This post is by Sheral Reddy, Associate Director at GECA Chartered Accountants and an experienced CA who specialises in tax and property compliance.
Avoid making loans between companies
Avoid making inter-company loans if you are operating two or more companies. Unless the shareholdings in both companies are identical interest needs to be charged between the two entities. If it is not charged, the value of the interest that is supposed to be charged can be deemed a dividend. This can lead to tax complications.
If you want to move money between companies we suggest using the shareholder(s) current account as an advance or drawings in both entities. This is assuming you have a sufficient balance in the current account.
We also suggest not paying another company’s bills from the other company’s bank account. It usually creates a lot of accounting work. This can be avoided by a simple transfer of funds, as described above.
If you have a complicated structure and too many inter-entity loan balances, have a chat to us to see if we can assist you with the loan restructures.
Accounting & tax tips for personal trainers
Motor vehicle – If you are using your personal vehicle, then take note of how much you use your car for work purposes. This might include travel between clients, picking up supplies, heading to a seminar or anything directly business related.
Bootcamps – If you are running a boot camp or training session for clients outside you can claim particular expenses. Any equipment or resources used are tax deductible. This includes mats, sunglasses, sunscreen, and hats.
Uniforms – IRD is very particular about what type of expenses fall under the uniform category. Clothing which has the business logo on it can be claimed as an expense for business purposes only. Note, running shoes also fall outside of this rule.
Separate business accounts – We recommend clients setting up separate bank accounts or credit cards. Your clients can pay into this account and you can pay all your business expenses from these accounts. This ensures we as accountants spend less time processing and separating out your business and personal expenses. Therefore, reducing your accounting costs.
Xero Invoice Reminders – With busy schedules, chasing up debtors can be a chore. Now in Xero, you can turn your automatic invoice reminders on. This saves you time on debt collection and allows Xero to chase up any late payers and overdue invoices.
Please contact GECA if you need more tips on how to structure your business and if you need to know more on which expenses you can claim for better record keeping.