2. © 2013 Deloitte
Options available to structure your business
• Sole Trader
• Partnership
• Limited Liability Company
• Limited Liability Partnership
• Trading Trust
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Running the financial side of the business
Income
Invoice Clients – use GST compliant invoices and register for GST.
Recommend payments basis and 6 monthly cycle.
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Example of a tax invoice for supplies worth more than $1,000.
ABC ELECTRONICS Name and address of the supplier
Main Street
WELLINGTON
POBox 99 999
WELLINGTON
Phone: (04)999 9999
Fax: (04)999 9999
TAX INVOICE The words "tax invoice"
GST number 98-765-432 Supplier's GST registration number
To: Wyatt Firsound Date: 12 November 2010 Date of issue
712 John Street
WELLINGTON Name and address of the recipient
Quantity Descripton of goods and services Unit price Total
4 Video camera $1,200 $4,800 Quantity of goods supplied
Description of the goods and services supplied
Amount excluding tax, charged for the supply
Plus goods and services tax $720 GST charged
Total amount due $5,520 Total amount payable
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Get ready to register
• You need an IRD number
• and some business-related information before you can register for GST.
• If you don't have an IRD number, you need to apply for one using an:
• IRD number application - individual (IR595) if you're a sole trader, or
• IRD number application - non-individual (IR596) if you are registering a new
partnership, company, non-profit organisation or trust/estate.
• If you have misplaced your IRD number - call 0800 377 774
• You need to supply your BIC Code (business industry classification)
• You need to search for the code on ACC's www.businessdescription.co.nz website.
• M692435 Design services [CU code: 78520 CU description: Specialised design
services (not elsewhere classified) ANZSIC code: M692400 ANZSIC description:
Other Specialised Design Services]
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Get ready to register cont.
• You need to choose an accounting basis. Payments
• You need to choose a taxable period. Six monthly
Other Income points
• Follow up your debtors
• Engagement process – ensure you know who you are working for and
consider credit checks
• Terms and Conditions – make sure you retain ownership of IP and clear
obligations for customers to pay you for work completed. Include an option to
charge interest on unpaid invoices.
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Expenses
• General Rule
• Expenses are only deductible if there is a connection to the generation of income.
• Note that travel from home and food are not deductible.
• CAPEX vs. OPEX
• Assets over $500 need to be capitalised
• Then depreciated to get the tax deductible expense
• Home Office
• Calculate the costs of your residence (rent, power, etc)
• Then apportion based on your “office” space compared to the total area
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Profit is Income less Expenses
• Two big reasons for knowing this
• Are you making enough money?
• How much tax do you need to pay?
• Recommendation - track this monthly (at least)
• Not making enough?
• Lift your price, or
• Increase volume
• Tax?
• Based on the income less expenses
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