20.05.2015
What % of my Sales should I Set Aside for Tax ?
People often ask me to tell them how much money they should be putting aside to cover their GST and tax bills. I find this question difficult to answer because every business is different and I would hate for someone to be relying on something that didn’t fit for their particular business. However, it is such a common question that I’m going to take a stab at a rule of thumb answer. Please let me know whether this works for you if you try it. Please don’t shoot me if it doesn’t.
The first thing we need to do is to work out your net profit margin and for that we need a recent Statement of Profit or Loss for your business. If you rummage around in the pile of stuff your accountant sent you when s/he told you how much tax you have to pay this year, you should come across a set of financials statements and within that will be a page headed either Statement of Profit or Loss or Statement of Financial Performance, that’s the page we need. If you don’t have one from an accountant then you should be able to print one from your accounting system.
Near the top of the page will be the figures for your sales, possibly fees received or other income and hopefully a line saying total income. At or near the bottom will be a line saying net profit. Take the net profit amount and divide it by the total income and multiply by a 100. This is your net margin. For a service business this might be 50% or more but for a food business perhaps 10% or less. It really depends on what industry and what environment you are operating in. [Read More…]
Admin - 08:44:22 @
09.05.2015
Beginners’ Guide to Filing Your Own Small Business Tax Return
We’re pretty lucky here in New Zealand. Our tax system is rated as one of the easiest in the world to navigate and comply with. And accountants are expensive right? So when you only have a small business it makes sense to keep your costs down by filing your own tax return. Here are a few tips and reminders to help you get it done right.
1. Include all your income – don’t forget to add in your cash sales (if you used the cash to pay expenses don’t forget to put those expenses in as well). If you’re GST registered then your sales income is the GST exclusive amount. If you’ve sent out invoices before the 31st March that weren’t paid until 1st April or later you need to include those too. [Read More…]
Admin - 06:04:46 @ | 3 comments