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  1. #1
    Member
    Join Date
    Apr 2010
    Location
    Wellington, New Zealand
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    88

    Default Accountant recommendation in Wellington for setting up a Trading Co

    To date my share market activity has been limited to longer term value investing. I feel its time to have a go at some shorter term trading.

    After a bit of thought I have decided it will be best to separate my investing and trading activities by setting up a company to do the trading. The company will pay the capital gains tax on trades, providing a clear distinction to the tax man what my trades are and what my longer term investments are.

    I actually have no idea how to go about setting up a company. I assume you need an accountant to register your company with the companies office and prepare financial statements, tax etc. I'm sure there are some here who could shed some light on the process.

    I am still a student, and I only have around 25k invested (so far), so I'm not after the most expensive accountant out there. I am however prepared to pay what it costs for an accountant who can do the job, and do the job well!

    I don't plan on starting to trade immediately. I want to gain experience through paper trading to refine my strategy before I commit any hard earned cash. Do you think I would be better waiting until I'm fully ready before forming the Co. Or are there advantages to setting it up now. E.g. could I could I depreciate laptop, pay for internet connection, books etc. to offset future tax liability? I would incur those expenses regardless.

    Thoughts?

  2. #2
    Legend
    Join Date
    Apr 2008
    Location
    Sth Island. New Zealand.
    Posts
    6,428

    Default

    Quote Originally Posted by mr.needs View Post
    To date my share market activity has been limited to longer term value investing. I feel its time to have a go at some shorter term trading.

    After a bit of thought I have decided it will be best to separate my investing and trading activities by setting up a company to do the trading. The company will pay the capital gains tax on trades, providing a clear distinction to the tax man what my trades are and what my longer term investments are.

    I actually have no idea how to go about setting up a company. I assume you need an accountant to register your company with the companies office and prepare financial statements, tax etc. I'm sure there are some here who could shed some light on the process.

    I am still a student, and I only have around 25k invested (so far), so I'm not after the most expensive accountant out there. I am however prepared to pay what it costs for an accountant who can do the job, and do the job well!

    I don't plan on starting to trade immediately. I want to gain experience through paper trading to refine my strategy before I commit any hard earned cash. Do you think I would be better waiting until I'm fully ready before forming the Co. Or are there advantages to setting it up now. E.g. could I could I depreciate laptop, pay for internet connection, books etc. to offset future tax liability? I would incur those expenses regardless.

    Thoughts?
    For a kick off you will not pay capital gains tax. There is no such tax in NZ. What you will pay is income tax on capital gained if you are a trader. Either a lawyer or accountant will advise you on the pros and cons of setting up a company. It's a simple process, so stay away from the big firms - they charge like wounded bulls. Legal and accounting charges are directly related to the distance from their entrance door to the receptionist's counter, and the depth of the pile on their carpet.

  3. #3
    Member
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    Apr 2010
    Location
    Wellington, New Zealand
    Posts
    88

    Default

    Quote Originally Posted by fungus pudding View Post
    Legal and accounting charges are directly related to the distance from their entrance door to the receptionist's counter, and the depth of the pile on their carpet.
    Haha thanks for the insight! Will keep that in mind.

  4. #4
    Legend shasta's Avatar
    Join Date
    Sep 2004
    Location
    Wellington
    Posts
    5,914

    Default

    Quote Originally Posted by mr.needs View Post
    To date my share market activity has been limited to longer term value investing. I feel its time to have a go at some shorter term trading.

    After a bit of thought I have decided it will be best to separate my investing and trading activities by setting up a company to do the trading. The company will pay the capital gains tax on trades, providing a clear distinction to the tax man what my trades are and what my longer term investments are.

    I actually have no idea how to go about setting up a company. I assume you need an accountant to register your company with the companies office and prepare financial statements, tax etc. I'm sure there are some here who could shed some light on the process.

    I am still a student, and I only have around 25k invested (so far), so I'm not after the most expensive accountant out there. I am however prepared to pay what it costs for an accountant who can do the job, and do the job well!

    I don't plan on starting to trade immediately. I want to gain experience through paper trading to refine my strategy before I commit any hard earned cash. Do you think I would be better waiting until I'm fully ready before forming the Co. Or are there advantages to setting it up now. E.g. could I could I depreciate laptop, pay for internet connection, books etc. to offset future tax liability? I would incur those expenses regardless.

    Thoughts?
    You can set up a simple company online for $60, by using the companies act & not your own constitution.

    I'll help you in settings things up if you like, i'm an Accountant & happy to help.

    Won't cost you a cent, Sharetrader isn't here to promote individuals it's here to share the good oil & help others

  5. #5
    percy
    Join Date
    Oct 2009
    Location
    christchurch
    Posts
    17,222

    Default

    Quote Originally Posted by shasta View Post
    You can set up a simple company online for $60, by using the companies act & not your own constitution.

    I'll help you in settings things up if you like, i'm an Accountant & happy to help.

    Won't cost you a cent, Sharetrader isn't here to promote individuals it's here to share the good oil & help others
    Shasta, I take my hat off to you for helping a new investor/trader.
    Mr.needs,go for it you are in capable hands.Laying the ground work will save you a lot of headaches.

  6. #6
    Member
    Join Date
    Apr 2010
    Location
    Wellington, New Zealand
    Posts
    88

    Default

    Quote Originally Posted by shasta View Post
    You can set up a simple company online for $60, by using the companies act & not your own constitution.

    I'll help you in settings things up if you like, i'm an Accountant & happy to help.

    Won't cost you a cent, Sharetrader isn't here to promote individuals it's here to share the good oil & help others
    Thanks for the kind offer shasta. Much appreciated

    I will send you a private message.

  7. #7
    Junior Member
    Join Date
    Sep 2008
    Posts
    2

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    Hi Shasta - Probably a silly question, but if you set up a company and trade through that vehicle, how do you transfer funds out of the company and back to yourself from a tax perspective. For example, if you have a good few months trading through the company and make 50k profit, how would the tax on the profit (income) be paid typically? If the company is liable for the income tax then fine, but how would any funds being transferred out of the company and into the individual's name be treated/classed? Presumably the individual would not have to declare the funds once again to the taxman and pay another lot of income tax?

  8. #8
    Guru
    Join Date
    Feb 2005
    Location
    Auckland
    Posts
    3,115

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    Quote Originally Posted by DecentTown View Post
    Hi Shasta - Probably a silly question, but if you set up a company and trade through that vehicle, how do you transfer funds out of the company and back to yourself from a tax perspective. For example, if you have a good few months trading through the company and make 50k profit, how would the tax on the profit (income) be paid typically? If the company is liable for the income tax then fine, but how would any funds being transferred out of the company and into the individual's name be treated/classed? Presumably the individual would not have to declare the funds once again to the taxman and pay another lot of income tax?
    IF there is a shareholders loan to the company, the loan can be repaid.

    Alternatively, a dividend can be paid. It will be taxable but you should be able to attach imputation credits which are accumulated in the company via the tax it pays.
    Free delivery worldwide with Book Depository http://www.bookdepository.co.uk

  9. #9
    Junior Member
    Join Date
    Sep 2008
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    2

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    Quote Originally Posted by CJ View Post
    IF there is a shareholders loan to the company, the loan can be repaid.

    Alternatively, a dividend can be paid. It will be taxable but you should be able to attach imputation credits which are accumulated in the company via the tax it pays.
    Thanks CJ. That makes sense.

  10. #10
    SRV is a God STRAT's Avatar
    Join Date
    Jun 2006
    Location
    Auckland, , New Zealand.
    Posts
    4,327

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    Good on ya Shasta. I met Mr Needs when I went to a Wellington ST meeting. Hes a charming bloke.

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