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I'm looking forward to start a D2D business for homewares and electronics, I want to get myself educate on regarding GST and stuffs attached to this type of business, please explain me if we file gst every two months , and pay it what amount we get back as refund and when because I know my business will go above 60k annually, and if anyone knows please let me know any wholesale suppliers for electronic gadgets like LED TVS and laptops,
Thanks a lot, help would be much appreciated.
I am not sure what a D2D business is.
GST registration will serve you well when making a loss as you will get refunds. However when you make a profit you will have to collect GST and then pass this to the government.
One bonus about being GST registered and importing goods is that you will be able to claim the duty back (well, the GST portion of it). This is very good when importing high value items for yourself / use in the business.
Let's think about a couple of scenarios.
Scenario one you are not GST registered. You import something for $50 and sell for $150. That means you keep $100 and if this is profit at the end of the year you will need to pay a portion of it as income tax. For example if you are a company paying 28% you get to keep $72 and pass $28 to the gov.
Scenario two you are GST registered. You import something for $50 and sell for $150 including GST. The GST is payable at your next return date and this will be 15% eg. $15. That means you keep $85 and if this is profit at the end of the year you will need to pay a portion of it as income tax. If this was 28% you would keep $61.2 and give the government another $23.80.
Where it gets interesting is when you claim additional expenses that have a GST component through your business that you wouldn't be able to normally. For example - your power bill. Say your power bill is $200 and your business occupies 10% of your house. You could claim $20 as a business expense and 15% of this as GST ($3). So that would reduce your GST bill by $3. If you have lots of expenses (eg. are making a loss) then you could get a refund.
Personally I have found being not GST registered at the start of a business is best for cashflow.. but then once you actually get off the ground GST is a necessary evil that you have to content with.
And of course I am not a financial adviser and really am just another joe on the street. You should look out for some official advice. Your bank would run workshops and as well IRD - these are free and I recommend them. Also check out your local Te Wananga - they also do free business courses.
Thank u very much for yo helpQuote:
Originally Posted by PrivateBoxNZ
Is the tax 33% for my income profit , and is the tax calculated on my profit not my turnover , so for example if I have $500k turnover and making 100k profit annually the tax for that is $33k ,
could I get tax refund on that .?
For that type of company is it better to register for GST or not because I'll be exactly doing same figures as I have exampled and will be working from home using 20% as office ,
Is it better to appoint a accountant for this business .?
And D2D states for door to door
I'm gonna start D2D marketing, if you could help me in any way even a small tip it would be helpful.
Thankyou very much for replying me .
Yes - it is accounted for on profit only. 33% would be a high tax margin for personal tax. Running a business as a sole trader is fine however you need to know that if there is an issue with a product you sell (for example - perhaps a battery charger short circuits and causes a fire) you could be held personally liable. The alternative is to create a limited company. The "limited" bit means the liability is limited. Companies are vehicles to encourage business risk.Quote:
Originally Posted by prparikh
The tax refund would only be if you could account for the expenses correctly. And if you expenses exceeded your profit. Eg. $550k expenses and you only made $500k. This also means you are losing money - so its not really sustainable over the long
Yes - an accountant would be able to help. Even a decent book-keeper would be able to point you in the right direction. Quite often a book keeper will be able to crunch the numbers for you to work out the best set-up. However - only accountants are the ones qualified to give this type of advice.Quote:
Originally Posted by prparikh
To start off with I would put your services on Amazon and trade me as they are already established and have an audience. Then you could start building your audience. Focus on a single product to start off with and promote it using google adwords or facebook advertising. Work out exactly how much you can spend to bring customers to your website in order to make money. This is a long process and you will need to learn alot. But start small and go for it.Quote:
Originally Posted by prparikh
Thanks a lot , this answer was really helpful.