Starting a Business in New Zealand IELTS Reading General
Reading Passage 2
Read the text below and answer questions 15-20.
Starting a Business in New Zealand – Types of Structures
Did you know there are a few different ways you can structure your business? It’s possible to do business in New Zealand under one of three basic types of business structure. Each offers varying degrees of control and responsibility.
If you’re a sole trader, your business is built around you. The entire operation relies on you, but you can still employ others to help you. You’re 100% accountable for your business’ liabilities, but you also retain full control of the business and its profits. Many small business owners start out as sole traders, because sole traders aren’t required to spend money following any formal or legal processes to establish their business, unlike companies. This is because sole traders and their businesses are considered to be the same legal entity.
A partnership is when two or more people or entities join together to pool their assets and divide the profits and liabilities in a business. They often bring different skills to the table and varying resources, with the division of profits and liabilities – in addition to individual roles and responsibilities – outlined in a partnership agreement. Individuals are liable for their own debts and you can also be liable for business debts incurred by your partners if they become insolvent.
Companies are separate legal entities to their shareholders. This provides shareholders with limited liability from any of the business’ debts beyond the value of their shares in the company. However, if a shareholder is involved in the running of the business (as a director, for example), and he or she is found to have traded recklessly, fraudulently or not in the company’s best interests, they can still be made liable. Most financial lenders will also only give a business loan in exchange for a personal guarantee overriding limited liability. Shareholder dividends undergo taxation at a different rate to the company itself. All companies have to declare their director and shareholder details by registering for incorporation with the Companies Office.
Complete the notes below.
Write NO MORE THAN THREE WORDS for each answer.
New Zealand Business Structures
The owner is the business, but can take on employees. Owner wholly responsible for (15) __________ business operations and profits. Good way to start due to less red tape – owner and business are the (16)__________
2 or more people combine (17) __________ and share profits and losses. All aspects of a partnership summarized in a partnership agreement. If a partner is (18) __________ the other is responsible for all debts.
Separate from shareholders – creates limited liability (unless shareholder takes part in running the company and is doing so poorly). Moneylenders often only offer loans when there is a (19) __________ Shareholder income is subject to different (20) __________ Companies must declare various company details at the Companies Office.
Read the text below and answer questions 21-27.
Company expenses – Information for Employees
Expenses are paid back to employees every quarter. Fill out digitally the expenses form, which is available in the company forms section on the shared drive of your c ` omputer. Send the expenses form to your line manager by email. Take all the relevant receipts for your expenses and place them in an envelope, which you must give to your line manager. Make sure your name and date references are on the outside of the envelope. Please keep a digital copy of the form that you send your line manager. We do not expect you to shoulder a financial burden for us. If you find that you are paying out of your own pocket more money than your personal finances can deal with, please get in contact with your line manager immediately and he/she will ensure that you are repaid immediately.
You can claim expenses for all your legitimate business travel, including when you travel to a temporary workplace. Examples of items you can claim for while on company business:
• Travel on planes, buses, ferries and taxis
• Parking, congestion charges, travel tolls
• Hotel bills and meals
• Subsistence expenses (such as eating away from your usual workplace)
• An amount per kilometre using your own vehicle – this amount changes periodically
• $30 incidental expenses per day on day trips
• $60 incidental expenses per day on overnight trips
You cannot claim expenses for travel to and from your living place and usual office location.
Telephones and Internet
If you ever use your home phone or mobile for company business, you can claim the cost of these calls. You cannot claim the cost of rental or contract respectively, as this will be treated as a benefit in kind on which you will pay tax. If you use your own Internet connection, then you may only claim a proportion of the bill based on your company usage.
This can be a problematic area for the company when we make deductions against corporation tax Expenses related to entertaining are allowed if they meet the following criteria:
• You are entertaining customers or potential customers
• None of your family or friends is present
• If the entertaining is not Just a social event
You may be asked for details of any entertaining you claim for. Please try and acquire receipts for any items for which you plan to claim. The company can reimburse you for some expenses without receipts, but we try and keep this to a minimum.
Do the following statements agree with the information given in the text? In boxes 21-27 write:
TRUE if the statement agrees with the information
FALSE if the statement contradicts the information
NOT GIVEN if there is no information on this
21. All company expenses can only be paid at the end of every three months.
22. Employees can claim for food when staying at a hotel on company business.
23. Employees can only claim for using their car when the company cars are not available.
24. Employees cannot claim back any money on their personal cell phone contract, even when they use it for company purposes.
25. Employees can claim some money back on their own home Internet connection if they use it sometimes for work purposes.
26. Employees cannot claim taxi expenses for their customers when entertaining.
27. No expenses can be paid without production of the relevant receipt.
Starting a business in New Zealand IELTS Reading GT Passage Answers
16. Same (legal) entity
19. (personal) guarantee
23. NOT GIVEN
26. NOT GIVEN