ENTERTAINMENT EXPENSES

Often when completing small business accounts we find people confused about what they can claim for Entertainment Expenses.

 

The number 1 Rule is the expense needs to be related to your business i.e. linked to earning your income.

 

For most small businesses the majority of entertainment expenses are only 50% deductible. Examples of these are:

  • Food and drink, including meetings with clients or staff
  • Friday night drinks for staff
  • Lunchtime food shout to staff
  • Christmas party for staff

The exception to this is food and drink while travelling out of town on business, which is 100% deductible.

IRD expects you to keep records of:

  • The date the expense was incurred (bill/receipt)
  • The names of people entertained and the business they represent
  • The reason for the entertainment

 

GST - GETTING IT RIGHT

GST Registration

You need to register for GST with IRD (Inland Revenue Department) if you carry out a taxable activity and your annual turnover (gross sales) are more than $60,000, or if GST is included in your selling prices.

GST Returns

GST Return frequency has 3 options i.e. 1 monthly, 2 monthly , and 6 monthly. For most small business we recommend the standard option of a 2 monthly Return filing period, as this works best for the business Cash Flow. Many astute business owners say doing this ensures that their small business accounts are up to date, and it gives them (the owners) an up to date picture of their financial performance.

GST Returns must be filed by the required time, even if you have no income or expenses for that Return period.

Using a good accounting package such as Xero, can make completing your GST Return a lot easier and quicker.

 

 

 

HEAD IN THE SAND???

Ignoring your small business accounting and compliance just does not work!

We often find new clients who haven't filed Company Annual Returns for a number of years or even haven't filed any GST Returns. Some have been employing staff but have not  registered with IRD as an Employer, nor made PAYE payments.

Most are extremely busy working in their business, which is successful, but they don't have time for their small business accounts and the paperwork etc. that comes with business basics and compliance.

We specialise in small business accounting and compliance, and are based in Tauranga.

 Using cloud based technology such as Xero also enables us to work efficiently with clients throughout NZ.

So don't hesitate to contact us for all your small business accounting needs

SMALL BUSINESS ACCOUNTING - Keeping Personal Expenses Separate From Business Expenses

We often encounter people who mix up their personal expenses with their small business accounts. This increases the time it takes to complete the accounting, which in turn increases the accounting cost.

The best way to keep these expenses separate is to use different bank accounts or credit cards, and also know what expenses you can claim for your business e.g. Entertainment, Home Office, motor vehicle etc.

If you need assistance with this don't hesitate to  contact us.

SMALL BUSINESS ACCOUNTING - HOME OFFICE COSTS

A lot of people do their small business accounts & book work at home, in a set area i.e. a small office or separate room. Costs associated with this area can be claimed as 'Home Office Costs'.

 

Costs can include a percentage of:

  • Home Phone & Internet 
  • Property Rates & Water Rates
  • Property Insurance
  • Electricity

The amount that can be claimed is calculated on the area of the 'Home Office' space as a percentage of the total building space of the property.

If you are unsure of how to do this or what you may be able to claim as a business cost then contact us. We specialise in small business accounting, bookkeeping, payroll & HR, and health & safety, and are based in Tauranga.