TOTALACCOUNTING Chartered Accountants

Accounting                               Taxation                                   Business Advice and Development Assistance                                        

 P.O. Box 10 , Clive         133 Main Rd, Clive           Tel. (06) 8700952          Fax. (06) 8700955 

Email murray@totalaccounting.co.nz                                  Website www.totalaccounting.co.nz

 
EMAIL NEWSLETTER  SEPTEMBER 2014
 

Welcome again to the TotalAccounting Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  

 

NEW CLIENTS

We are happy to accept new clients.  We would be happy to assist colleagues and acquaintances as new clients.

 

INDEX

  1. Office Closure 26/9/2014-7/10/2014.

  2. IRD Payment Options are Changing 

  3. Comparisons between Sole Trader, Partnership and Company

 

OFFICE CLOSURE

The office will be closed from Friday 26/9/2014 and will reopen Tuesday 7/10/2014.  If you need to contact your messages will not be followed up in this period, but feel free to leave these on the office telephone message system or contact by email.   These messages will be responded to when the office reopens.

 

IRD PAYMENT OPTIONS ARE CHANGING

Do you pay IRD by cheque or make payments at Westpac?  If so, you need to be aware of changes happening from 1 October, 2014.

Limited services at Westpac

Westpac will continue to accept cash or eftpos payments over the counter after 1 October 2014 but they'll no longer accept any cheque payments, returns or other documents from that date. 

Posted cheques must be received on time

From 1 October 2014, cheque payments and returns posted to IRD must arrive on or before the due date to avoid late payment penalties and interest.

Going Online

IRD are recommending  internet banking.  Banks offer the facility to make IRD payments online. You can make your payments right up to the due date if you use this facility.

 

COMPARISONS BETWEEN SOLE TRADER, PARTNERSHIP AND COMPANY

Many taxpayers are uncertain as to what business form to utilise when they go into business.   The following table highlights significant implications of setting up as a sole trader, in a partnership or as a company:

 

SOLE TRADER

PARTNERSHIP

COMPANY

Credibility

 

 

Generally has the highest perception of all.

 

 

 

 

Money You Owe

Liable for all money the business owes.   Liability is unlimited.   Personal assets can be seized to pay business debts.  

Unlimited liability also applies.   You are liable for your partners share of the debts, including unpaid taxes relating to the partnership.

Shareholders liability for debt is limited to the amount paid for their shares in the first place.   The personal assets of the directors can only be touched if the company has been trading while insolvent.

 

 

 

 

Start Up Procedures

Cheapest form to organise- just advise IRD.

Do not have to get a written partnership agreement, but would be sensible to do so if partnership is not husband and wife.

Set up the company and register it with the Companies Office.   Annual Returns must be filed with the Companies Office with annual fee.

 

 

 

 

Financial Accounts

Accounts Format not laid down by law.   No requirement to produce a Balance Sheet.

Same as Sole Trader.

More formal presentation required than Sole Trader and Partnership.

 

 

 

 

Getting Accounts Audited

No requirement.

No requirement.

If public company on the sharemarket, have to be audited.

 

 

 

 

Rates of Tax

Tax paid based on personal marginal income tax rates on all income.  This may be lower than or  33c/ $  

Tax paid based after distribution of partnership profit on personal marginal income tax rates on all income.   This may be lower than or  33c/ $.

Company pays tax at 28c/ $ on profits after paying of all costs including shareholder salaries.

 

 

 

 

When you Pay Tax

 

 

Company will have to pay Provisional Tax a year earlier than individuals if certain income levels are met.

 

 

 

 

What to do with Losses

Set off Losses against future trading profits and against other income in the year of the loss or the year after.

Same as Sole Trader.

Set off losses against future profits of the company in a Standard Company.   If a Look Through Company profits/ losses are applied as personal taxable income of shareholders in proportion to their shareholding.

 

 

 

 

Raising Money

Options are fairly limited- to bank or other individual.

Same as sole trader plus may be able to find a new partner to bring in capital.

Same as sole trader plus raise funds from general public plus venture capital fund.

 

 

 

 

Selling Business

 

 

Easiest form to sell as could sell some of the shares instead of whole business.

 

 

TOTALACCOUNTING KNOWLEDGE CENTRE AND ARTICLES ABOUT TAXATION AND BUSINESS IN GENERAL PRESS HERE FOR BUSINESS STARTUP KNOWLEDGE CENTRE PRESS HERE
FOR INFORMATION ABOUT COMPANY INCORPORATION PRESS HERE FOR PREVIOUS MONTH EMAIL NEWSLETTERS PRESS HERE

FOR PROPERTY INVESTMENT AND TAX INFORMATION PRESS HERE

FOR FRANCHISE INVESTMENT AND TAX INFORMATION PRESS HERE


The information provided in this email newsletter is for informational purposes only.   TotalAccounting accepts no responsibility for the opinions and information expressed in the information provided and it is provided "as is" without warranty of any kind.    The user assumes the entire risk as to the accuracy and use of this document.   Readers are asked to seek professional advice pertaining to their own circumstances.    The TotalAccounting email newsletter may be copied and distributed subject to the following conditions:
  • All text must be copied without modification and all pages must be included.
  • This document must not be distributed for profit.    

 

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