Starting a business

Check out our ideas for the future of tax and find out what small businesses thought of them

Future

Our vision for the future when starting a business

Starting a business may become easier soon. You can read about changes we are considering below and watch a short video to see what changes may mean for busy business people like Josh.

It’s important to note that some of the examples below may require changes to legislation.  The New Zealand Government has signalled that they are considering all these changes, and more.  You can keep up-to-date on their proposals at www.makingtaxsimpler.ird.govt.nz. (external link)

The right information when you need it

When you register a new business (even with the Companies Office), we'll send you tax information to help your get your tax right from the start. That could include short and simple, online training modules that you could complete from anywhere, anytime. You may also be prompted to register for GST or as an employer, if that’s right for you.

This help would mean you start your business off on the right foot when it comes to tax. There would be less chance of making mistakes or falling behind and playing catch-up.

Anticipating your needs

We may also direct you to free trials of accounting software. From experience, we know keeping tabs on your business is much quicker and easier when you use software rather than paper records.

Plus from time to time, our smart systems will check in with you to see if we can help. If we notice your profits are increasing, we may suggest you start putting money aside for your next tax payment.

What that all adds up to is less time on tax and more time growing your business.

Your feedback

We asked for your comments around the ideas we had and whether you thought they could work for you. Check out a summary of the feedback.

Thanks to everyone who took the time to share their thoughts.

 

Check out what these changes may mean for busy people like Josh.

What do you think?

Add a comment

What other people are saying

  • While I like the idea of offering free trials for software to help businesses manage tax, but how will this software be selected and managed? I wouldn't like to see this slot auctioned off the highest bidder.

    James 20/06/2016 1:25pm (13 months ago)

  • Many people starting a new business get confused about what type of business they should set up, limited liability, self employed etc. It would be useful to take the information from MBIE into this process also and have some form of automated check to help also

    Paula 20/06/2016 3:28pm (13 months ago)

  • I agree with the person suggesting to have a seamless system from MBIE through to IRD, helping people set up a new business from end-to-end. It's an excellent idea. Tutorial videos are nice. A guided system is better. you could include an online chat help where people can ask their questions as they work. I've found that very helpful when learning other systems.

    Benedicte 26/06/2016 8:33pm (13 months ago)

  • You need to tell me what to do. I figured out a lot of stuff by accident. Do expect me to find videos and watch them .. Also I needed much better information about timeframes. It took ages to register for GST, and then as an employer ... and that has a flow on effect for everything else. Would have helped A LOT if you had spelled out the time frames and flow on effects of this stuff.

    Leigh 27/06/2016 10:27am (13 months ago)

  • Finally! An excellent plan as starting a new business can definitely have lots of complications and unknown areas for someone who's unfamiliar with any of the tax requirements and any other ins and outs of the daily running of a small business. Would've helped my 60yo mother-in-law immensely when she started her own business and was unaware she needed to sign up for PAYE!

    Katie 27/06/2016 3:58pm (13 months ago)

  • The free trial will just give an unfair competitive advantage to the provider featured. Perhaps IRD shouldn't try function as a marketing or advertising agency.

    What new businesses need is assistance on demand. IRD's telephone support is in general exceptional. The agents are helpful, well trained and effective, but hold times tend to be very long and waste a lot of productive time. How about simply employing a few more call centre agents.

    A check-box on the company registration asking for a call from IRD would probably be appreciated. Something like "Please have IRD give me a call to discuss my tax options." would probably help people more than a bunch of videos that they won't watch any way.

    Shawn Pate 28/06/2016 12:32pm (13 months ago)

  • Support the comments on the inappropriateness of videos and website based information. A conversation with a real person - accountant or IRD - is a much quicker and more effective mechanism for exploring and understanding options that are relevant to you.
    Spending a lot of time working with charities and not-for-profits has highlighted the seismic gap between MBIE and IRD. Your processes must cross the silos!

    Dr D M Whale 29/06/2016 10:41am (13 months ago)

  • I think providing information on starting a business, tax, gst etc are all good. I started a business recently and the information from IRD was helpful. This could definitely be improved though. I wouldn't want IRD recommending specific software companies to provide services though!!... I think IRD should concentrate on making it easier to import info into myIRD from accounting software and providing a good platform which software companies (or whoever) can link their info into. Also, simplifying and refreshing the myIRD interface would be great.

    Matt 01/07/2016 3:59pm (13 months ago)

  • What were the tips? How does it take a qualified account at least three years of studying for a degree and at least three years of professional exams and only after that to be able to offer themselves to the public as qualified to offer tax assistance to business. You are over simplifying the process of calculating the payment of tax. As he was in his second year of business and just started making a profit he would probably be cash strapped and would be better not to put aside money for tax and put the money into more stock and grow the business. It is unlikely that any bank would have lent him money without collateral so by managing his cashflow this will be far more important than making early tax payments.

    Bruce Sparrow CAPP 01/07/2016 4:40pm (13 months ago)

  • Brilliant!! Setting up a business is a daunting prospect as the consequences are serious if you mess up your tax obligations - this puts off a lot of people!! the free three day training courses offered by ird are unbelievabley helpful but I've talked to so many people now who had no idea they existed! The more you remove the scariness of ird, the more likely people will be to set up businesses and create growth for the country.

    Cheryl 02/07/2016 6:31pm (13 months ago)

  • Not sure about the free software as there are many out there.

    Kelda 02/07/2016 7:45pm (13 months ago)

  • Why not pay one amount to IRD each month to cover payroll, GST & Income Tax for businesses whose sales are under a certain amount (say $500k), based on a % of turnover, calculated from data collected from IR10's etc? Paying 3 lots of tax at different times of the month and in different months is unnecessarily confusing. A lot of time and cost is wasted paying accountants to calculate taxes when it can be used more productively in a small business.

    Antony 04/07/2016 8:43am (13 months ago)

  • Stay away from advising/recommending/listing any software, not your job and leaves IR open to problems down the track. If you have it listed people will then believe it is recommended by IR. Software used incorrectly is a bigger problem than no software!

    Richard Bell 04/07/2016 10:26am (13 months ago)

  • I would like to be able to have better communication through emails. Be able to reply to an email reply from IRD rather than have to create a new message every time on the same topic.

    Clare Ormerod 04/07/2016 11:25am (13 months ago)

  • New businesses should be encouraged to see an accountant and get advise regarding structure and software - DIY can cost in the long run.
    Choosing the right software should be discussed with your accountant, who can ensure that you get the best software for you and start of with the right chart of accounts etc.

    Sharyn 04/07/2016 4:28pm (13 months ago)

  • I feel IRD should develop an accounting software for small to medium business which we could use and thereby avoid mistakes in filing returns .

    Mahendra Tejnani 07/07/2016 8:27pm (13 months ago)

  • Great concepts and vision. Agree associating software with IRD could create bias with certain suppliers but if IRD supplied their own simple, free cashbook + payroll solution they could make a huge difference to sole traders and small enterprises. Ultimately throwing as much info and contacts out there is the key - different people learn in different ways and everyone has their own preconceptions about business and tax so all you can do is offer information and encourage them to seek professional advice. They may not seek the advice they should but ultimately any information they have available is better than none. We accountants have our place but the more we can empower small businesses and sole operators to (accurately) manage their own taxes the better off NZ will be as a country - knowledge is power and we should be putting it back with the people as much as possible.

    C Winehouse 13/07/2016 4:40pm (13 months ago)

  • I do believe anyone starts a new business should see a chartered accountant. It takes a CA only 1 hour to understand your needs and give you right advice, and 2 more hours to get your business incorporated and tax registered. IRD's idea of employing a sound IT system to help reduce the compliance costs for small businesses (it's a great idea I must not deny) may at the end costs small businesses more If it does not work the way intended.

    Andrew 02/08/2016 8:56pm (12 months ago)

  • There is more to setting up a business that putting numbers in boxes and pressing a button to give a tax position. This proposed system will lead to major problems and create a big mess as the majority of taxpayers are not up to filing their own returns with accuracy.

    Annie 08/08/2016 3:48pm (12 months ago)

  • When completing number application forms it would be much more efficient to have an option to complete GST registration and elect someone to act on your behalf all on the one form.
    At present 3 forms are required to be completed with duplicate of the same information on each form.

    Neil Calvert 02/09/2016 12:28pm (11 months ago)

  • ".........Brilliant!! Setting up a business is a daunting prospect as the consequences are serious if you mess up your tax obligations - this puts off a lot of people!!"

    I messed up my tax obligations and as a penalty the IRD cleaned out my entire bank account without notice. I had to go to WINZ to get rent. I actually sat down with the IRD prior to try and resolve the debt, but they still took the money. I now work with a chartered accountant and a lot of small businesses are ruined because of IRD debt. Penaties and interest compound just like the interest on a credit card.
    Tax laws allow the IRD to take money without notice of more than a day or two and by then with the slow postal service, the money was already gone. They also bankrupt business owners. Sure some debt gets written off, but its the laws that need changing. People still use pen and paper, or even a spreadsheet works well enough if you only have a few transactions. Also you can export bank transactions to a spreadsheet, and some accountants also use banklink, as we do. Make the priority to protect your assets from creditor and IRD claims. Get educated.

    I recommend if you are setting up a business, even if you are to be self employed. Budget for legal advice. You will need it. I have a bank issue a summons against me for a financial assessment hearing. Legal aid is not even available for that. Once you get into debt, you'll get a huge shock. You'll find out how the real world of money and tax works. Be prepared to defend yourself from creditor claims against you and your business, including the IRD.

    Ford 08/09/2016 12:46am (11 months ago)

  • First, "free" trial of accounting software. This only means that once the trial is over, I will be paying premimum "subscriptions" for a provider that will make a big case out of the fact that YOU accept their software in your system. You must make your API universally available, including to open software. It is YOUR duty to make sure the API does not jeopardise the integrity of your systems and/or data. Offering a monopoly (or duopoly, or whatever-poly) to Xero, MYOB and only a few other selected ones is no way to go. It will only make me pay more money to those guys for the lousy customer services they already have. No, I prefer to deal with a human accountant, not with a forum on a website to look for solutions to the problems they create.

    Second, while the idea of a "smart system" keeping a close eye on my business could throw any tech nerd in awe, I dread the concept of a Big Brother making "recommendations" when my profits are rising. Really?!? This is no different from the big good fellas coming through the door and, hm, "recommending" that the protection tax should be higher. Let's be frank: you want your taxes and your smart system will work for YOU. What's next? Recommend whom I should hire or not "in anticipation of my needs"? What software should I use or not? Wait! You already want to do this!! I don't think so. So, NO!

    Dan 09/09/2016 10:20am (11 months ago)

  • Thats great, but did he have to register as a company 1st What about sole traders?

    Chris Barton 27/09/2016 8:42am (10 months ago)

  • Would be good if we have clear instruction of step by step what we need to do (i.e.) flow chart, and staff can solve problems more time efficiently. The phone calling recognition system is useless, and is not mobile friendly. As many people deal with business on phone and might not have a cell phone, this is very unreasonable as it only benefit part of the people.

    Jason 04/10/2016 10:06pm (10 months ago)

Now

What happens now

 When you register your company, you can do it online through the Companies Office website. As part of the registration process, you can tick boxes to:

  •     get an IRD number

  •     register as an employer, and

  •     register for GST.

All straight forward, but if you miss ticking these boxes, you can't go back and put it right. Instead, you need to complete a form to apply for an IRD number and send this to us, which can take up to 10 working days to receive and then another 5-10 working days to process.

You'll find you can only register as an employer or for GST after you get your IRD number. And if you don't register online, it may take 15 working days before your registration is confirmed.

You might need help understanding your tax when you start out.

Generally, we only get in touch if you don’t get something quite right. You’d likely get a letter outlining your obligations. At that stage there may be some ground to make up.

There's plenty of information and tools available online to help make tax easier to get right from the start, but you have to actively go and look for it, and you don't always know what you need to know.

Inland Revenue seminars are popular, but you need to travel to attend these sessions in person, which isn't always possible when you're getting your business up and running.

Government’s policy consultation

Making Tax Simpler

Government is conducting a separate series of policy consultations on detailed proposals to make tax simpler.

You can find out about these on Government’s Making Tax Simpler  (external link) website.

You might also want to find out more about this website.