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Keep on Top of Tax!

5 Quick Tips for Small Businesses to Keep on Top of Income Tax

1) Run regular year-to-date profit and loss reports from your accounting system (eg Xero; MYOB) to help calculate your income tax. If you are not currently using an accounting system, consider getting one.

2) Use the IRD's Income Tax calculator to help estimate your income tax - Here's the link:

3) Have you heard of AIM? - If you use an accounting system, such as Xero or MYOB, and your turnover is less than $5 million, you can pay your income tax throughout the year on actual profits earned using AIM (accounting information method). AIM returns are filed in line with your GST filing period.  E.g. if you file your GST every two months you file your AIM return every two months.  OR if you are not registered for GST AIM returns must be filed every two months. Certain criteria apply so ask your accountant if AIM is right for your business.

4) Use GST Ratio method of paying income tax - Pay income tax, with your GST return, on a percentage of your GST-taxable supplies. You need to let the IRD know if you want to use this option at the beginning of the tax year.  The percentage used is calculated by the IRD and personalised to your business. Certain criteria apply so ask your accountant if the GST ratio method is right for your business.

5) Use a forecasting system, such as Spotlight Reporting or Figured (farming), to help predict your financial year end profit and loss, effectively allowing you to calculate your upcoming income tax liabilities. 

You can also ask your accountant for a tax review.