imogenwilsonjewellery

Walk with me, every step of the way as i try to grow my teeny craft business into something sustainable… watch this space!

The Only Things Certain in Life – Death and Taxes

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Around this time last year I was a frazzled wreck. Still at my full time job, making jewellery in my ‘spare’ time. I had just completed and sent off my first self employed tax return. Not just the normal IR3 that I’ve filled in for the last ten years, but an extra yellow form called an IR10 detailing all the incoming and outgoing money I had dealt with over the year, so I didn’t have to send them a box full of paperwork… When I realised I had to fill it out I was quite excited.

It’s OK, I’ll give you a minute to get the laughter out of your system, I’ll wait.

So grown up

So grown up

I felt so grown up and responsible filling out a form like that. I thought at the time that I kept quite good records, that they were filed in a way that made sense and could be accessed easily. Oh how wrong I was. Filling out this seemingly ‘simple’ form took me weeks with paper strewn all over the floor. I stressed, worried and cursed the ‘language’ that it was written in, I am told it was in English but you could have fooled me.

It wasn’t so much the new and convoluted sounding words they used. Things like Dividends, Liabilities, Depreciation and Bad Debts (who knew there was a good kind)- they could be googled, or sometimes explained in their ‘easy guide to the IR10’. The hard bit was the instructions to explain how to get to the figure you needed, they were so long and had so many steps and variables that by the time I’d got to the end of reading it (no matter how simple or difficult) I’d have to start again to remember what the first bit said… Amidst the haze of 50 steps and descriptions like the one below and a year’s worth of receipts… trust me, it could have been written in Arabic.

“Enter the total amount of purchases and other direct costs as shown in the income statement. Sometimes only the cost of goods sold is shown in the income statement. In these cases, add closing stock to the cost of goods sold and deduct opening stock. The answer should be treated as purchases, although it may include other direct costs. Direct costs (labour and other) of a business that provides services should be treated as purchases. Do not include purchases of assets where the proceeds of sale of the assets have been included in Box 26 (exceptional items).”

How could I know that filling out the damn thing would only be half my problem. As soon as I put it in the post I started to fret. I had filled it out completely honestly, sometimes not claiming things I knew I had spent simply because I couldn’t locate a receipt… But what if I’d filled it out wrong? Would they come and arrest me, or even worse, would they make me fill it out again?

The only things certain in life...

Franklin was right, they really are the only things certain in life…

After a couple of weeks of these worries I looked through the IRD website and discovered they have a FREE workshop to help people fill out their tax forms. I booked myself in, took the morning off work and dragged my boyfriend along (two pairs of ears are better than one). I left feeling confident, realising how little I had claimed compared to what I was allowed to. The worry stopped and I implemented some rather simple things to make impending tax time 2013 a little less stressful. I started ingoing and outgoing folders on my computer; inside each of them was a folder for each month. I collected some envelopes and made one per month for easy receipt stuffing. I started a new ‘tax’ bank account to put money into periodically so I wouldn’t have to save up to pay next year’s bill. It seems so simple looking back, but even these simple steps I hadn’t thought of till that point. I started (and two months later gave up on) an ingoing and outgoing Excel spreadsheet. Most of the stuff I was inputting into the spreadsheet was off the computer so the backwards and forwards between windows was making my head spin, so I went out and bought a nerdy Accounting book, which I of course put in a draw and never looked at again.

Weeks later my bill arrived from IRD, I was over the moon, I owed them exactly what I had calculated I did. Who knew I could be so happy OWING money. I was so pleased with myself. Then a surprise bill arrived from the Student Loan people and another from ACC ‘based on my self employed earnings’ I owed them both a slice too. What a kick in the shin, couldn’t they tell I was possibly the only person in NZ who was excited to be paying them the amount I owed.

So I paid them, begrudgingly, as you can imagine there aren’t really that many other options…

This year will be different

This year will be different, or so I thought…

Which brings us to this year’s tax. I was so much more organised, I had my envelopes, my organized folders, my Accounting book… which when I opened it I realised was totally empty…

Hmmm maybe next year will be my year…

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