In running a business you need to account for this income tax on your profits and the expenses/deductions you may claim against your income. Provisional tax is not a separate tax but a way of paying your income tax as the income is received through the year. You pay installments of income tax during the year, based on what you expect your tax bill to be. The amount of provisional tax you pay is then deducted from your tax bill at the end of the year. If you had income tax of more than $2,500 to pay at the end of any tax year you may have to pay provisional tax for the following year.
Many businesses supply employees with benefits or perks, ranging from a motor vehicle that is used privately to meals and entertainment. Providing benefits can be a great way to recognise and reward your employees’ contribution to your business, but you should remember that some benefits or perks are subject to fringe benefit tax (FBT) – talk to your accountant on a regular basis to ensure you are aware of your exposure to FBT.
We advise our clients to setup a tax holding bank account and transfer funds monthly into this account to ensure they have the cash to pay when due. What is known is that GST is payable on the difference between sales and expenses (GST applicable). End of year tax will be payable on trading net profit and income tax is payable on drawings taken from the business so keep in contact with your accountant throughout the year to ensure you are putting aside an appropriate amount before that tax bill arrives