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michaelmurfy

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#312203 26-Mar-2024 10:11
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Hey all!

So my Wife and I are starting up a new side hustle selling cat toys (and perhaps her art) - Black Fur Studios if anyone is interested. The total revenue we'll get from this won't be much, it is more just for fun but basically I'm building a wee site to sell our cat toys online and we're attending some local craft markets. At first I was looking at popping this through my own business which is currently listed as a non-active company as I am more just holding the name but do have a bank account under it.

 

But now I am a wee bit conflicted. Things like hnry are not designed for side hustles like this and accountants are far too expensive to even consider on a small side hustle like this but also don't want the IRD chasing after us saying "oh you started this side hustle? Where's our cut?" - I am also wondering if perhaps this side hustle money should just go into a personal account but at the same time would love to get eftpos for our markets.

 

I fully understand that I'll likely need to seek other advise but thought I'd ask here first to see what others do knowing full well there are also accountants here. I am a complete n00b here! Cheers all!





Michael Murphy | https://murfy.nz
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alikat
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  #3211593 27-Mar-2024 14:35
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Hi stranger on the internet - I'm a chartered accountant and I'm here to give non-specific tax advice on the internet. Congratulations on the new hustle.

 

first off, Hnry would the direction in which I would normally point you to, except they only deal with sole traders, not partnerships. I could be mistaken here, because they are the competition :)

 

You don't need xero, MYOB or any of that, just good record keeping.

 

You don't need to register for GST if your sales are under $60k in a rolling year.

 

You can DIY your taxes:

 

  • keep a spreadsheet of money in/money out and use a single bank account for the hustle. and take money out of that to pay yourselves.
  • IRD has a cashbook spreadsheet you can download and use
  • you can enter your business income on your IR3 through MyIR

 

 

The IRD won't chase you for tax until you've got tax due, or you become a provisional tax payer (i.e. your residual income tax is over $5000/yr) but say you're earning over $70k, put a third of your net profit (income minus expenses) aside.

 

Where will you find catches? Anything you buy for the business that's over $1000+GST and has an enduring benefit of over 12 months becomes an asset - eg you buy a dSLR camera for taking product shots -> depreciation, that is you write it off over time, using the rates set by the IRD and searchable on their website. MyIR even has a depreciation calculator in your tax returns if you need it. They're doing me out of a job.

 

Anything that is deductible must be directly related to earning income. That could include a portion of your own home (home office claim). It's mileage driving to markets, market stall rental, a table for display, materials, etc., but not what you pay yourself as sole trader(s). Buying yourself lunch while at the market is not deductible. That's personal sustenance. 

 

I am happy to answer any queries in DM, or if you'd like a cheap and cheerful Xero package that doesn't go GST, bank feeds only, I have access to a level not available to the general public currently at $16/m + GST that I oncharge at cost (with the exception of credit card fees if paying me by Stripe)


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