How should NZ sole traders plan their cash flow for tax?

Managing cash flow for tax is one of the most important financial skills for a New Zealand sole trader. Here's a practical approach: **Set aside money immediately:** Every time a client payment arrives, transfer 28-35% into a separate tax savings account. Don't touch this money. Think of it as not your money. **Estimate your annual liability:** Multiply your expected net profit by your estimated effective tax rate (see the effective tax rate guide). Include ACC levies in your estimate. **Know your provisional tax dates:** - 28 August: 1st instalment - 15 January: 2nd instalment - 7 May: 3rd instalment **GST planning:** If you are GST-registered, the GST you collect is not your money — it belongs to IR. Keep GST collected in a separate account or track it carefully in your accounting software. **Avoid common cash flow mistakes:** - Spending money held for GST before the return is due - Forgetting that the first tax bill arrives 15-16 months into self-employment - Not increasing provisional tax payments when income significantly increases **Tools to help:** Xero or MYOB can track GST and estimate tax automatically. AnyDayAnyTax calculates your tax liability from your bank statements to help you plan ahead.

• Set aside 28-35% of net income for tax immediately
• Keep a separate tax savings account
• Know provisional tax dates: 28 Aug, 15 Jan, 7 May
• GST collected belongs to IR — keep it separate
• First-year sole traders: 15-16 months before first tax bill