How to prepare taxes and how to lower your taxes for 2019
Get your records up to date.
-Tax forecasting.
-Expenditure planning
-Defer income
-Review and write of bad debt
-Reduce your inventory before 31st March 2018
-split your income
Get your records up to date
You first need to make sure that all your records are up to date. Make sure all your paper invoices are filed in a logical order. Make sure your accounting program is updated as much as possible from now to 31st of march. Without good clear recorded it will be hard to assess your tax.
Tax forecasting
Ideally you would have an accountant with you during the year who is actively giving you updates on your tax liability. If you have not now is the time to get a set of financial statements prepared. This will show you how your business has done this year and it will show the amount of profit you have made. If your profit is high you will pay more tax. Preforming a tax forecast now will allow you to reduce your profit before it is taxed. At 93 accounting we offer a great annual package that includes tax forecasting, unlimited tax advice, reporting to the IRD and much more for just $20 per week. Click here to contact us for a no obligation meeting. visit www.93accounting.com for more information
Expenditure planning
If you're in profit. look into planning expenditure. For example, it may pay to buy the office desks you were planning to buy next year, now. To cut down your taxable income, acquire any upcoming expenses, like postage, printer ink, stationery etc. before 31 March in order to claim as much expenses for this financial year. Some prepayments such as insurance can be claimed as well, as long as the total prepaid is less than $12,000.
Defer income
If you are working on a big project currently and may receive payment before 31st March, consider deferring your income. If you bill your customers after 31st March 2018 the income will fall in next financial year.
Review and write of bad debt
Before the financial year is finished make sure that you review the invoices owing to you. Write off any debts that you may not receive. Bad debts can be used as an expense, thus reducing your overall tax.
Reduce your inventory before 31st March 2018
Purchase price of sold inventory can be used as an expense thus will significantly reduce your tax. Look into holding a sale for the products that have not done so well. Use the product and the sale as a tool to claim the purchase price of your inventory.
split your income
If you had a family member helping you out with your business or you have a family member who is not a high-income earner, consider setting them up as a contractor to your business and split some of your income with them. Since they are a low income earner they will be taxed alot less.