SMEs must be aware of tax
Keeping good financial health is of the upmost importance to the successful running of a business, big or small. Keeping on top of taxes, debts and responding to financial changes, such as a company restructure or a bankruptcy notice, with swift and efficient action is the key to success.
A recent tax overhaul was announced recently in New Zealand by Finance Minister Bill English and Revenue Minister Michael Woodhouse in the 2016 budget. This announcement will make it a great deal easier for Kiwi small to medium businesses to reduce compliance costs, making tax a whole lot simpler for SMEs.
"The package will make paying tax easier and more certain, reduce the burden of interest and penalties, and help small businesses tailor payments to their circumstances," Mr. English says.
The press release states that this new move will be one of the most applauded changes in the budget, giving SMEs the chance to pay tax as they go, through their accounting software, instead of having to predict tirelessly a year ahead of time what their tax might be.
This move will also reduce the likelihood of SME's accruing debt to the Inland Revenue Department, freeing up cash flow for their business.
"Small businesses are the backbone of the New Zealand economy. We want to help them spend more time focused on their business, not their taxes." said Mr. Woodhouse.
This change is clearly great news for New Zealand businesses, and hopefully SMEs will see similar changes happen in other countries.
SMEs a soft target
A British chartered accountancy firm, UHY Hacker Young, claims in a report that small- to medium-sized companies are soft targets for tax investigators, who see the firms as easy to challenge, as most have little in the way of legal resources.
Roy Maugham, tax partner at UHY Hacker Young, claims that SMEs need to get their books in order to avoid penalties.
"SMEs are highly advised to try and get their books in order and make payments within the requested time period in order to avoid a visit [from] the taskforces – and the prospect of an undoubtedly unwelcome fine." said Mr. Maugham.
SME business finance
Seeking advice and help on tax, insolvency and cash flow problems is the best way to avoid being left in the dark and ultimately losing your business. By reaching out early and having a proactive discussion with a financial expert, SMEs will be in the best position possible to make smart, business-savvy decisions.