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LETS GET DOWN TO BUSINESS.

Question :
Hi there, I am a stay-at-home mum and have decided to put some of my spare time into a small money making venture. I have created a business called Writing for Help which predominantly offers a CV and cover letter writing service. I have registered the business with the Companies Office as I wanted to do it all above board and was provided with an IRD number but am now concerned about the implications of having done this. I know absolutely nothing about bookkeeping and taxes so feel that I have done it wrong! I think I should be a sole trader, not a company. It’s a very small business as it’s only me and because of that I can only do so much work. This means the income I receive after expenses won’t be very much so I don’t think it’s worth getting some sort of accounting software like Xero, although I worry I may need this. What are my options? Can I de-register it as a company?Do I have to pay income tax? Are there thresholds for doing so?Thanks so much for your help.

Question submitted 01/06/20 @ 05:03pm
Industry: Start-ups
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  • Good morning – good on you for doing a side hustle alongside your day job! Love it, and I totally understand your desire to be ‘above board’ and do things right. It is often really hard to know with certainty what will happen in business – so starting off quite flexible in the early days and just focusing on customers – getting customers, servicing customers is the most important thing. You don’t really need accounting software, or a company.

    Here are a few thoughts:
    – Finding your market – which are going to be people who need their CV and cover letter’s redone – can you reach these people, do you know who they are, can you get referrals and word of mouth from existing customers? Have you worked our pricing, and do you have a web presence or can you put together something like a Linked In profile so you can point people to your service? I would not go with any paid/costly site if you do one – use one of the free sites or even be novel and do word of mouth – here is a free site we offer – https://www.manaaki.io/1000websites/ – it is important that you focus however to start with on finding your market and supporting them with their needs
    – Administration – all you need to do is record (1) any income you make from your services and (2) the costs that you have incurred for deliver your income e.g. stationery, phone costs, maybe a portion of your power at home e.g. 15%, any driving costs if you had to go to a meeting etc – you can record these costs and income in an excel or even in a book.
    – Tax – ultimately you will need to pay tax on the net income – the rates are 10.5% up to $14,000, 17.5% from $14k to $48k
    – Deregistering your Company – here is the link to do that https://companies-register.companiesoffice.govt.nz/help-centre/closing-a-company/removing-your-company-from-the-register/

    All the best – what I would say is – all that matters when you start, is your market, their needs and whether you have something that people are prepared to pay you for. Focus on that, and everything else can be sorted once you know you have a market, a service and a business.

    Hi … well done you!! Great stuff getting cracking on something that others will value. Andy has pretty much said it all… so I just wanted to toss in a little empathy. I totally get that it can seem really overwhelming starting a business or going out on your own. Been there!! The amount of admin can seem daunting. Do lean on the IRD and Companies Office (agree with Andy – not sure you need a company just yet – sole trader is fine!) … I’ve found the IRD especially keen to be helpful. Give ’em a call with any questions and they will step you through. In the early days for me someone even came to see me at my home office! Keep going… 🙂

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