How to avoid stress and save money on your New Zealand taxes

A good accountant can save you money on your tax by helping you to organise your affairs properly and to take advantage of all the possible tax deductions that are available. If you are running a small business in New Zealand, you are unlikely to have the knowledge or experience to manage your own tax affairs. When you consider return on investment, the fees that you pay a top-flight accountant will probably be one of the best investments you make.

However, even the best accountant is no magician, and unless your financial affairs are recorded and documented properly, there is not much that they will be able to do. You should also remember that the New Zealand IRD prefers that you appoint a tax agent (normally a chartered accountant) to administer your tax affairs.

The first step is therefore to organise your accounting and recording system in a manner that will minimise the difficulties of preparing your tax returns.

Here are some simple tips on how to organise your paperwork instead of stuffing it into the nearest available shoebox or desk drawer:

  • Prepare and label folders for each month of the year. Place every piece of relevant paper in the appropriate folder. Whenever you have a little time, you can arrange the contents of a folder, and itemise income and expenses.
  • Consider acquiring a corporate credit card to which you can charge all your expenses. The credit card company will present you with comprehensive and neatly itemised bills, in effect doing your dirty work for you.

Let us now consider a few ways in which you can reduce your tax bill.  A chartered accountant is the best guide, so rely on their advice.

Bring forward planned expenditure: If you happen to be planning to spend money on marketing or refurbishment and redecoration, incur the expenditure immediately. You need to spend the money anyway and doing it immediately will give you a nice little tax break.

Take advantage of capital deductions: Bring forward expenditure you plan to incur on items such as machinery or other fixed assets. In consultation with your chartered accountant, pick items that will give you the highest possible depreciation benefits. If you plan well, it is possible to find items that will give you tax benefits of 100 percent.

Do you really want to go on paying more tax than you should? If not, employ the services of a high-quality accountant and start planning your New Zealand tax.

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