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Chapter 5 of 5

Taxes and all that stuff

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Retail guides >  Retailer's guide to making money > Taxes and all that stuff

Taxes and all that stuff

Besides running a shop, there’s also the small matter of taxes to deal with. There are three main types to focus on. Let’s learn what they are and how businesses deal with them.

What taxes do you need to know about?

Retailers generally have to file up to three types of tax return:

  1. GST (goods and services tax)
    You may have to add GST to your prices. The government expects you to collect that cash on their behalf and send it their way at set times. Learn more in our guide to GST.

  2. Business income tax
    This is calculated as a proportion of your profits. 

  3. Employee-related taxes
    You’re expected to withhold income tax from your employees' wages and hand it over to IRD.

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Dealing with GST

Most retailers get a bookkeeper to look after GST. The bookkeeper keeps tabs on how much GST you’ve collected, and how much you’ve paid, and puts together a report for IRD. Any taxes due are generally paid when the report is filed.

Dealing with business income tax

Income tax is calculated on profits. The bigger they are, the more tax you pay. But there are ways to legitimately lower your profits in the eyes of IRD. This is where things get technical, and the stakes are high because your returns will be heavily checked by government tax experts. That’s why most businesses get an accountant to prepare their income tax return.

Dealing with employee PAYE taxes

As an employer, you’re expected to calculate how much PAYE tax employees owe, and then withhold the right amount from each pay run. At the same time, you must submit a report to IRD saying how much you paid your employee and how much tax you withheld. IRD will tell you when to pay the withheld taxes to them. A lot of businesses do this themselves, but there’s a bit of ‘paperwork’ (it’s actually done online) and some rules to learn, so some hand the job off to a bookkeeper.

The New Zealand tax filing system

New Zealand’s tax system is actually quite simple compared to many other countries. And tax filing is generally done online, which is a huge time saver.

Nevertheless, tax can be a complicated topic if your brain isn’t wired for it. And a tax expert can help reduce your tax bill so it’s a good idea to consult one. 

If you’re filing any of these returns yourself, double-check your numbers. Mistakes can get you fined, but that may not even be the biggest problem. You’ll be expected to repay any shortfall, which can be a real blow to cash flow.

Tips to make tax less of an ordeal

Whether you use a professional or file on your own, you can speed things up using handy apps for:

online filing

Expense receipts
You can now photograph receipts on your phone, and software will link the picture to the record in your business accounts. That way you don’t have to keep and file receipts yourself. Check out Hubdoc for more.

take photo of receipt

income records
online filing

Income records
Your POS records and bank deposits can all flow directly into your business accounts when you use online accounting. You’ll still have to check that the records from these sources sync up, but that’s a lot faster than entering them yourself.

online filing

Online filing
Once your tax reports are completed, you (or your tax advisor) can connect to the IRD website and file them without leaving the office or even picking up a pen.

online filing

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