If you’re new to business then your google-search has served you well because the following tips will get you started on the right foot ensuring you get the most tax back and keep your accounting bills to an absolute minimum:
Get the bookkeeping right
- Setup a separate bank account for your business
- Deposit all your income into that bank account
- Pay all the business bills out of that bank account
- Don’t pay business bills using cash or personal bank accounts
- Have a separate loan or mortgage for the business
- Don’t use the business accounts for anything except the business
- Say no to shoe-box accounting
- Use Xero accounting software with bank-feeds ($12 month with us)
- Avoid doing your invoices using Excel or Word
- If you accidentally pay a business bill by cash (or from a private account) then reimburse yourself by taking the exact amount out of the business bank account to your personal account
Know what you can claim:
- Accounting & Legal fees (New Zealand ones only)
- Advertising & Marketing
- Administration costs
- Assets which cost less than $500 (printers, phone, website etc)
- Bank fees on your business account
- Business Consultants
- Computer expenses (some exceptions)
- Debt Collection fees
- Depreciation on assets over $500 (computers etc)
- Entertaining clients, suppliers and staff
- Freight & Cartage of your product
- Home Office costs (strict rules rules apply)
- Industry memberships
- Insurance for business assets and professional indemnity
- Income Protection Insurance
- Internet for business accounts where private use is prohibited
- Interest on money borrowed for the business
- Licences and subscriptions
- Magazines and Periodicals (industry related)
- Motor vehicle running costs for business trips
- Printing & Stationery
- Protective Clothing & Uniforms
- Rent on business premises
- Repairs & Maintenance to business assets
- Telephone & Tolls for commercial lines
- Trade journals and magazines (work related)
- Travel expenses
- Uniforms & protective clothing
- Xero Accounting Software
- Valuations for business financing
- Website domain renewals (but not the initial registration)
- Workplace Accident Compensation levies (not Earner)
Heads up! You can only claim the interest part of your repayments (not the principal) and watch out claiming home office if your Trust owns your home.
- If you intend to buy several fixed assets which cost less than $500 each from the same shop on the same day, consider buying each of them on separate days to obtain a full initial claim.
- If you have a personal mortgage, consider booking a consulting session with us so we can maximise your interest claim.
- Whatever you do, don’t start paying yourself wages like a normal employee.
- Before you buy a business, get a valuation showing separate values for the fixed assets ideally with the the value weighted towards depreciable assets rather than goodwill which isn’t deductible.
For more info on what you can claim click through to this government article.
Need to know more? Book a consulting session with the clever accountants at Boutique Financial Chartered Accountants Auckland.
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Boutique Financial Chartered Accountants & Business Commentators
Copyright © 2016 Boutique Financial Limited Chartered Accountants Auckland All Rights Reserved. This publication must be read in accordance with the attached disclaimer and does not provide an exhaustive statement of tax law.