The notes below have been prepared to assist you to minimise the cost of our work.
Due to the complex nature of tax law and the penalties for mistakes, this firm will only accept responsibility for tax advice supplied by its principals.
Please ensure this is completed and signed. If you have any difficulty with the questions, please do as much as you can and then contact us.
Your fully completed questionnaire helps us ensure we have all the information we need. It is a checklist. Asking the right questions helps us eliminate mistakes. The tax penalty regime has raised the importance of having a fully completed questionnaire.
Be sure to include all documents we require, with your questionnaire. If supplying bank statements, for example, make sure there are no gaps. If the first ones for the year are missing, you may have given them to us last year.
Minimise the number of bank accounts you use for business. If you have interest bearing accounts, they are usually best kept out of the business. Run them as private accounts. However, if your business is a company ensure your shareholders’ accounts will not be overdrawn as a consequence. If in doubt talk to us first.
If we need to trace transactions between different bank accounts, it adds to our time and your costs. We may also have to adjust for withholding tax deducted from interest received, keep an imputation credit account (for a company) and may be trace a small tax refund.
If you use a credit card, we can either treat this like a bank account and analyse all the transactions or you can supply us with a summary for each payment.
Private expenditure in business
We adjust for any expenses which are partly private. For example vehicles (unless you are paying FBT on these) and phones, Our questionnaire has questions to cover these. Some people draw two payments for accounts like telephone, one from private account and one from business. This reduces our work.
Never put a personal cost through the business, unless you call it “drawings” and make sure we realise it is not a business cost.
Non current assets (also known as fixed assets)
Make a note of any assets you have acquired, purchased, sold, traded in or disposed of during the year. Assets can only be written off if the business has got rid of them.
Non current assets purchased
Treat any asset costing $500 (net of GST) or less as an expense; so long as you did not buy it at the same time as another asset.
If you think we may have difficulty determining depreciation rates, please ask for a manual and confer with us when you bring in the accounting records.
Identify each asset on bank statements.
If you have purchased a business, supply a breakdown of the cost:-
- assets, split if possible
- goodwill and how this is made up.
- any other details
ACC levies, holiday pay and sick pay
WE include money owing at the end of the year for these costs in your annual accounts. They are not immediately tax deductible. If you are unable to tell us the how much the business is owing, make an estimate. For example, you will not know the ACC debt on wages until you get a bill. Look up last year’s figure and use this as a basis for your guess.
Make sure your staff have completed IR 330 tax forms. These must be kept for 7 years after an employee departs.
This is a complicated area. Generally, food and drink is only 50% tax deductible. Be sure to identify all entertainment costs. Do not combine with some other account like general expenses.
Companies are permitted to claim the cost of approved charitable donations as a business expense. If the payments result in a loss, the loss is not tax deductible.
If you employ people and you provide them with the use of a vehicle, low interest loans or any other non taxable benefits then you may be liable for fringe benefit tax. If you are trading as a company, these rules apply to you as well as your employees.
You can account for fringe benefit tax in two ways. You can either pay the tax or we can make an adjustment by treating the value of the benefit as business income.
If you have been paying fringe benefit tax please provide us with copies of the statements you have sent to the IRD.
If you have provided benefits, including a car for your own use, (in the case of companies and trusts) and not paid fringe benefit tax then provide us with details of these benefits and we will adjust.
Legal costs are sometimes not tax deductible. Please provide us with a copy of all lawyers’ bills.
Supply us with copies of all returns and workings.
When we have completed your accounts, there are often GST adjustments to be made. We will provide you with a schedule. If we overlook mentioning this, please ask.
It saves costs to have GST dates coincide with the year end. If yours does not, please ask IRD to change or contact us.
Cash on hand or in the cash register
Record the balance of money you are holding at close of business on the last day of the tax year.
Debtors (Accounts Receivable)
Write off any bad debts before balance date. Separate these from your debtors’ list, and note any recovery action taken to date.
We need the total amount owing to you at your balance date. This means all money you have earned up to balance date regardless of how long the money has been owing to you. You may reduce this amount by the bad debts, once they have been written off, so long as this occurred before the year ended.
Those providing services should note they must include, either as debtors or work in progress, amounts earned but not yet billed where the service was capable of being billed at balance date. For example, if I have completed someone’s accounts and not billed them, I must include the fee as income.
Work in progress
If you have any jobs which are still in progress at balance date, which have not already been charged, value materials and wages and include a share of direct overhead expenses (not administration expenses or profit.)
Count and value stock at balance date. Use cost (to you) or selling price if it is lower. If you choose selling price discuss with us. You have to be able to prove the selling price figure. Your guess is not enough.
If the value of your stock will be lower than $10,000, you may use the same stock figure as last year. You don’t need to do a stock take, if you are sure the value of your stock will not reach the $10,000.
Get up to date printouts from the bank or lending institution of any loans your business has.
Ask for statements showing all transactions for the year, the year end balance and the interest charged for the year.
Make sure you give us copies of all funding (e.g. Hire purchase or lease) agreements.
If your bank has not sent you a statement showing details of a loan up to balance date, please ask for and get it before you see us.
If you are required to keep a logbook and have not kept one in the last 3 years start one from the 1st of April. The logbook must run for 3 months.
When a vehicle is owned by a company and is available for private use by an employee, or shareholder employee, the company is required to pay Fringe Benefits Tax on the cost of the vehicle. Generally, no log book is needed. If a relative has owned the vehicle within 2 years of the company buying it, cost is the amount the relative paid. If Fringe Benefits Tax applies to you, consult us
Qualifying Companies and Loss Attributing Qualifying Companies
It is usually advantageous for your company to be a qualifying company. If it is not, you will need to act before balance date if you wish to change.
New companies are allowed a certain amount of time to register as qualifying and loss attributing qualifying companies. Consult us.
If your company is in financial difficulty, you may need to deregister quickly. Discuss this with us before you get to the stage of liquidation.
Salaries and wages for staff
Salaries and wages can be included in accounts payable provided payment occurs within 63 days of the year end (2 June for March balance dates.). If you wish to pay a bonus or holiday pay, this rule affects you.
WARNING: The information supplied here is simplified and condensed. Also, the law is constantly changing and these notes can soon get out of date. They are only a guide and should not be relied upon as a substitute for professional advice.