What two things go together like butter on toast? If you guessed NZ businesses and Inland Revenue, you’re bang on. And while everyone might want to keep that relationship toasty warm, sometimes businesses find that their IRD partner’s gone stone cold.
Inland Revenue is the ‘my way or the highway’ type. It loves a business with tight systems, processes and record keeping. If you’re the ‘she’ll be right’ type of business owner, lacking good processes and systems, there’s a chance you may end up in the IRD’s bad books.
As we are well and truly into the new financial year, now’s the time to think about your business’s relationship with Inland Revenue and pinpoint where you may be going wrong.
Inland Revenue likes transparency. It wants to see that you keep accurate records and are open and honest about your business’s accounts. So, what does this mean? It means having systems and processes in place that help keep that ‘openness’ in your relationship. Think:
· Are we storing our invoices and receipts correctly?
· Are we keeping logbooks where required?
· Are we accurately recording all expenses and income?
· Are we declaring all cash receipts?
· Are our Payroll and Employment records up to date?
· Are we accurately recording Stock/Inventory on hand?
Accounting systems and processes should be constantly re-evaluated so they not only align with your businesses strategies and objectives, but also enable you to keep on top of technology/system updates that can help make record keeping less of a drag.
Top tip: If you hold a Starter, Standard or Premium Xero subscription, you’re entitled to a free Hubdoc subscription. Hubdoc is a quick and easy method of processing your bills and receipts. The system reads the document to reduce your data entry (and errors) and then publishes it into Xero as a bill. It’s your best friend for efficient bookkeeping! Check out our Introduction to Hubdoc video to get an idea of how it all works.
Inland Revenue isn’t the type of partner who loves surprises (so don’t expect any flowers on Valentine’s Day!). Tax dates are the same every year, so you shouldn’t be shocked when they pop up. Be a business that's prepared for tax payments by putting funds aside ready for provisional tax, terminal tax and GST when they fall due. Create a calendar with tax due dates written in bold, and ensure you have digital reminders in the weeks before tax payments are due.
If you haven’t already, get in touch with your Outside go-to for a rundown on how much you should be putting aside for tax, based on your current situation. As always, we’ll be there to remind you about upcoming tax payments, just in case it’s fallen off your radar.
As much as it may feel like it, communication with Inland Revenue isn’t a one-way street. If you’re feeling snowed under with tax payments, and paying in full on the due date seems impossible, Inland Revenue has systems in place for managing instalment arrangements, applying for financial relief and just general account enquiries. Check these out here.
We can be there to act as a bridge between your business and the IRD, so often it might be best to give us a bell and tell us your story before contacting Inland Revenue directly.
We know being a business owner can sometimes be tough. However, it’s important to see beyond the tax payments and understand the ‘whys’ of your obligations, whether to Inland Revenue, your employees, your clients or the environment. Understanding your obligations to the tax department as well as those beyond what the IRD controls can be the best way to keep your business ahead of the game.
Often, there’s room for system improvements in places where you’d never guess—you may just need an Outside perspective. Give us a bell and we’ll advise you on how to improve your accounting systems and processes, and make your businesses relationship with Inland Revenue a healthy one.
Your Outside team, Ruby and Rocket
Mail: PO Box 24-457, Wellington 6142
Phone: 04 889 2975