Frequently Asked Questions
To help you find the answers to your questions about Ezebiz and accounting, please see our F.A.Q. below
What do I need for an accounting or bookkeeping system?
There are a number of accounting and bookkeeping packages on the market and we suggest all businesses should have one to keep track throughout the year of your progress and to also keep on top of your accounts and make sure you are being paid.
At Ezebiz, we use Xero and suggest that all our clients be on Xero.
Do I need to set up a company?
There is no one-size fits all answer to this question.
It will depend on your circumstances and we suggest you seek professional advice before going ahead and setting up a company so that you can make an informed decision.
Do I need to register for GST?
IRD do not require you to register for GST until you reach $60,000 in sales. We wouldn’t recommend that you register for GST until it looks like your sales are likely to exceed $60,000 in a financial year.
What has Ezebiz got to offer that other accountants don’t?
With the use of Xero, Ezebiz is able to help you throughout the year with the day to day running of your business rather than just compiling your end of year reports and tax returns.
Ezebiz also offers monthly fixed fee packages so that you are able to pay your accounting fee throughout the year which assists you with the cashflow of your business and there is no hidden costs or scary bills at the end of the year.
Xero enables us to use the same information as what you are using and to step in and help you if you think you may have done something wrong along the way or need help.
As well as accounting and taxation services, we are able to offer our clients bookkeeping assistance e.g payroll, debt control, invoicing and general accounting duties, throughout the year which is invaluable to clients that need help with their accounts but do not have the resources to be able to employ staff to undertake these jobs
What do you mean by “a financial year”?
A standard financial year is from 1st April to 31st March.
What about Working For Families? What should I tell IRD about my income?
We recommend to our clients that they do not receive their Working For Families weekly. In some cases, IRD’s estimates could cause you to be overpaid and put you in a situation of debt with IRD if you have self-employment income to be filed with IRD.
If you can cope without your WWF weekly, we suggest you leave claiming it until IRD calculate your end of year square up when your tax return is filed and receive it as lump sum.
What does registering as an employer mean?
It means that you will need to organise employee agreements for your staff and pay them at least the minimum wage and be liable for ACC levies on wages you pay them.
What can I claim?
You can claim most expenses that are directly related to your business if they are expenses you have incurred that you would not have incurred if you were not in business.
When it comes to your home or vehicle expenses, we suggest you seek professional advice as this will depend on your personal circumstances.
If I have to borrow money for my business, can I claim the loan payments?
If the money you have borrowed is purely for the purpose of running your business, then you can claim the interest portion only as an expense. The principal that you pay on your loan is not a tax-deductible expense.
We suggest you seek advice on the correct loan structure for you before borrowing funds for your business to ensure the interest is tax deductible.
What if I have expenses to pay and don’t have enough money in my business bank account?
Keep a record of all costs that you have incurred and make a note of transactions that you have had to pay for out of your personal funds so that these can still be included in your end of year accounts.
Is Xero easy to use?
Xero is the world’s easiest accounting software. It was designed by a Kiwi who saw the need for an accounting package that is easy to understand for everyone – even for those that don’t feel completely confident with computer use.
Ezebiz runs regular free demo/training events to assist new owners with getting to grips with using Xero.
How does Xero work?
Xero works the same way as internet banking does by taking an online copy of your banking transactions. Traditional accounting packages only downloads the information at the end of each month or you have to enter it manually from your bank statements but Xero downloads the information daily.
Xero allows you to reconcile your bank accounts each day, track your expenses and reconcile payments and receipts against Debtors and Creditors you have entered in Xero.
At Ezebiz, we allow you to use Xero as much or as little as you like. If you want to be proactive and be involved in the day to day running of your business and utilise Xero to do this, you are able to.
If you are not interested in learning to use Xero, that is entirely up to you.
We encourage our clients to use Xero to be more hands on and involved in how their business is going from day to day.
Using Xero also means that as your accountant, we will be using the same information as what you are using.
What if I don’t want to use Xero?
With Ezebiz, it is up to you how much you want to utilise Xero. Your annual accounts will be prepared on Xero but it is entirely up to you as to how much you want to be involved. We encourage our clients to use Xero as it is such an easy system to use, that anyone can use it and it enables our clients to be proactive and identify problems as they occur, rather than after the year has finished and we aren’t able to assist you with your issues throughout the year. It also means that if you have issues, we can be right there to see what is going on and help you if you have any issues.
When I register for GST, what is the difference between “invoice basis” and “payments basis”?
Invoice basis means that you must include your sales and purchases on your GST return when you receive or issue an invoice.
Payment’s basis means that you include your sales and purchases on your GST return when the money goes into or out of your bank account.
We suggest to our clients that they register on “payments basis” as this means you don’t have to pay GST on your sales until you receive the payment in the bank. Having to pay GST when you issue the invoice (invoice-basis) could impact on your cashflow if you have a customer or client that takes a while to pay you as you will have to pay the GST portion to IRD before you actually receive payment for the job.
How do I claim for expenses if I don’t register for GST?
If you are registered for GST, you claim the GST portion in your GST returns. If you aren’t GST registered, you can claim the whole amount (including GST) as an expense in your end of year accounts when your tax return is prepared.
What will my tax rate be?
If your income is up to $14,000 your tax rate will be 10.5%
From $14,0001 to $48,000 the tax rate is 17.5%
From $48,0001 to $70,000 the tax rate is 30%
From $70,001 and over the tax rate is 33%
If you are operating as a company, the company tax rate is 30%.
Should I register for monthly, two monthly or six monthly GST?
Filing monthly GST returns can mean that you feel like as soon as you have filed your GST, it’s time to do it again and that can feel like a chore.
Filing GST returns six monthly can help with cashflow but you will need to be organised and put the funds aside for your GST as you go. It can also be hard to remember what you did nearly six months ago if you don’t stay on top of your accounts and keep up to date on a regular basis.
We recommend to most of our clients that they should register for two-monthly GST returns.
How do I pay people who work for me?
If they are operating as their own business, you can claim their costs based on their invoices. If they are not registered as a business and are not able to provide you with an invoice for their services, you will need to register with IRD as an employer and pay them wages with PAYE deducted.
If you have someone who works for you on a labour only basis, you could need to register as an employer and deduct withholding tax from payments to them if they are not an employee that you are deducting PAYE from. In this situation, we would recommend that you seek advice on this.
What do I put in an employee agreement?
If you go to http://www.dol.govt.nz/er/starting/relationships/agreements/builder.asp it will take you through the process of helping you fill out an employment agreement.
What happens if I have to buy assets for my business? e.g. a new computer, new vehicle, new machine?
If the asset you have purchased is under $500 (including GST) then the whole amount is deductible as a business expense.
If the asset is more than $500 (including GST) then it will be added to your balance sheet/assets and only a portion of it will be deductible as depreciation each year. Your accountant will be able to give your more information on how much is deductible each year.
Do I need a business bank account or should I put my income and pay my expenses out of my personal account?
You should set up a separate account that is purely for business. Deposit all your business income into that account and if possible, pay all your business expenses out of that account.
What if customers pay me cash? Can I pocket it and not declare it?
We recommend that you deposit all cash payments that you have received from customers. IRD have parameters that they run your tax returns through and if your sales versus expenses do not match the criteria that they have for your type of business, you could end up being audited by IRD which is a situation that nobody wants to be in.
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Please do not hesitate to contact Ezebiz if you have any questions about technical accounting or would like more information about our services.
Ezebiz Your First Choice Accountant In Whakatane