What Will You Get Paid If You Have an Accident?

ACC is a large bill for any business (particularly for tradesmen and those in high risk industries) that none of us like getting.

When you get the next invoice, check the details are correct because if the levy rate or income details are wrong you may be paying too much for not enough cover. Read More »



Going Paperless

There’s no question about it, computer systems are replacing the need to employ people, and making things happen so much faster in a business.

Just one example is creditors and the payment cycle.

In the old days, after purchasing something, you received the invoices in the mail, sorted them, and reconciled them to a statement. The invoice may have been processed into a creditors system, maybe by about the 10th of the month you had an idea of what your creditors balance was at the end of the month previously. Read More »



Does your business earn enough to pay you what you’re worth?

Many years ago, one of my sons asked me, “What do you get paid, Mum?”

I said, “I own the business. I get what’s left over.”

“Well,” said my son, “how do you make sure there’s enough left over for you to get paid?”

I replied, “That’s my job as the business owner, to make sure the business earns enough to pay the staff, pay all the bills AND then has some left to pay me.”

As the saying goes: ‘Out of the mouths of babes.’ Read More »



Business Values

What are your business’s values? Do you know? Have you articulated them to anyone?

Any business book you read these days will ask if you know what your business’s core values are. It’s a bit of a step on from mission or vision statements, although these things are still talked about.

A business’s core values are defined as the philosophies or principles that guide its internal conduct as well as its relationship with its customers and other stakeholders. They are the guiding principles that help to define how the business and its employees will behave.

I find all this airy fairy talk a bit hard to follow. Much of what people say are core values are just basic must haves to me. For example, to say we act with honesty and integrity. Of course we do; that’s to be expected. Read More »



Goals

Goals- BW Miller Dean Ltd

My husband and I have a goal – to walk the whole of the Te Araroa in our lifetime. Check it out here. www.teararoa.org.nz. It’s a 3000km walk from the top to the bottom of NZ and joins together many existing walks. We could do it as “through walkers”- start at one end and keep going till we get to the other end- but we don’t have the time or dedication. So we’re what’s called “section walkers”; we do it in sections. We fit in pieces where and when we can: a longer tramp at New Years, several day walks through the years, etc. It’s a logistical challenge. The biggest problem is always getting transport to one end to walk to the other.

We aim to do between 100-150km per year. That makes it a 20-30 year plan. Sounds ridiculous I know, and it certainly did when we started in 2012. (We realised we’d done some of the walks already so why not keep going?) However, we’ve now done 762km. That’s over 25% so it seems more realistic.

And how do I know that? I keep a record of all the pieces we’ve done. It’s drawn on a map and a spreadsheet of course. After all, I’m an accountant. Read More »



Trusts

Do I need to establish a Trust? Do I still need the Trust I have?

We often get asked these questions by our clients. And the answer, as it so often is, is “it depends”. It depends on why you want it. Then it depends on the balance between the advantages and the disadvantages to you.

The principal purpose of a Trust is to set assets aside to protect them from a variety of people and organisations such as:

  • Creditors
  • Family
  • Relationship Partners
  • Asset and Income tested benefits and assistance

Protection from family members and organisations tend to be emotive reasons that vary from person to person.

Read More »



New Years’ Resolutions: Business Planning

Happy New Year!

I hope you’ve come back to work all fired up and ready to get into it- declaring that this year, you’re going to make the time to work ON your business not just IN it. You know what your goals are for the year and have a plan to get them underway.

Or does it feel like groundhog day? You just get bogged in the same old detail with no clear picture of where you want the business to be going.

Without a clear idea of why you’re in business and what you want to achieve, you cannot complain when you don’t achieve the lifestyle you want from your business. If you aim nowhere, that’s where you get – nowhere.

I’ve been reviewing our plan for the last quarter, ticking off what was achieved. We’ll be meeting next week to set the new objectives for the next quarter and the coming year. From all I’ve read this is the best way to do your plans. Have longer term strategic targets, anywhere up to say 3 years, then break it down into what has to be achieved this year, then this quarter, to move you towards that goal. Often the tasks on this are not things that are urgent but they are important. Things that if you don’t do you won’t move forwards. Read More »



Natural Disasters and Your Business

What a week we had from the 14th November, starting with the Earthquake early Monday morning and followed by torrential rain and floods. I know we’ve always got plenty to talk about with the weather in Wellington, but that week really topped the list.

The effect on businesses vary depending on what the business does and where it’s situated. We’ve been talking to many clients since, and it seems the effects on their business swing both ways.

A supermarket client had a mad morning clean up, but were then able to open Monday morning. They were really busy as their competition weren’t able to open. Sadly, they’ve been shut down 10 days later because of a building over the road being deemed to be risky. A firm of lawyers have moved in temporarily downstairs from us, they’re locked out of their building because of a risky neighbouring building. They can’t even get their records and equipment.

On the other side, a client with a pub had an extremely busy Monday. People couldn’t go into the city and wanted the companionship of others. Clients that work in engineering, alarm systems, tiling, or anything else to do with building and maintenance have been inundated with work since. Read More »



How Planning and Budgets Make Business Better

When I come back to work after the summer break, I spend the first week or two planning for the next financial year. I like to get a head start on it when I’ve been out of the nitty gritty of day-to-day stuff and when we’re not so busy with clients’ work.

It’s important to plan what you want the business to achieve, then look at what it has done in the past and work out how you’re going to bridge that gap.

The financial aspect of a plan is a budget. And because cash is king, the even more useful version of this is a cash-flow forecast.

It’s not unusual for a client to ask us to prepare one for them because the bank has asked for one. It then gets handed to the bank or put in a drawer and promptly forgotten. That’s about as useful to the business owner as an annual set of financial statements we prepare long after the year end to calculate the tax payments!

But a budget and cash-flow forecast can be very useful to help manage the business. Read More »



Why Billing is the New Black

Here’s a fun factoid for you… billing your customers for the work you’ve done gets you paid!  AND, when you get paid, you can pay your bills!  And eat!

One of the most important things about running an SME is to get your invoices out- as quickly after the job is done as possible. Simply put, people won’t pay you if you don’t bill them. Invoice fast and often.

I know, I’m hearing you say that it’s the last thing you feel like doing after spending all your time on the job; you’re just too busy and it becomes a chore for the end of the month or a wet day.  But that sort of business practice is what gets you a gigantic debtors list and believe me, chasing that up is a far worse chore! Read More »



Is your business really sustainable?

Is your business sustainable? And I don’t mean are you eco-friendly and “green”; I mean, would your business carry on if you weren’t there, working in it day after day?

So, you’re the owner of a business.  You might have started it from nothing or you could have bought it from someone else.  But often we are really self-employed, maybe with a few staff to help us out. The customers are our customers, they only want to see us and they believe we do all their work ourselves. Our staff rely on us to feed them tasks you end up doing nearly everything yourself, picking up all the bits that the staff didn’t get to. Or maybe you have to correct their work and, rather than coaching them to develop their skills, you just do it yourself because it’s quicker and easier.  You think you’re the only one that can get it right. This is the proverbial working IN the business rather than ON it. Read More »



Getting to know new clients

When we take new clients on it’s really important that we get to know them and understand them and their business. To repeat what I said in our last blog: “We like nothing better than when our clients achieve the lifestyle they want to from their business.”.

We know that not everyone desires building a large empire that they can sell off for megabucks. Many of our clients just love being their own boss and in charge of their own destiny. But all business owners also want their business to be the best that it can be. This is where we can help.

It’s also important that new clients understand what we can do to help them. We’re not here to just do Annual accounts and tax. We understand running a business and the challenges it brings. Not only have we run our own business for many years, we constantly talk to other business owners about their business challenges.

So, when we first meet potential new clients we like to have what we call a Proactive Accounting Meeting.

Read on to find out more about a PAM, and call us if you have any questions or would like to arrange a time for us to come and meet with you. Read More »



Why systems and processes save lives

Do you feel you are juggling all the parts of the business you own all at the same time?  You are trying to handle it all and be everything to everybody.  You neglect to take time out for yourself; there is little or no time for family and friends; and there is little or no time for a holiday

Think about your role in the business objectively and ask, “How can I improve my business without working harder?”  How could you do more but in less time?  Ask yourself, “Without me, what would happen to this business?”  What could you do with that business so you have time for family and friends and that trip you have always dreamed about?

Let’s take another moment to consider why you went into this business in the first place.  Probably to give you the ability to earn more income, to take time off when you would like, or because you did not want to work for someone else.  Are you actually achieving the goals that you set out to achieve when you went into this business? Have you considered your role in the business as a job?

Starting with the end in mind and working backwards will net you some good answers to work with.  Imagine what the end goal really looks like, then work backwards to identify the steps it took to get there.  This is where planning for the business comes to the forefront.

Breaking the cycle we are currently operating in through the use of systematisation is key.  Systems that would allow for someone to undertake your role if you were not there.

Read More »



Succession planning for dummies

Why is advance succession planning so important?

An ageing population combined with the dynamic of younger generations who seem less motivated to acquire a business tests long held assumptions that our businesses will be our future superannuation.

SMEs need to focus on extracting the capital value of their business and with an increasing number of those businesses expected to come onto the market in the next few years we can expect the polarisation between the good and the bad to grow.

Good businesses will continue to sell and command a high price, whereas poor performing businesses will at best come under greater price pressure and at worst be unsaleable.

The ideal timetable for an effective succession plan is three to five years from initial plan through to final succession. In a perfect world we’d recommend a minimum of two years to prepare and in a sense groom the business for sale.

Read More »



Business Advisory Services

One thing all four of us Directors agreed on when we merged was that we all love working with our clients to help them with their businesses. We like nothing better than when our clients achieve the lifestyle they want to from their business.  So we’ve been working on defining and streamlining our business advisory services to make sure our services are in the best interests of our clients’, managed consistently and using up to date business practices.  It’s all things we are very experienced at doing, just defined and managed in a better way.

Over the coming months we will feature the services in these blogs to introduce and explain them.

The best place for us to start working with you is with a Complimentary Client Review for existing clients or a Proactive Accounting Meeting for new people. This is where we find out from you what your aspirations for your business are and what’s going on in it at the moment.

Read on to find out more about a CCR, and call us if you have any questions or would like to arrange a time for us to come and meet with you.

Read More »



Changes at IRD

Changes to the interest and penalties regime

IRD have announced that from 1 April 2017 they will be changing the hated interest and penalties.  For provisional tax payers using the standard uplift method (based on prior year) there will be no interest charged on the first two instalments. I.e. they won’t take the interest calculation back to the first payment retrospectively.

For late payments on new returns filed there will still be the initial 1% penalty the day after for late payments and 4% after 7 days but the 1% monthly incremental penalties will go. UOMI will still apply.

 

Proposed Provisional Tax payment Changes

You may have heard through the media that the IRD are doing away with Provisional tax. As with a lot of their recent releases, this is only partially true. But (hopefully) from 1 April 2018 your business could qualify to pay tax using the AiM Accounting Income Method.
Read More »



The Profit & Loss Equation

Picture1

We all know that for any business to make an income it has to make Sales.

Many business owners closely monitor the sales, compare them to previous months, previous years and, if they can get hold of the information, other businesses.

But this isn’t the only thing to monitor. You have to make sure that out of those sales proceeds you can pay all of the costs of the business and have some left over for the business to make a profit.

And as the above picture shows the amount left over can end up being only a small percentage of the sale value.

Firstly you deduct Direct costs, the costs that if you didn’t sell that product or service you wouldn’t have to pay. This leaves your Gross profit. This is a much better value to monitor closely.

And you need to do so product by product, or service by service.

You may have an overall Gross Profit but it’s hiding the fact that you sell product A at a good margin, but product B at a loss. Reducing your overall gross profit. And it may even be that Product B is a higher dollar amount so you concentrate on pushing these sales, but there is very little point in selling something for less than it cost you to get to the point of sale.

The only time a business can justify this if it’s doing it intentionally as a loss leader. A marketing ploy to get customers to come in and buy other things as well.

Then, the total Gross Profit must be enough to cover all your overheads. The costs that would continue even if you didn’t sell those particular products or services e.g. your occupation costs.

Anything left after that is your profit.

You can also turn this around the other way, from the profit you want to make, or even break-even point, you can add your overheads and margins and calculate how much sales you need to make to achieve this.

 



The Christmas period and paying your staff

We’re heading into the silly season again. It’s referred to as that for a reason. In NZ with our annual close down of business we seem to go flat out to squash a months of work into 3 weeks in December. Unless you’re in retail and selling things people want for Christmas, these are never usually profitable months.

For those of us that are employers it’s a particularly expensive time of year. There’s 6 statutory days between Christmas and Waitangi day. That’s 6 days you pay staff not to turn up and do any work. Or, if you’ve got a business that’s open on those days you have to pay more and give them a day in lieu. Then when people return it always seems to take a few weeks for everyone to rev up into full productivity again.

A quick reminder on the statutory day pay obligations:  If someone would normally work on the day the holiday falls you have to pay them for it. If your business is open on the statutory day and your employee works on that day you have to pay them time and a half and give them a day in lieu. This year Boxing day, January 2nd and Waitangi day all fall on a Saturday. So these are all carried over to the Monday – Yes Waitangi Day is now Mondayised and is a statutory day on Feb 8th. If you want help working out any of your holiday pay obligations give Nicole a call, she’s our head bookkeeper and comes across all of these situations.

For some employers, you pay all the staff their annual leave as you close down at Christmas. Then there’s the GST and provisional tax payments due in January to fund as well – so a tough time of year for business cash flow.

Do any of these come as a cash shock to you and your business? If the answer is yes, perhaps your new year’s resolution should be to talk to us about helping prepare a budget and cash flow forecast for next year so you can enjoy that well-earned break.

The other side of this is we all get a chance to spend time with family and put our feet up, rest and recover for the new year. I always come back invigorated and keen to get into a new year.



How to get the best from your Xero

Last month I talked about using your management accounts to tell the story of what’s happening in your business. And how important it is that those management accounts are timely and accurate.

And it’s that accuracy that’s also vital to help us in preparing your year-end Financial Statements. The more we have to change in your accounts the more time it takes us and the bigger the cost to you.

More and more of our clients process their own accounts. And systems like Xero do make this seem super easy. They make out it’s quick, simple and what’s more – fun. But at our end, we’re finding it’s a mixed bag as to the accuracy of the accounts we are given. And banks are often saying the same thing. Read More »



Interpreting your accounts – Part 2

In my last blog I talked about the benefit of understanding your accounts and having them prepared regularly.

Now I am going to explain this in more detail.

Following are two of the most common misunderstandings of business. Reviewing your management accounts regularly can help your business by understanding these two areas.

1. Profit is not Cash

It’s not uncommon for us to be going over annual accounts with a client, telling them the profit and they say “I don’t believe we made that profit – if we did, where is it? It’s certainly not in the bank.” Read More »