Summit Accounting

Should I start as a sole trader or register as a limited company?

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When deciding to start a business, one of the first decisions you must make is whether to register as a sole trader, limited company, partnership, or trust. A sole trader operates as a single entity and requires minimal paperwork, while a limited company offers more professional status, protection from personal financial liability and taxation benefits.

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For many businesses, registering as a limited company is the best choice. This type of business structure offers benefits such as better protection from personal financial liability and tax advantages due to the ability to spread profits across a larger number of shareholders. Furthermore, it’s easier to manage than other types of businesses since you don’t have to worry about managing multiple partners or trustees.

Should I register for an NZBN?

 

A New Zealand Business Number (NZBN) is an identifier issued to all businesses operating in New Zealand. It allows companies to have a unique identifier, allowing them to access services and interact with the government more easily. Limited companies will automatically be assigned an NZBN number when they are registered, while sole traders, partnerships, and trusts need only apply for a NZBN number if they wish.

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Having an NZBN can be beneficial as it allows customers, suppliers, and other businesses to easily identify your business. It also gives the government and other agencies an easy way to find out information about your business. Having an NZBN is not compulsory but does have benefits in terms of access to government services and programs, which can simplify day-to-day operations.

Do I need a separate bank account for my business, and can I pay business expenses from my personal account?

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Creating a separate bank account for your business is necessary for several reasons. It allows you to easily track income, expenses, and any other financial transactions related to your business.

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Although you can pay business expenses from your personal account, keeping your personal finances separate from the finances of your business can be beneficial for tax purposes. Having a separate bank account also grants you security and provides extra layers of protection as you manage your business’ finances.

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When paying expenses, it is important to document all transactions and keep receipts for future reference. Depending on your business type, there may be specific accounting rules regarding which expenses can be paid from personal funds and what must be paid from the business account. It is also essential to determine the best way to pay taxes on any income that is earned from the business.

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To ensure the protection of your business, it is wise to consult a professional accountant or financial advisor when setting up and managing your business’ finances. Doing so will help you remain in compliance with local laws and regulations.

Do I need to register for GST when I start my business?

 

Check out from this link to see if you need to register for GST.

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When you embark on a business journey, one of the important decisions you'll need to make is whether to register for GST. It's a critical decision since it will have long-term implications on how your business operates. Generally, businesses with an annual turnover of less than $60,000 are eligible to register for GST. However, you may choose to register for GST even if your turnover is lower than that.

In some cases, businesses may voluntarily register for GST even if their annual turnover is below the threshold set by the government. This could be beneficial if you're selling products and services in bulk or have many customers who are willing to pay GST on the goods or services you provide.

 

It's best to speak to an accountant or business advisor if you're unsure whether you should register for GST or not. They can help assess your business and advise on how GST will affect it in the future. It's important that you do your due diligence before deciding to register for GST, as incorrect registration could lead to hefty penalties or other complications.

When it comes to registering for Goods and Services Tax (GST) in New Zealand, your business’s GST number is actually the same as your Inland Revenue Department (IRD) number. This IRD number will be unique to your business; for instance, a sole trader's business IRD number is the same as their personal IRD number. Any other type of entity will have a separate IRD number, which is not the same as their personal one.

Do I need Xero?

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Xero is an incredibly powerful and helpful accounting software designed for use by both business owners and their accountants. It enables users to easily manage their accounts from the same platform, allowing them to keep track of their financial activities in real-time. With Xero, users can view their invoices, create new ones, and process payments quickly and easily. Xero also offers features such as payroll, inventory management, billing, reporting, and more.

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Overall, whether you need to use Xero depends on how involved you want to be in managing your accounts. If you are comfortable with doing only occasional admin tasks or relying completely on your accountant for account management, then you probably don't need Xero. However, if you want to be more actively involved in the process of managing your accounts or do more than ten invoices monthly, then Xero is a great option that can help you save time and make it easier to stay on top of your finances.

Is Xero complicated to learn?

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Xero is an incredibly easy platform to learn and use, making it an ideal accounting solution for small businesses. Our Xero training is designed specifically for those who are new to the platform and makes learning both quick and efficient. We cover all aspects of the program including setting up your business accounts, entering and managing invoices, payments, reconciliations and more.

 

Our experienced trainers are here to answer any questions and guide you through each step of the process, ensuring you gain a comprehensive understanding of the Xero platform and become comfortable with it before you get started.

Whether you’re looking for an introduction to the basics of accounting or want to expand your knowledge around more complex topics such as managing payroll and bank reconciliation processes, our Xero training has something for everyone.

Can I pay myself?

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Yes, you can pay yourself for the work you do as an owner or operator of your business. Paying yourself has both legal and tax implications that you need to be aware of before acting.  It is important to keep in mind that it's not advisable to overpay yourself as this could have further consequences.

Do I have to pay tax when I pay myself?

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When paying yourself, taxes must be paid; however, the method of taxation is more flexible. Instead of being required to pay it all at once at the end of the financial year, you have the option to spread out those payments throughout the year, either in instalments or through making periodic payments.

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This method can give you greater control over how much you are paying in taxes and make budgeting easier. It is also important to remember that you must still report your income and expenses on your tax return for it to be accurate.

Do I have to find an accountant?

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No, it is not mandatory to find an accountant, but it is highly recommended. Having the help of a professional when dealing with taxes and financial matters can be highly beneficial.

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An accountant can provide guidance and expertise that would otherwise take time and effort to acquire. They can review your income statements, prepare tax returns, check for errors, and handle any necessary changes.

Furthermore, they can help you make sound financial decisions and keep track of your financial records. With an accountant on hand, you’ll have the assurance that all your financial information is accurate and up to date.