Running your own business or being self-employed means that you have to pay your own taxes and file an individual income tax return (IR3) at the end of each year. If applicable, you may need to register for a goods and services tax (GST), as well. All these taxes are important, and regardless of your industry they’re something you shouldn’t ignore.
Itp.co.nz and other professional taxation accounting services noted that this situation could be challenging for those who don’t know or have little idea how the collection of their taxes work. Here’s an overview to get you started:
What is an IR3?
If you’re self-employed, you should tell the New Zealand Inland Revenue (IRD) that you are in business. You should complete an IR3 each year to show all your income and expenses, as well. Its purpose is to help the IRD know what your income was for the entire year, what your business expenses are, how much taxes you paid and if you owe taxes or are entitled to a refund.
How can You File an IR3?
You’re an IR3 taxpayer if you are self-employed, running a business, receives rental income and overseas income, and have untaxed income. Filing is available online (recommended) or you can contact the IRD, so they can send a form to your address. All you need is to keep records of your income and allowable deductions, like chequebooks and bank statements. If you’re self-employed and a wage earner, the IRD will send a summary of earnings (SOE) to you. If there’s an error on your SOE, you can make changes to it directly and send it back.
Taxation can be a complicated subject, especially for the self-employed. If you’re having problems, don’t hesitate to ask for the help of the professional to make sure you’re paying the right amount and receiving refunds you’re entitled to.