5 Common Tax Mistakes Kiwi Businesses Make and How to Avoid Them

Paying taxes is part of running a business in New Zealand, but mistakes can be costly. From missed deductions to late filings, small errors can result in penalties, interest, or lost opportunities for tax savings.

Whether you’re a start-up, tradie, or a growing SME, understanding common tax pitfalls is key to keeping your business compliant and financially healthy. Here are the top 5 mistakes we see and how to avoid them.

1. Mixing Personal and Business Expenses

Many business owners make the mistake of using personal accounts or credit cards for business transactions or vice versa. This creates confusion, makes bookkeeping harder, and can jeopardise your ability to claim legitimate deductions.

How to avoid it:

• Open a dedicated business bank account.

• Use a business credit card for all purchases.

• Track personal withdrawals separately as drawings, not business expenses.

Keeping business and personal finances separate makes accounting simpler and ensures your records withstand an IRD review.

2. Failing to Keep Accurate Records

Incomplete or disorganised records are one of the most common tax mistakes. Without accurate invoices, receipts, and payroll documentation, it’s easy to miss deductions or make errors in tax filings.

How to avoid it:

• Use cloud-based accounting software like Xero to record all transactions in real time.

• Digitally store receipts and invoices.

• Reconcile bank accounts monthly.

• Maintain payroll records and leave entitlements carefully.

Accurate records not only make tax filing easier but also provide valuable insights into your business performance.

3. Missing Out on Deductible Expenses

Many Kiwi business owners under-claim deductions simply because they don’t know what’s eligible. Missing legitimate deductions can increase your tax bill unnecessarily.

Common deductible expenses include:

• Business vehicle costs and fuel

• Home office expenses (if applicable)

• Equipment, tools, and machinery

• Professional fees (accounting, legal, insurance)

• Marketing, website, and advertising costs

Tip: Keep receipts and record the business portion of any shared expenses. Your accountant can guide you on what’s deductible.

4. Late or Incorrect GST and Provisional Tax Payments

Failing to lodge GST returns or make provisional tax payments on time can lead to penalties, interest, and unnecessary stress.

How to avoid it:

• Set reminders for GST and provisional tax due dates.

• Use accounting software to automate calculations and filing.

• Work with your accountant to forecast tax obligations.

Proactive management ensures you stay compliant and avoid last-minute surprises.

5. Not Planning for Growth or Changing Circumstances

Businesses evolve, and tax strategies that worked last year may not be suitable now. Many businesses fail to review their structure, tax planning, or cashflow as they grow — leaving money on the table.

How to avoid it:

• Review your business structure regularly (sole trader, company, trust).

• Plan ahead for large purchases or investment decisions.

• Update budgets, forecasts, and cashflow projections.

• Consult an accountant before making major financial decisions.

Strategic planning ensures your business remains efficient, tax-compliant, and ready to scale.

Final Thoughts

Avoiding these common tax mistakes saves you time, money, and stress. By keeping accurate records, claiming all eligible deductions, and seeking professional advice, you can focus on growing your business with confidence.

At Affinity Accounting, we help Kiwi businesses navigate tax requirements efficiently while identifying opportunities to optimise savings.

Talk to the Affinity Accounting team today to find out how we can help your business grow with expert accounting and advisory services.

What our clients say

“Dylan is one of the best accountants I've worked with. He makes a point of explaining things as plainly as possible to those of us who don't understand accounting speak. He has a solid knowledge of best practices in the industry, but most importantly he will always recommend what is most suitable for your specific business. I will continue to recommend Dylan and Affinity Accounting to my clients when they are looking for an accountant.”

-Jay Brooker