When it comes to business admin, some tasks are definitely more fun than others.
Receipting money and working with clients you love are definitely tasks that top the list of good jobs.
However, one task that commonly draws groans and is accompanied by a hefty helping of procrastination is fulfilling your IRD obligations.
But as a business owner, it’s essential you keep this chore at the top of the list!
The first step in battling the overwhelm of taxes and paperwork is to understand how it all works, and the second is to keep on top of it – so let’s get stuck in!
Keeping On Top Of Your IRD Obligations
Welcome To The IRD
Every person who lives and works in New Zealand knows about the IRD – the Inland Revenue Department. This government department has the massive task of collecting revenue to fund various projects and programmes that keep the country ticking along.
As an employee, paying tax is a relatively simple affair that you don’t have to give too much thought to. But as a business owner and/or employer, there’s quite a bit more to it!
What Are Your IRD Responsibilities?
When you first set up a business in New Zealand, you will need to spend time getting familiar with the IRD requirements. These vary depending on the type of business you are setting up.
Paying Taxes
Your business structure impacts how and when you pay tax, and your income also dictates things like how much you need to pay and whether you should register for GST.
For example, if you are a sole trader, you use your personal IRD number to pay tax by filling out an individual income return every year. A partnership will need its own IRD number and a different kind of tax return, while a company must be registered with the companies office, and taxes are paid differently again.
There’s more than one kind of tax to get your head around, too. As well as income tax, your business may need to pay resident withholding tax on interest and dividends received, complete fringe benefit tax returns, and maybe pay provisional tax during the year.
If you are an employer, you will have to deduct PAYE, student loan repayments, child support payments and KiwiSaver and pay these to Inland Revenue on behalf of your employees. And don’t forget about GST! Paying your taxes on time is important for any business. A late payment comes with a hefty penalty charge, and potentially further fines, depending on how delayed you are!
Keeping Records
As well as staying on top of your tax payments, your business must keep accurate and detailed financial records. From bank statements, receipts and invoices to vehicle logs and wage records, you will need to ensure it’s all safely stored away (via hard copy or digitally) and efficiently organised for seven years.
How To Stay On Top Of Your IRD Obligations
While all the information can be overwhelming, as with anything in business, the best way to tackle it is by being organised and efficient. Instead of scrambling to find the money to pay your taxes, put aside the correct amount every month.
Rather than handing your accountant a shoebox full of receipts at tax time, ensure all your records are scanned, organised and stored online. Also, make use of online accounting software to ensure your books are up to date.
There are some great free resources available online that delve deeper into your IRD obligations. You can hear it straight from the horse’s mouth at the IRD website, or get great info from business.govt.nz. Or, you can seek professional help to complete your IRD obligations on your behalf. Taxes and compliance can be a complicated subject, so it’s always best to talk to an accountant to ensure you are doing everything correctly for your business.
And if you need a helping hand to stay on top of the admin that comes along with those obligations, reach out to us at Admin Army – we’re here to help you wage war on all those troublesome business tasks!
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