GST Made Easy
Many small business owners (even those who've been in business for many years) get themselves worked up about GST but it's generally pretty simple here in NZ providing you keep good business records.
The thing to remember about GST is that it's NOT your money, it is merely additional monies you've collected from your customers and have temporary care of. In return for this duty, you are permitted to claim the GST added to your purchases and costs. How good is that? You are being paid to collect the GST!
Business owners complain about their GST bills, but in general, the higher your GST bills, the better, as this means your sales are high in relation to your costs (unless or course say your wage bill is out of control).
With only a very few exceptions you have to add GST to virtually everything you sell and can claim GST on virtually everything you buy or every service you use. The main exceptions on the sales side are exports, residential property and certain financial services. On the cost side watch out for certain financial services like bank fees and interest, obvious items like wages or drawings and suppliers who are not GST registered.
Going back to good business records, many and varied are the ways that people try and account for GST. These range from third-hand corrupt spreadsheets which don't add up, to adding up the ins and outs on their bank statements to using 10 year old accounting software which still calculates the GST at 12.5% but there's no substitute for some simple to use, cheap accounting software. The software I find business owners get to grips with quickest is Banklink - no accounting knowledge required, very cheap, and very easy to use.
If your GST is still giving you a headache don't take an aspirin, seek advice from a modern, friendly accountant who's genuinely interested in what's best for you and not themselves and gets huge satisfaction from helping you succeed.
If you have any tax or business queries of any kind telephone 0800 ASK NICK, e-mail me at email@example.com or use "Contact Us" on www.abac.co.nz. The information in this article is of a general nature and should not be relied upon as a substitute for specific advice.