Reducing your tax bill

Reducing your tax bill is not a myth, your tax bill is calculated on your net profit. You can reduce your tax bill by claiming as many valid business expenses as you can. You’ll need to keep good records, eg receipts and log books, and hold onto them for seven years — Inland Revenue (IR) will need to see these records if you’re audited.

Claiming expenses

• Many of the costs involved in running a business can be claimed.

• If you run your business from home you might be able to claim some household expenses.

• Entertainment expenses can be 50% or 100% deductible.

Business expenses are:

• Day-to-day revenue expenses for running your business, eg advertising or wages.

• Assets you buy, eg machinery, computers or tools, which are called capital expenses. Note: items that cost $500 or more must usually be depreciated.

Generally, you claim your revenue expenses in the year you incur them, and you depreciate capital expenses over time. 

Pay on time

• Paying by online banking is quickest and easiest.

• In your first year of business, you might get a discount if you voluntarily pay tax before the end of the tax year.

TIP: DO NOT pay tax late. Penalties might be more than what you owe.

TIP: DO NOT overpay tax. Refunds include interest, but at a lower rate than you’ll get in a savings account.

If you have specific questions please feel free to contact me for tailored advice.