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
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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:
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SOLE
TRADER
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PARTNERSHIP
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COMPANY
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Credibility
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Generally
has the highest perception of all.
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Money
You Owe
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Liable
for all money the business owes.
Liability is unlimited.
Personal assets can be seized to pay business debts.
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Unlimited
liability also applies.
You are liable for your partners share of the debts,
including unpaid taxes relating to the partnership.
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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.
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Start
Up Procedures
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Cheapest
form to organise- just advise IRD.
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Do
not have to get a written partnership agreement, but would be
sensible to do so if partnership is not husband and wife.
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Set
up the company and register it with the Companies Office.
Annual Returns must be filed with the Companies Office
with annual fee.
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Financial
Accounts
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Accounts
Format not laid down by law.
No requirement to produce a Balance Sheet.
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Same
as Sole Trader.
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More
formal presentation required than Sole Trader and Partnership.
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Getting
Accounts Audited
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No
requirement.
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No
requirement.
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If
public company on the sharemarket, have to be audited.
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Rates
of Tax
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Tax
paid based on personal marginal income tax rates on all income.
This may be lower than or 33c/ $
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Tax
paid based after distribution of partnership profit on personal
marginal income tax rates on all income.
This may be lower than or 33c/ $.
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Company
pays tax at 28c/ $ on profits after paying of all costs
including shareholder salaries.
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When
you Pay Tax
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Company
will have to pay Provisional Tax a year earlier than individuals
if certain income levels are met.
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What
to do with Losses
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Set
off Losses against future trading profits and against other
income in the year of the loss or the year after.
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Same
as Sole Trader.
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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.
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Raising
Money
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Options
are fairly limited- to bank or other individual.
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Same
as sole trader plus may be able to find a new partner to bring
in capital.
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Same
as sole trader plus raise funds from general public plus venture
capital fund.
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Selling
Business
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Easiest
form to sell as could sell some of the shares instead of whole
business.
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