Tax Mistakes to Avoid
When it comes to tax returns, authentic mistakes are one thing. But there are some common traps that business owners should avoid.
Procrastinating
If your strategy to avoid your taxes is to put off filing your return (such as PAYE and GST), think again. If you don’t file a return because you don’t think you can afford pay, it will end up costing you more in the long run – the IRD charge you late filing penalties.The best idea is to file your return and enter into discussions with the IRD to set up a payment arrangement.
Cash Earnings
The hidden economy is alive and thriving. In fact the IRD have estimated up to $8 billion escapes their clutches each year – this means they are investing extra resources into this area. With more sophisticated systems and the age of Big Data, the IRD at getting clever at identifying businesses that are not declaring earnings based that are in line with industry trends. And the IRD's default position is any mischief is likely to be considered tax evasion – a big no no.
You need to make sure that what you are declaring in your tax return is in line with your industry or trade.
Shabby Record Keeping
Good record keeping can keep you out of trouble. Fact. A good rule of thumb, if you can prove it, you can use it.In this day and age, with products like Xero, there is no excuse for poor record keeping.
Mingling Business and Personal
It’s going to be easier if you keep your business and personal lives separate. Yes, if you run your business from home its likely you will be able to claim a deduction for ‘home as office’ expenses, but it’s probably not wise to think the trip to the movies with a mate can be claimed as deductible client entertainment.
The IRD didn’t come in on the last raincloud.