BUSINESS MOTOR VEHICLE COSTS

Often when we are completing small business accounts we find people confused about what can be claimed for their business vehicle costs. In many cases the vehicle is used for both personal and business travel.

There are several ways these costs can be allocated i.e.:

1. Private motor vehicle (also used for business)

a)   If travelling less than 5,000 km per year for business, keep a Log Book of all business travel, and at the end of the year the total business km traveled can be claimed as a business cost at the IRD set rate (currently 72 cents per km)

b) If travelling more than 5,000 km per year for business, keep a log Book for 3 months showing all travel (business and personal), then calculate the business% of total km traveled over the 3 month period. This % can then be claimed from all the vehicle costs (fuel, servicing, RUC, registration, insurance, repairs and maintenance).

2. Company Owned Vehicle (listed on Company Asset Register)

Claim 100% of costs and at Year End pay Fringe Benefit Tax (FBT) for personal use (based on 20% of the cost price of the vehicle).

If you are unsure of your specific requirements contact us, we specialise in Small Business Accounting.

 

 

 

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.