Business Accounting

There are now several new accounting software providers that claim to be able to calculate and pay your tax for you. When looking at services like this you need to be aware of some of pitfalls of using them vs using an accountant.

To be able to calculate and pay your tax they need to have access to your bank account, so they set one up for you that they manage, and all your income goes into it.  They then take out the tax and their commission and pay the IRD then send you the difference which goes into your operating bank accountant which you manage.  Here are some of the issues:

• The software provider and their team have access to your bank account and money. This is not advisable.
• The software provider gets your income before you do.
• They collect your tax months before it is needed by the IRD, putting pressure on your cashflow.
• You still need to be the bookkeeper which takes hours a month of your time.
  • You will need to record all your expenses from your business operating bank account into the software.
  • You may have to upload all your receipts to it every month.
  • You may have to work out what you can claim and what you can’t.
• If you forget to upload the expense information into the software, you cannot claim for it.
• They can only calculate your tax correctly if they have the correct income and expenses and it could be months or even a year before that mistake is picked up by the IRD. The IRD will charge penalties and interest on miscalculated or under reported tax and that can get very expensive very quickly.

In a nutshell software that calculates and pays your tax does not offer the same level of expertise or advice as an experienced accountant. Often the help desk is operated by graduates or non-accountants only citing basic tax information from the IRD website.  They are not looking at your books and your tax position and the best strategy for your business.

When you use an actual accounting team like SBA, we do the accounting for you.  We get a bank statement feed directly into Xero and we don’t have access to your actual bank account.  We automate the process and do all the bank reconciliations and tax calculations for you. We make sure to claim everything you can and nothing that you can’t, then we simply tell you what tax to pay and when. You keep your money in your bank account until you need to pay the IRD, which will help your cash flow. We do the work, so you don’t have to.  Once we have set you up you don’t have to worry about your accounting as we do all the heavy lifting and let you know what we need and when.  Using an accountant will not only keep you compliant but will help your business to grow.