FAQs

General

Why do I need an accountant?
Owner-managed businesses often do their own accounting and bookkeeping to try and save money. But investing in a professional accountant could save you both. An accountant helps keep control of your tax obligations, identifies savings you could otherwise be missing out on, and helps you grow your business by providing reliable financial information so you can make important business decisions.
What is the difference between an accountant, a chartered accountant and a tax agent?
Chartered Accountants are members of the NZ Institute of Chartered Accountants who are bound by a code of ethics and professional standards, and hold a professional qualification from NZ that is internationally recognised. Some Chartered Accountants hold Certificates of Public Practice which means they are qualified to offer accounting services to the public and are subject to a review once every three years by NZICA. Anyone can call themselves an ‘accountant’. As such, there are a large number of ‘accountants’ who are not members of any professional body. They may not even hold a bachelor’s degree in accountancy. If you decide to use an accountant or bookkeeper, you should check their qualifications and experience. A Tax Agent is someone who is registered with the IRD to prepare and lodge income tax returns for taxpayers. Being on a tax agency list means you have 365 days in which to prepare and lodge your income tax return. Taxpayers without tax agents will only have 98 days.
Do I need to buy expensive software?
Accounting software is the lifeline of your small business as it keeps track of your cash flow. Fortunately, accounting software doesn’t need to be expensive in order to do a good job. There are a range of accounting software options available for small to medium businesses, and we’d be happy to share our recommendations with you if you need any advice. We work specifically in Xero and we are a Xero Silver Partner.
How much do you charge?
Please contact us to find out about the best package to suit your specific requirements or refer to our packages page for more information on the services we provide.

Tax and IRD

What is an IRD Audit?
An IRD audit is an examination of your financial affairs to check you have paid the correct amount of tax, and you are complying with the tax laws. It might simply be a check of a GST registration, or it could be a full examination of your business and personal records. Find our more about IRD audits by visiting the Inland Revenue website.
What do I do about tax debt?
The best way to make your tax payments is to plan ahead for them so you can pay the full amount on time. If you are unable to pay the full amount due on time, you should contact IRD as soon as possible. You can call them on 0800 227 771 or, if you are in business or have a student loan, on 0800 377 771. IRD may need further information from you to determine the best options for you.
What is provisional tax?
Provisional tax makes it easier to pay your income tax by spreading the payments over the year. If your end-of-year tax was more than $2,500 then you’ll have to pay provisional tax the following year.

Rentals

What expenses can I claim?
If you own a rental property you can claim a number of expenses at tax return time. These must relate to the costs of generating rental income, and must not include costs for private use. Here is a brief list of expenses you can claim but it’s best to check with your accountant before filing your return:

  • Insurance and rates.
  • Interest charged on money you’ve borrowed to buy your rental property.
  • Fees and commission paid to agents who collect the rent, maintain your rental, or find tenants for you.
  • Fees paid to an accountant for your accounts to be managed, tax returns prepared and advice.
  • Repair and maintenance costs.
  • Motor vehicle expenses such as running costs for travelling to inspect your property or to do repairs.
Can I claim depreciation?
Depreciation is an allowance you can claim to cover the costs of wear and tear and general ageing of furniture and fittings you’ve bought for your rental. You can combine assets worth less than $5,000 rather than depreciating them separately. You cannot claim depreciation on the rental’s land or buildings.
Can I claim interest on my mortgage?
You can claim the interest charged on money you’ve borrowed to buy your rental property. However, if you borrowed part of the money for another purpose, or topped up the mortgage for another purpose, for example to consolidate debt or to buy the house you live in, you can only claim the interest that relates directly to the rental.
What about GST?
GST is not charged on residential rent. This means you don’t show rental income in your GST return even if you are registered for GST for another taxable activity. When you claim your rental property expenses in your income tax return (IR3), you use the cost of the expense including the GST.
Can I claim repairs and maintenance?
You can claim the costs for any repairs to the property or general maintenance. However, if you’re doing the work yourself you can only claim for materials – not your time. If the work is more of an improvement than a repair then you can’t claim the cost as an expense.

Self-employed / contractor

What expenses can I claim for tax?
All self-employed people, including contractors and sole traders, can claim expenses against their income. Business expenses can include:

  • Insurance and rates.
  • Interest charged on money you’ve borrowed to buy your rental property.
  • Fees and commission paid to agents who collect the rent, maintain your rental, or find tenants for you.
  • Fees paid to an accountant for your accounts to be managed, tax returns prepared and advice.
  • Repair and maintenance costs.
  • Motor vehicle expenses such as running costs for travelling to inspect your property or to do repairs.
What home office costs can I claim?
Along with the interest on your mortgage repayments, you can also claim the proportion of your home used for business. If you have a home office, you can claim that proportion of your house, typically determined by floor area. You may be able to claim a percentage of other rooms, like bathrooms and kitchens, as well as associated costs like a cleaner or gardener, rent, insurance, rates, power, repairs and maintenance. You can also claim the GST on your use of home expenses.
What entertainment expenses can I claim?
Very specific rules apply to different categories of entertainment. Some entertainment expenses can be fully deducted, while others can only be 50% deducted. It’s important to differentiate between business and private expenses. An entertainment expense is business-related if you spend the money to help your business earn income. If the expense doesn’t help your business earn gross income, it’s private and you can’t claim it as a tax deduction, even if you paid for it out of your business account.
Can I claim motor vehicle expenses?
If you use the vehicle strictly for business, you can claim the full running costs, without making any adjustments. If you use the vehicle to travel from home to work, or any personal travel, you will need to separate the running costs of your vehicle between business and private use. To work out the business share of running costs, you must keep a logbook for at least three months every three years. You will need to record the distance, date and reason for each trip in your logbook. You can use the difference between the odometer readings at the start and end of the three months to work out the percentage of vehicle expenses you can claim.
What happens if I get injured or need to claim on ACC?
If you’re injured or unable to work, ACC will pay up to 80% of your income as weekly compensation. This means you’ll still get paid while you recover. Visit the ACC website to find out whether you’re eligible for cover.

GST

When should I register for GST?
You must register for GST if you carry out a taxable activity and your turnover was $60,000 or more in the last 12 months or will be $60,000 or more in the next 12 months, or your prices include GST.
How do I register for GST?
Visit the Inland Revenue website to find out all you need to know about registering for GST. You can only charge GST on your sales and income, and claim it back on purchases and expenses if you’re GST registered.
Which GST registration option should I choose?
Most small businesses choose to file two-monthly or six-monthly GST returns. Two-monthly means more paperwork but can be easier to keep track of. Six-monthly filing is only available if your turnover is less than $500,000 (although some exceptions apply), and may be a good option if you don’t have a lot of expenses or invoices.

Business Growth

How do I set up a company?
You need to comply with New Zealand laws when you incorporate your company with the Companies Office, including reserving a company name, appointing directors, issuing shares and registering for tax. Visit the Companies Register website to find out how to set up a company in New Zealand.
How do I set up a Trust?
Although it’s possible to set up a family trust without getting a lawyer involved, it’s probably worth getting legal advice from an experienced trust lawyer or trustee company (a business that will carry out trustee duties). They can help you decide whether or not it would be advantageous for you to set up a family trust in the first place. They can also advise on how to structure your family trust and how the gifting should proceed, and draw up the trust deed so that it clearly sets out what the trustee/s can and can’t do.
If you decide to proceed, you will need to decide the following:

  • Insurance and rates.
  • Interest charged on money you’ve borrowed to buy your rental property.
  • Fees and commission paid to agents who collect the rent, maintain your rental, or find tenants for you.
  • Fees paid to an accountant for your accounts to be managed, tax returns prepared and advice.
  • Repair and maintenance costs.
  • Motor vehicle expenses such as running costs for travelling to inspect your property or to do repairs.

Visit the Public Trusts website to find out more.

How can I manage my business cash flow more effectively?
Cashflow planning is critical to survival and growth in every business. Talk to us about our Cashflow Planning service. We’ll prepare Cashflow Forecast, conduct a thorough review of your processes and identify any potential causes of poor cashflow to help you determine the underlying issues.
What should my business plan include?
Business Planning helps you identify and prioritise your goals, create strategies to achieve these goals, review actual performance against targets, and establish a 90-Day Action Plan to address immediate and critical issues. Get in touch with our team to find out more about our Business Planning service.
Why is my profit amount different to my cash balance?
The simple answer is that financial reports are prepared on an accruals basis and not a cash basis. When financial statements are prepared on an accruals basis, it means that revenue is recorded when it is earned (for example, when goods are sold); and expenses are recorded when they are incurred (for example, a service has been consumed within your business). The bottom line: cash is not profit and profit is not cash. You need both to sustain and grow a business.
How important is it to get my business and personal finances structured right?
As your business grows, creating a clear boundary between your personal and business finances, and maintaining the supporting documents to prove that separation, is crucial to staying on the right side of the law.

Accounting Systems

Which accounting system do you recommend?
As a Xero Silver Partner, we work in Xero. Xero’s online accounting platform allows you to work faster and more efficiently than ever before.You’ll have real-time access to the information you need, whenever and wherever you need it, simply by logging in.
How do I switch to Xero?
If you’re considering switching from another accounting platform to Xero, here are some tips to help you get started. Get in touch with our team if you’d like assistance in converting to Xero.