Not everything your business pays for is a valid, tax-deductible expense. There are some exceptions and special tax rules. That is why you need the help and guidance of an experienced tax accountant. To help you learn more, here are some of the ways to maximise the tax deductions for your business:
Do Not Leave Out Any Deductible Business Expenses
Your business pays taxes on the total income minus all the expenses you claim. To reduce the amount of tax you must pay, you should claim all valid business expenses. Most of the costs involved in running your business can be claimed. These include office rent, electricity, warehouse expenses, and so on. If you work from home, you can claim some of your household expenses as well.
To ensure you do not forget any claimable expenses, keep all receipts and invoices you receive. Also, pay for all your business expenses through your business account. These will make it easier to trace the expenses through the records of your business bank account.
Avoid Penalties
Do not risk getting charged with penalties for filing your business taxes late. The penalties might be higher than the amount of taxes your business owes. That is why you should always file and pay your business taxes on time. If it is the first year in business, you might get a discount for paying before the end of the tax year.
Avoid overpaying taxes. The refunds you get will include interest. However, this interest rate will be lower than what you will receive in a savings account.
Keep Accurate Depreciation Records
Another way of claiming back some of your tax money is through the depreciation of your business assets. Anything like computers, vehicles, and machinery used in your business operations is considered an asset.
Every year, these business assets go through some wear and tear and become outdated. Your business gets reimbursed for this loss by deducting the depreciation amount from your taxable income. The depreciation amount of some types of software and intellectual property can also be claimed. Just make sure to keep all receipts and invoices related to the depreciable assets.
Do Not Forget To Deduct Donations
Any business registered as a company or Māori authority is allowed to deduct donations from its taxable income. To claim a donation, it must be paid to an approved organisation. Inland Revenue has a database of all these organisations. The list includes New Zealand-registered charities and schools. In addition, there are some specifically named overseas charitable organisations.
Only cash donations higher than $5 can be claimed. You should also have a signed and dated receipt from the charity. The total amount of donations claimed cannot exceed your business’s taxable income.
Tax deductions for businesses are not an easy topic. To navigate all these laws and rules, you need the help of an experienced tax accountant. With over 35 years of commercial experience, we can help you maximise your business’s tax deductions.
Working in Chartered Accounting firms, Public Corporations, Private enterprises, and International consulting projects, we know which expenses could be claimed. We have in-depth knowledge of the New Zealand tax system and can guide you throughout the whole process. You can trust us to prepare and file your business tax returns accurately. With us, you can ensure timely, accurate submissions that will help you avoid the risk of penalties or audits.
Maximise the tax deductions for your business. Call Joe CA Today!
