STEP 4: Set up company bank accounts
The advantage of running everything through your company bank accounts is that every transaction is recorded.
This simplifies the entire process when it comes time to do your GST and tax.
Take a copy of your Certificate of Incorporation (from step one) into your chosen bank and open the following two accounts:
- A current account. This account will be used for your day-to-day expenses and income. You should select an account type that offers the lowest transaction cost. You may wish to also include a cheque facility and an overdraft facility. Deposit some initial working capital into this account ($500 is sufficient).
- A tax account. This should be a high-earning savings type account. This account will only be used for holding regular instalments for tax until your tax is due, at which time you will pay the IRD. With the tax account please remember that this has to cover GST payments and also hold enough for provisional tax payments. See http://www.ird.govt.nz/provisional-tax/ for more information.
Please also refer to comments on taxation and Tax calculators in Step 8.
We advise that you talk to your accountant to ensure that appropriate levels of income are being put away for GST and provisional tax payments.
Note – You may choose to use a different bank for this account depending on the rates available at the time.
Ensure both accounts are set up for both phone banking and internet banking. Also ensure that your chosen bank offers the facility to download your internet banking files. This is critical to later steps.