The first few years in a new business can be the most delicate and you really don’t want any unwanted surprises when your initial tax bill arrives. There have been constant murmurs recently about what to do if you’re facing tax debt but what about some guidance as to how to avoid it altogether?
It’s that age old solution: planning. By planning ahead and ensuring you have a surplus set aside for tax payments, you’ll prevent any over the top or unexpected bills. The key is to start putting money aside from the beginning. And the trick? Once it’s there, don’t touch it. This is an essential point for new businesses because in the first year of operation, the IRD do not charge tax. However, these first year taxes will be lumped in with the second year tax charges and this is often where businesses get into trouble and wind up facing tax debt.
It’s not just about the additional cash though. Always ensure you keep hold of your receipts and ensure your records are as accurate as possible.
Understand your tax obligations and budget for them
Keep money aside from a capital gain when selling an asset such as property or shares
If you are collecting GST, always keep it in a separate account
Update your financial records regularly (at least once a month)
We may be able to help you forecast for potential cashflow and assess what you may expect in your first few years of business. Avoiding tax debt should be on the radar for all businesses, new and established.
Call us today if this is something you’d like to discuss.
