you manage your tax obligations more easily
This guide is intended to offer an overview of taxation and does not purport to offer tax advice. Tax involves some complex specialist legislation and it is important that you get your own expert advice.
Understand your basic obligations
Your first task is to gain an overview of the compliance obligations every business faces.
Here are two sources of help:
1. Make use of free help first
If you are new to business, or you are having difficulty with your tax compliance, make use of the free services offered by the Inland Revenue Department. Inland Revenue’s helpful website features useful articles on various aspects of tax. You can also download or order various documents on tax issues including the useful Smart business (IR 320) guide. In addition, Inland Revenue offers free tax seminars and workshops around New Zealand and you can arrange a free business advisory visit online.
In addition, Inland Revenue’s specialist Business Tax Information Officers offer free tax education and advice to new businesses, and will also help existing businesses with tax problems and queries. To arrange an advisory visit, complete the online form under Get it done online or phone 0800 377 774.
2. Advantages of an accountant
Few businesses achieve success without the help of good advisors. Give serious consideration to using a chartered accountant as your tax agent (submitting tax returns on your behalf) and as a tax advisor.
Here are some of the benefits:
- Accountants deal with tax issues every day and keep up with the latest tax rulings and changes. It makes more sense to use a specialist than to divert your energies from your core business activities, in an attempt to keep up with changes that might affect your business.
- An accountant can help you set up a good record keeping system and a calendar of tax returns to streamline your tax compliance.
- You’ll get reminders of due dates for tax returns, helping you to avoid late payment penalties.
- Submitting your end of year tax returns is time consuming and tricky for beginners. Your accountant has the experience of preparing many returns each year.
- An accountant can help you claim all the expenses you’re entitled to - and is likely to be aware of more than you are.
- You also get advice on issues such as the tax advantages of leasing versus buying equipment, using a private vehicle or company car, and other tax matters.
To find a suitable chartered accountant, contact several other businesses similar in size or industry type to yours. They will usually be happy to tell you which accountant they use, and even give an indication of the fees charged. If you consult your accountant more regularly than just for end of year accounts, you should expect to pay more for the service.
Remember though, that low fees are not as important as the value the accountant can add to your business.
It is worth speaking to several accountants before making your choice. Look for a person with whom you can establish a good working relationship.
If your business is just starting, look for an accountant with a special interest in helping businesses to grow. Some accountants are more proactive in this area than others. Ask the accountant what they could do for your business.