Introduction to Business

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• Introduction to Business
• Professional Historians Assn
• 11 October 2008

Presented by John Forde Business Tax Information
Officer
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Going into business

• Banking and budgeting
• Keeping records
• GST
• Income tax
• Provisional tax
• Business expenses

3
Banking and budgeting

• Bank accounts
• Budgeting for
• ACC
• Student loan
• Income tax
• GST

4
Record keeping - Model Cashbook
Page 18 , 50 Smart business IR320
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GST

• Do you need to register?
• Choose your
• accounting basis payment, invoice, hybrid
• filing period

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Tax Invoices/Receipts

• Less than 50
• Less than 1,000
• More than 1,000

Page 47 Smart business IR320
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GST

• 12.5 on sales and service
• GST on expenses and purchases
• File on time
• Online filing

Page 10 Smart business IR320
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GST return

• Total sales for period 1,125
• GST collected from sales (1/9th) 125
• Total purchases for period 900
• GST paid or claimable (1/9th) 100
  
  
• 
  _______
• 125 - 100 GST to pay 25
• 
  

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Business Expenses Vehicle
Page 38 Smart business IR320
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Business Expenses

• Home Office Calculation
• Mortgage interest
• Rates
• Insurance
• Power

Floor space used 15m² X 100 Total
floor space 179m²
8.38
Page 39 Smart business IR320
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Other Business Expenses

• Telephone
• Travel Accommodation
• Insurance
• Interest
• ACC
• Depreciation

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Income Tax
Profit and Loss Account Sales (Gross
Income) 30,000 Less Expenses Rent
4,000 Materials 3,000 Advertising
500 Interest 500 Insurance 2,000
10,000 Net profit 20,000
Drawings are not deductible expenses
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Provisional Tax
Example Profit (2009 Income Tax year)
20,000 Tax on profit at 19.5
3,900 (due 07/02/2010) Residual income tax
gt 2,500 Need to pay provisional tax next
tax year
1 April 2008 31 March 2009
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Provisional Tax

• Example
• Residual Income Tax (2009 tax year) 3,900
• Allow for inflation next year (add 5) 195
• Provisional tax 2010
  4,095
• There will be 3 payments of 1,365 28 August
  2009
• 15 January 2010
• 7 May 2010
• Residual Income Tax 3,900 Due 7 February 2010
• (2009 tax year)

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Provisional Tax

• GST and Provisional Tax Ratio option
• Early payment discount

Page 33, 27 Smart business IR320
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Tax Rates

• Individuals
• Under 38,000 19.5
• 38,001 - 60,000 33
• Over 60,001 39
• Company 30

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Tax Rates from 1/10/08

• Individuals
• Under 14,000 12.5
• 14,001 - 40,000 21
• 40,001 - 70,000 33
• Over 70,001 39
• Company 30

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Support and information

• Website
• Contact centre
• INFOexpress
• Newsletters
• Advisory services
• One on One
• Seminar/Group

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Key Messages

• Set up an efficient record keeping system
• Keep all receipts and Tax Invoices
• Budget for your taxes
• Work out if you need to register for GST
• Send IRD returns and payments before they are due
• If you cant meet return dates call us
• Ask for help

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Questions