Tax compliance is one of the highest costs for New Zealand SMEs. Beyond actual tax liabilities, businesses must also invest time and resources — such as accounting software and external advisors — to stay compliant.

For Kiwi SMEs with 1-5 employees, compliance costs have surged an average of $1,067 per year, increasing to $2,187 for businesses with 6-19 employees. The rising cost of tax compliance, combined with the time and complexity involved in tax preparation, often pulls you away from what matters most: running and growing your business.

In this article, we will provide practical tax tips to help you simplify your tax processes, reduce compliance costs, and stay in control when filing taxes — whether you work with an accountant or handle things yourself.

1Put your record-keeping on autopilot

Paper receipts are easy to lose, and manual record-keeping can lead to costly mistakes. Invest in user-friendly accounting software like Xero or MYOB that automates data entry, tracks expenses, and integrates with your bank accounts. By digitising your financial records, you’ll save time and avoid common tax-time headaches. If full software isn’t an option, use cloud-based receipt storage apps like Hubdoc or Dext to stay organised.

2Separate business and personal finances

Blurring the lines between business and personal spending makes tax time harder than it needs to be. A dedicated business bank account and credit card help you track expenses, prove deductions, and avoid unnecessary headaches. If you haven’t already set this up, consider doing so before the next financial year.

3Review your financials before the rush

Set a date in your calendar — at least 60 days before your tax return is due — to review your financials. Look for:

  • Unreconciled transactions that need categorising
  • Unpaid invoices you need to follow up on
  • Business expenses you might have overlooked

Addressing these early means you’ll be better prepared and avoid last-minute stress.

4Set aside money for taxes

It’s easy to forget that not all the money coming into your business belongs to you — some of it is earmarked for tax. To avoid last-minute scrambles:

  • Allocate 35% of your sales revenue into a dedicated savings account
  • Break it down: 15% for GST and 20% for end-of-year tax
  • Adjust these percentages based on your specific business situation

5Consider provisional tax payments

If your previous year’s residual income tax (after accounting for any tax credits) was over $5,000, you’ll likely need to pay provisional tax in the current year. This means paying your income tax in instalments throughout the year rather than in one lump sum at the end. Spreading tax payments can help manage cash flow and prevent financial pressure.

6Small business tax deductions: What you can (and can’t) claim

Every dollar you can legitimately claim as a deduction reduces your taxable income. But not everything is deductible. To stay on the right side of the IRD, check:

  • Which expenses are 100% deductible (e.g., operating costs like rent, utilities, office supplies, accounting fees)
  • Which have partial deductions (e.g., home office costs, vehicle expenses for business use, entertainment)
  • Depreciation of assets and any recent changes to tax rules that could affect your claims

For a deeper dive into deductions for tradies, check The Ultimate Guide to Tradies Tax Deductions for 2025.

7Check if you qualify for tax credits or relief schemes

The Inland Revenue Department (IRD) website provides up-to-date information on tax credits and relief schemes that could help reduce your tax burden. For example, the research and development (R&D) tax credit can be a significant benefit for businesses investing in innovation.

8Stay compliant with GST

If your total revenue exceeds $60,000 in any 12-month period, you must register for GST. Ensure you’re accurately charging, collecting, and filing GST returns on time. Keep detailed records of GST transactions to avoid errors and penalties. If you’re unsure about your GST obligations, consulting an accountant can help you stay on track.

9Make tax time easier — DIY or with an accountant

Whether you manage your taxes yourself or work with an accountant, preparation is key to avoiding errors.

If you work with an accountant, make sure they have everything they need to help you file efficiently. Before your first tax meeting:

  • Ensure your records are up to date and categorised correctly
  • Have copies of key financial documents (bank statements, invoices, receipts)
  • Note any major business changes (new assets, staff, loans) so they can offer tailored advice

If you’re managing tax yourself, set aside time in your calendar to tackle it step by step:

  • 60 days before filing – Review income, expenses, and outstanding invoices
  • 30 days before filing – Organise receipts and check deductions
  • Tax return due date – File early to avoid last-minute stress

By staying organised, you’ll streamline the process and feel more in control.

10Learn from this year to improve next year

Once tax season is over, take 30 minutes to reflect — whether you do your taxes yourself or with your accountant. What worked well? What was stressful? Making small changes will help you stay ahead of tax time next year.

By implementing these strategies, you’ll keep your business finances on track year-round.