The video title Business Basics Company Structure slides in from the left of the screen.
The title slides to the right of the screen and is replaced by a person sitting at a desk with a laptop. File folders, a desk lamp and a mug also appear on the table. A clock ticks on the wall. 3 lights hang from the roof and there is a potted plant on both sides of the desk.
A circle appears above the desk on the right with a person standing inside it as “being your own boss” is said.
A circle appears above the desk in the middle with a love heart inside it as “working on the projects you want to” is said.
A circle appears above the desk on the left with a tax form inside it as “being responsible for your own tax matters” is said.
The scene is replaced by 3 circles with a different structure type in them. On the left is SOLE TRADER, in the middle is COMPANY, and on the right is PARTNERSHIP. Each circle expands and contracts as the structure type is said.
The company circle expands again as this is what we’re looking at today. An image of 2 people and a building replace the word COMPANY.
Cheerful and bubbly music plays during the whole video.
Starting your own business can be pretty exciting.
Being your own boss, working on the projects you want to, and being responsible for your own tax matters.
One of the first things to do, is choose a business structure that's right for you.
The 3 most common business structures are sole trader, company, and partnership.
In this video, we'll look at companies, which are their own separate legal entitles, and how they do their taxes.
Leeann appears on the left of the screen, John appears on the right. A shop appears between them.
COMPANY STRUCTURE appears on the shop. This is then replaced by 2 percent signs with a 50/50 split down the middle of the shop indicating Leeann and John each hold 50 percent of the company’s shares. Leeann’s percentage then increases to about 66 percent, while John’s decreases to about 33 percent.
Leeann and John appear behind a counter inside the shop, looking at a computer. They are registering their company and getting their IRD number online through the Companies Office.
PATINA ANTIQUES LIMITED appears on the front side of the counter, and as a sign at the top right of the screen.
‘LIMITED’ on the sign is highlighted and expands as this is explained. A circle above each person’s head appears showing their share percentage again.
Meet Leeann and John. They’ve decided a company structure is best for their antique business.
When people form a company, they each get shares, usually in proportion to the money they contribute.
Leeann and John contact the Companies Office to register their company as Patina Antiques Limited, and get an IRD number at the same time.
Most companies have limited after their name.
This means if the company gets into financial difficulty, a shareholder's personal liability is limited to their share in the company.
Leeann and John are attending to customers in their shop. A circle appears in the middle of the screen with $150,000 in it showing the company’s profit for the year.
Circles appear above Leeann and John’s heads showing they each received $40,000 from the company’s profit. $150,000 then changes to $70,000 showing the company’s remaining profit.
$40,000 in each circle is replaced by an Individual tax return - IR3 which is the income tax return both Leeann and John need to file. $70,000 is replaced by a Companies income tax return - IR4 which is the income tax return a company needs to file.
We zoom out to show the outside of the shop again. A calendar on the shop with 31 March highlighted as the end of the tax year for the company.
In its first year in business, Patina Antiques Limited makes a profit of 150,000 dollars.
During the year, Patina Antiques pays Leeann and John 40,000 dollars each, leaving the company with a profit of 70,000 dollars.
Leeann and John each file an individual tax return, called an IR3, showing their income from the company of 40,000 dollars each.
Patina Antiques files a company tax return, called an IR4, declaring a profit of 70,000 dollars for the year, and pays tax on this profit.
Patina Antiques has its business year end at the thirty-first of March, the standard date for many companies.
So, Patina Antiques files it’s returns by the seventh of July, and avoids any late-filing penalty.
Some of the tools and resources available to you appear in 4 circles.
From left to right, the circles contain:
- useful tools and resources from business.govt.nz
- GST returns as you must register if your turnover is more than $60,000
- our ird.govt.nz web address
- our myIR logo.
A few final things to remember before we wrap up.
For useful tools and resources for businesses, including a tool to help you choose your business structure, visit business.govt.nz.
All businesses with sales of more than 60,000 dollars must register for GST and file GST returns.
Our website ird.govt.nz has lots of useful information for people in business to help you get it right from the start.
And if you don’t already have a myIR account, set one up via ird.govt.nz so you can file your returns online and send us secure emails.
The video ends showing our web address ird.govt.nz and then our logo.