{"id":1683,"date":"2023-03-14T22:07:01","date_gmt":"2023-03-14T09:07:01","guid":{"rendered":"https:\/\/marketingwebsite.afirmo.com\/nz\/?p=1683"},"modified":"2023-05-25T14:15:51","modified_gmt":"2023-05-25T02:15:51","slug":"how-to-manage-business-expenses","status":"publish","type":"post","link":"https:\/\/www.afirmo.com\/nz\/resources\/how-to-manage-business-expenses\/","title":{"rendered":"How to manage business expenses"},"content":{"rendered":"

The benefits of tracking business expenses<\/h3>\n

Income minus expenses equals your profit, so keeping track of expenses is an essential ingredient of managing your business well. In some ways it lets you see the invisible. You can spot changes in costs early on and make adjustments to promptly seize an opportunity or minimise an upcoming challenge before it turns into a major problem.<\/span><\/p>\n

Tracking your expenses also means you can safeguard your business reputation. It makes it easy to ensure suppliers, employees and service providers get paid on time. Forgetting to pay people is one of the fastest ways to get a bad name in your local market.<\/span><\/p>\n

And finally, diligently tracking your expenses can save money by reducing your income tax and GST payments. That\u2019s because you pay income tax on your profit. So you\u2019re allowed to subtract legitimate business expenses from your business income before working out how much tax you have to pay.\u00a0<\/span><\/p>\n

If your business is registered for GST<\/a>, you have to add 15% onto what you charge customers and collect that money on Inland Revenue\u2019s behalf. But you\u2019re also allowed to deduct the GST you\u2019ve paid on business expenses from the GST you\u2019ve collected to work out each periodic GST payment or refund. See our complete guide to GST.\u00a0<\/a><\/span><\/p>\n

What are legitimate business expenses?<\/h3>\n

If you\u2019re going to track business expenses, it\u2019s important to know what is and what isn\u2019t a business expense. Although you could pay for pretty much anything from a business bank account, that doesn\u2019t make it a business expense. Generally speaking, business expenses are money spent that\u2019s directly related to the business earning its income. In other words, it has to be necessary for the business.<\/span><\/p>\n

When you\u2019re running a business, even just a part-time side gig, it\u2019s important to keep your business-related transactions separate from your personal finances. Here\u2019s why:<\/span><\/p>\n