Provisional Tax Changes

You may have heard that the IRD have introduced some changes to the way they manage Provisional Tax.

For many years, some of the biggest gripes we have heard from our clients have related to Provisional Tax.

Why do you have to pay tax based on guesses as to what you are going to earn, and then get penalised if you get it wrong? And yes, we know that Use of Money Interest (UOMI) is actually interest and not a penalty, but people still see it as a penalty, especially as the IRD charge and pay interest as if they are a bank- they pay it at a low rate and charge it at a high rate.

Finally the IRD have listened and have taken the first steps towards making it a bit fairer. 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 »



Another scam to be aware of

It has recently come to our attention that clients have been receiving invoices which appear to be from the New Zealand Intellectual Property Office, but they are NOT. The following warning was posted on the NZIPO website in November.

“We have noticed an increasing amount of unsolicited or fraudulent IP protection, promotion or advertising services being offered to IP holders.

If you receive any communication about your IP case from anyone other than:

  1. Intellectual Property Office of New Zealand (IPONZ),
  2. World Intellectual Property Organization (WIPO),
  3. your appointed IP professional,

you should treat them with caution. Particularly if they are preparing to charge you a fee for the service. 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 »



An Insider’s Guide to Awesome Administrators

Good administrators, the ones who get things done before you have to ask, the ones who are meticulous and detailed yet friendly and fun, are as rare as hens’ teeth.  But if you find one… your business will skyrocket, as they are a very crucial part.

Not only are they the first face clients see when they come in the door, they are also behind the smooth running of any office environment.

As the practice manager of our office, I lead our administration team and I love my job!  We make the most of having a very strong admin team in our office, so our accountants can get on with what they do best – strategic planning, budgets and cash flow forecasts, and, of course, accounts! We take care making sure our office is clean and tidy. We enjoying making cups of tea and coffee for our clients and having a chat as they come in the door. We make sure our annual work is in so our accountants don’t need to worry about getting the work in but can focus on getting high quality work out the door to our clients. And we take pride in the relationships we get to build with our clients. 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 »



Phishing Scam – important message from IRD

Over the past two weeks Inland Revenue has received reports of a telephone phishing scam from several hundred customers around New Zealand.

The scam calls have been made to landlines and mobile phones, with messages being left on voicemail if the calls haven’t been answered.

The callers state that they are from the Inland Revenue Department and the following scenarios have been reported, that the customer:

  • is wanted for historic tax evasion or tax avoidance
  • has a red flag on their file
  • is in debt

The caller is then advising customer they or their lawyer must return the call as soon as possible. Some customers have been told to make a payment via Western Union within 30 minutes, or risk arrest.

They are often told to ring a Wellington number – (04) 830 2441 – and recommended to speak to a “Kenneth Matthews”, “James Matthews” or “Kevin Sousa” to arrange an immediate payment so as to avoid serious repercussions.

Customers have reported the callers as having “foreign sounding” accents, with many different accents reported. Sometimes the caller is female. The callers are very confident and convincing, and we have received anecdotal reports that some customers have been taken in and paid significant sums of money to the scammers.

Some customers have called the number referred to above and reported the background as sounding like a Contact Centre environment with multiple accents.
These customers have also reported the callers as becoming angry and aggressive when challenged.

If you receive a suspicious email, SMS scam message or a fraudulent call, please let us know as soon as possible so we can advise IRD.



Important note for all Directors

Following on from my blog last year and comments in our recent newsletter the new Health and Safety requirements come into place on the 4th of April 2016. You have probably seen various articles, including the one about Peter Jackson, regarding mass resignations of Directors in light of the new Health and Safety Requirements for Directors.

It is easy to read the headlines and pass it off as scaremongering, although in this case there is some substance to this and all Directors (as well as anyone else involved in business) should be considering their responsibilities under the new laws.


What are new Directors responsibilities?

All directors now have a responsibility to take reasonable steps to keep up to date knowledge of work health and safety matters and have an understanding of the business and its risks, ensuring it has appropriate resources and processes to eliminate or minimise risks.

This has always been the case for those involved in the running of the business but now extends to all Directors including those with no day to day involvement.


Do you need to resign as a Director?

As per the Peter Jackson article, in a lot of cases, if you don’t have regular hands on involvement in the running of the company it can be difficult to ensure that you maintain an up to date understanding of the business risks involved and the processes that are in place.

As a director you can be held liable if duties are not met by the company.


What happens if responsibilities are not met?

The Bill increases the penalties and creates three offence tiers relating to breaches of the health and safety duties:

  • Reckless Conduct – fines up to $3 million (or $600,000 and/or up to five years’ imprisonment for individuals)
  • Failure to comply with a Duty (that could cause death or serious injury) – fines up to $1.5 million (or $300,000 for individuals)
  • Failure to comply with a Duty – fines up to $500,000 (or $100,000 for individuals)


Worksafe
will still be required to work with you and help deal with risks, and has a number of codes and guides on their website to assist employers in managing specific risks.

At this time it is essential that you either get involved in the Health and Safety processes or consider your position as a Director and whether you are in a position to ensure the company is meeting the requirements.

Give Peta or I a call if you wish to further discuss your options.



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.



Xero Tips and Tricks

This month we are talking about getting the most out of your Xero.

In Peta’s last blog she went over a few of the common areas people make mistakes in Xero. This time I want to give you some tips so you can use Xero as efficiently as possible.

Here at BW we all use Xero on a daily basis so across the whole team we have all picked up little tips and tricks here and there to make using Xero that much easier.

Here is a list of some of our top tips in Xero: Read More »



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 »