Jay Changlani –
Not planning is the recipe for failure.
Indian Newslink carried a report in its June 15, 2015 edition of an East Auckland (Howick) Indian couple sentenced to home detention for under-returning sales by $1 million in cash.
As business owners, we understand the consequences of under-declaring the income to Inland Revenue Department (IRD) but a few do not know the solution to past mistakes.
More importantly, if you are starting your business, you should be properly advised on the level of planning required to ensure that you have sufficient funds to pay IRD, when your taxes are due.
Past errors
If you made some errors in the past, I suggest that you immediately talk to a specialist tax advisor to plan a Voluntary Disclosure to IRD. If cash flow is a problem, then look at some instalment arrangements.
But the important question to answer is, “Why do businesses have problems of not paying taxes when they are due?”
Adequate Preparations
It all boils down to not planning adequately.
The simple solution is to open another bank account or another suffix to the same account, depending on the business set up an automatic payment, say, 10% to 25% of your average sales each week to cover your PAYE, GST and Income Tax.
It is advisable that all businesses, irrespective of their size or industry in which they operate, have money readily available rather than borrow to make statutory payments.
In short, plan before you start your business and engage with a tax specialist if you need help to liaise with IRD.
Jay Changlani is a Chartered Accountant and Tax Specialist at Accounts Icon Limited. Phone: 021-0763762 Email: jay@accountsicon.co.nz
