Frequently Asked Questions
View our FAQs below for quick tips and tricks.
If you have additional questions, feel free to get in touch with the OnTax team!
How do I start my business?
If you have a good idea for a new business venture but don't have expertise in the legal or financial aspects, we can help you:
- Decide on the most suitable structure for your business - Sole trader, partnership, or limited company
- Prepare a business plan, cash flow projections, budgets, and trading forecasts
- Assess your finance requirements, advise on the best sources of finance, and draw up the necessary proposals
- Establish a good working relationship with your bank
- Complete any registration procedures with Companies House, Inland Revenue, or Customs and Excise
- Deal with company secretarial issues
- Set up a recording system for your internal use and for complying with statutory requirements
Let us help you turn your business idea into a reality!
What business structure should I use?
You can structure your business as a sole trader, partnership, or a company
Sole Traders
You are the sole owner of the business
Pros
- Quick and easy to set up
- No legal or registration fees
- You completely control the business and receive all the profits
- Any losses can be offset against other income
Cons
- You are liable for all debts which may put personal assets at risk
- Sole trader businesses are harder to grow
- Can be more difficult to get loans or investment
Partnerships
Two or more people or entities form a business.
Pros
- You can share resources and financial obligations
- You can offset losses against other income
- Cheaper and easier than setting up a company
Cons
- Each partner is liable for all debts which may put personal assets at risk
- You may be liable for your partners debts
Companies
Your business is a separate legal entity to its directors and shareholders
Pros
- Shareholder liability is limited to the price of their shares
- Lower tax rate than top personal tax rates
- Able to grow indefinitely as it’s not tied to one person
- Easier to get loans and investment
Cons
- There are more regulations than for the other business structures
- Higher set up costs
What is my tax rate?
New Zealand has progressive tax rates which means that as your income increases so does your tax rate.
| Annual Income | Tax Rate |
|---|---|
| Up to $14,000 | 10.5% |
| $14,000 and up to $48,000 | 17.5% |
| Over $48,000 and up to $70,000 | 30% |
| Over $70,000 up to $180,000 | 33% |
| Remaining income over $180,000 | 39% |
What is my tax code?
To find your tax code visit the IRD website. Click here.
Do I need to be GST registered?
Yes, if your turnover or expected turnover is more than $60,000.
Vehicle Lease vs Hire Purchase
The advantages or disadvantages favouring either of these options are really hinged to your overall business strategy, in particular your level of Capital Investment in your enterprise. If you decide to have a low capital investment model- therefore less risk exposure- then leasing is probably the best answer. Be aware however that all leases are not equal, and you should check with your tax adviser to ascertain what type of lease is proposed. In general terms a “lease” that gives an option to purchase an asset for a set value at the end of the lease term is probably not defined as a lease for tax purposes. The monthly payments would not then be deductible.
This really poses vexed questions therefore you should discuss the issue with your local business/tax adviser.
What expenses can I claim?
Any expenses directly related to the generation of business income can normally be claimed e.g.
- Everyday expenditure – purchases, stationary, rent etc.
- Other expenses such as entertainment and motor vehicles may only be partially deductible
- Asset purchases are not fully deductible but are subject to depreciation
- Personal expenses are not claimable except as part of a home office claim
What home office expenses can I claim?
If you have a home office, you can claim a percentage of the household expenses based on the area of the space used for the home office divided by the total area of the house.
For Example:
- House insurance
- Contents Insurance
- Rent
- Rates
- Power
- Mortgage interest costs (not principal repayments)
- Repairs and maintenance
- Phone and internet
Work with us
We offer a free 1 hour consultation to all new clients. Get in touch to talk with a friendly, local, Tauranga Accountant.
Phone: 07 578 7371
Free phone: 0800 466 829
Email: office@ontax.co.nz
Address: 299 Cameron Road, Tauranga 3110, New Zealand
Address: 2 Huanui Close, Papamoa Beach 3118 (By appointment only)
Postal Address: PO Box 630 Tauranga 3144
