An Introduction to Business.
Registering for GST. When you start out in business, you may
need to register for Goods and Services Tax. GST In this video we’ll give you a quick
overview of what you need to know. GST is a tax added to the sales price of most goods and services sold in New
Zealand. In most cases, GST is charged on imported
goods and services. If you’re registered, you collect GST from your customers and
pay it to Inland Revenue. You can claim a credit for the GST you pay on most of your business expenses. In general, GST is charged at a rate of
fifteen percent. So, when do you need to register for GST?
You must register if your turnover for the last 12 months
was more than sixty thousand dollars, or, if you expect your turnover for the
next 12 months to exceed sixty thousand dollars. You must also be registered if GST is
included in the prices you charge, such as being a taxi driver, where the
meter applies GST. If your turnover is sixty thousand
dollars or less, you may like to register for GST voluntarily. But before you decide,
please give it some thought. Registering has both advantages and
disadvantages. By filing regular GST returns you’ll
get regular insights into how your business is doing, and you’ll be able to claim the GST you pay on most of your expenses.
But registering for GST has some disadvantages too. Filing GST returns means extra paperwork and, you may be charged penalties
if returns and payments are late. Because you’ll be collecting GST from
your customers and paying it to Inland Revenue, you’ll need to allow for GST of 15 percent when you set your prices.
When you register online we’ll ask you which accounting basis
you’d like to use. Your accounting basis determines when
you have to pay Inland Revenue the GST on your sales and when you can claim the GST on your
expenses. The most commonly used accounting basis are the invoice basis and payments basis. With the invoice basis,
you return the GST on your sales when you issue an invoice, or receive a
payment, whichever comes first. You claim the GST on your expenses when you receive an invoice, or make a
payment. Again, whichever comes first.
With the payments basis you return or claim GST
when a payment is made or received. You can only use the payments basis if your
turnover has not exceeded two million dollars for a twelve month period.
Most small businesses use the payments basis. You also need to decide how often to
file your GST returns. You can file monthly, two-monthly or six-monthly. Monthly returns might be a good choice
if you’re likely to get regular GST refunds. However, you’ll have to file 12 returns a year. Large businesses with a turnover of more
than 24 million dollars must file monthly returns. Two-monthly return filing is the
standard option, and you may find filing two-monthly helps
you keep on top up your paperwork. If you have a turnover of five
hundred thousand dollars or less, you may choose six-monthly returns.
You’ll only have to file two returns a year but you may find it a big job accounting
for six months worth of trading all in one go.
You can change to a frequency you qualify for at anytime.
Just send us a secure email through myIR. Please make sure you file your returns and pay any GST by the due date. Filing or paying late could mean you’re
charged penalties and interest. Our website is full of useful
information and tools to help you with your GST,
including our interactive tool for business. Why not go there now and have a look? Once
you are set up with a myIR account you can register for GST and file your
returns online too. It’s quick and secure and you can do it
from anywhere, at anytime. If you’re incorporating a
company, you can apply for a company IRD
number and register for GST on the Companies Office website. Go to
business.govt.nz to access further tools and resources for
starting in business.