As a new business owner, it’s important that you know your tax responsibilities and are fulfilling them. This is easier said than done, however, so here are the taxes you need to pay to the Inland Revenue:
- Income Tax – You must pay this tax on your business’ yearly net taxable income. This is the difference between the business expenses you could claim against your income and the income for whatever services and products that you sell.
- Provisional Tax – This is similar to ‘Pay As You Earn’ or PAYE for a salary or wage earner. It’s primarily a way to spread out business taxes, rather than facing a single and huge tax bill when tax time comes. The majority of payments would be spread over the course of a year in three equal payments.
- PAYE or ‘Pay As You Earn’ Tax – You would only have to pay this if you have employees or if you receive a salary from your business. You have to deduct this from your employees’ salaries or wages and pay it every month to the Inland Revenue (IR).
- GST or Goods and Services Tax – You have to register with IR to GST if you project that your business would earn more than $60,000 in the coming year, or if your earnings were higher than the $60,000 limit during the past year.
- ACC or Accident Compensation Corporation Levies – You should pay the ACC a yearly levy to cover potential injuries in your workplace for yourself or your employees (if applicable). This also applies even if you don’t have employees.
- Fringe Benefit Tax – You have to pay this tax if your business provides perks or benefits to your employees.
- Employer Superannuation Contribution Tax – You would only have to pay this tax if your business makes contributions towards the superannuation schemes for your employees.
Sounds complicated? To some extent, it’s not yet there’s nothing simple about business taxes in the first place, especially for new business owners.
Accounting North Ltd and other top accountants in Auckland suggest making tax prep easier by regularly taking stock of your business’ cash flow and considering hiring professionals. This is to make certain that you’re paying your business taxes on time.
Following your first year, you may then end up with massive penalty fees, so prioritise your taxes if you want to keep your business.