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The Joy of Tax in New Zealand

Did you know that the amount you can earn in Australia before you pay tax is now $18,200? Yes, an amazing $18,200 - that’s $350 per week, $700 a fortnight or $1,517 a month. Yes, the rates for higher levels of income may be more, but that's pretty damn good for the low or averagely paid, don't you think? In the UK, you can enjoy income of £12,500 before you pay any tax, unless you’re over 65, in which case the tax free amount is even higher. $12,500 is roughly NZ $25,000. Eve...

Business Planning - Bridging the Gap

Once you’ve established where your business is now and secondly, where you want to get it to, you need to sit down and work out how you’re going to bridge the gap between the two. If the gap is large, it may seem like where you want to get to is just too hard to reach. The answer here is to work backwards from your final goals, planning out the key milestones and benchmarks you need to attain in turn. Let’s take an example, a former client of mine who’s an orthodontist who wanted to grow...

Tax on Your KiwiSaver

One of the great things about Kiwisaver is that it can be drawn tax free when you reach retirement which is a very valuable benefit. It's unusual because normally, in New Zealand, tax is mostly worse than in other countries e.g. the complete lack of any personal allowance here whereby you can earn an amount tax-free, unlike Australia and the UK. However, Kiwisaver is not all tax-free. The contribution that your employer makes is taxable via an unpleasant little...

Tax Credits Going to Waste

The amount paid for tax credits under the Working for Families rules increased reasonably substantially last year (2018) and are now more generous than ever. The current income thresholds within which Working for Families Tax Credits are available are $84,500 for one child, $99,500 for two, $119,900 for three and $120,500 for four children.For those with a predetermined level of income from employment it’s easy to ensure you don’t miss out and receive the correct entitlement. For ...

Growing Your Business - Marketing

To get your business to where you want it to be from where it is now, you need to bridge the gap by planning in four key areas - marketing, operations (or your day-to-day business activities), human resources, and management control. Your marketing plan should cover five key areas: Your marketing objectives. It’s necessary to set very clear and measurable goals when drafting your marketing plan which dovetail into your overall business plan and ensure you get to where you want to be. For examp...

Which Accountant Should You Use?

There are a number of factors that business owners should take into account in deciding which accountant to use: Relationships. It’s important that you choose an accountant that you can get on with. Do they make you feel at ease and are they welcoming? Are they stuffy and old fashioned or informal and modern in outlook?Size of Firm. Unless you’re planning to float your business on the NSX, utilising a “big” name in the world of accountancy is unnecessary and expensive. Medium sized firms...

Break-Even Point Analysis

The term “Break-Even Point” refers to the level of sales necessary to cover all expenses i.e. the point of no profit or loss. To calculate this, you need the following: Your expensesYour salesYour gross profit percentage which is your gross profit (sales less your cost of sales) expressed as a percentage of your sales Your break-even point is calculated by dividing your total expenses by your gross profit percentage and then multiplying by 100/1 e.g. if your sales are $180,000 and your gros...

Majority of SMEs unhappy with their accountant

Most of the small businesses who are working with an external accountant or bookkeeper would not recommend their adviser to others and a quarter are looking to switch accountants, according to research by software provider Xero Based on a survey of 1,500 small businesses with an annual turnover of between £20,000 and £20m using various bookkeeping tools, the research shows 80% had an accountant but 70% would not recommend their choice and 27% reported they are likely to switch accountants. A t...

Minimising Tax when Starting In Business

Starting a business can be a stressful and expensive time so it pays to make sure you take advantage of all possible ways to save Income Tax and GST. One common oversight is not to claim for tools, equipment, furniture, computers, vehicles, reference books and any other assets or items owned personally and then transferred into the business upon commencement. For many business owners these add up to many thousands, sometimes tens of thousands where vehicles are involved, so it is certainly worth...

Your Ideal Customer Or Client

Every business owner should be focused on his or her prospective customers. The ability to find a customer, sell your product or service to that customer, and satisfy the customer so that he/she buys from you again should be the central focus of all your business activity. The greater clarity you have with regard to your ideal customer, the more focused and effective your marketing efforts will be. Everyone is in the business of customer satisfaction in some way. Th...

How to Set Your Goals Part 2

Basically, a good goal comes in a format of:What do I want to achieve & by when? And to assist you in setting your goals it’s important that you know the SMART formula which will remind you of the important components of well set goals. S is for specific and your goals should be as clearly defined as possible so that you know exactly what you are aiming to achieve without doubt or ambiguity. M is for measurable because if you can’t measure it you can’t make it. Important in the goal achi...

How to Set Your Goals Part 1

There is a common factor in the success achieved by those who are successful. What is that common factor? It’s that they’ve done the necessary preparation for success. They understand the six P’s - proper preparation prevents pretty poor performance. They know that: Luck is when preparation meets opportunity! And it doesn’t matter what business you are in, what role you have, where you are on the ladder of success or whether it’s your personal or business life there is always opportun...

Selling a Business

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Business Structures

Your business structure should take account of the following factors: Risk. Business is a very risky place and your business structure should minimise risk as much as possible. Often ignored until it’s too late e.g. when the GST or rent is months in arrears! Practicality. Overly complicated structures e.g. trading trusts are OK in theory but not very practical to use. Try finding a professional trustee these days! Cost. Always a factor and whilst spending excessively is unwelcome, saving a few...

Starting a Business Part 2

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Increase Your Business Turnover and Monitor Your Performance

Every business owner needs reliable figures to regularly check on business performance.  Collecting data is useful in setting realistic targets towards increasing your profitability in 2015, and gives a baseline for monitoring your business throughout the year. Types of measurement data to collect: your annual customer numbersaverage salesnumber of customer visits In a retail store, for example, (although this exercise is appropriate for other businesses), you need to collect the following ...

Starting a Business Part 1

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7 tips for keeping your accounting organised

Here are 7 useful tips for keeping your accounting organised: Bank Accounts. Always use separate business bank accounts for your business transactions. Your private bank accounts should be kept wholly for private transactions and mixing up business and private transactions in your bank accounts is a recipe for disaster. The cost of business bank accounts these days is very low and there is no excuse for not having a business bank account or accounts. Get in the habit of making regular transfers...

Buying a Franchise

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How to cope with business competition

In the area of business competition there’s one thing I’ve learnt over the 35 years I’ve been at the coalface of advising SMEs and that is, no matter how many other competitors there are in your line of business, you can still be successful if you get your core business activities working the right way. The best example for that locally are cafés which are springing up all over the place. Some are busy all the time, some are deserted. Yes location and being on the sunny side of the street...

Buying a Business

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Selling Your Business

Just like putting a house on the market, selling a business requires careful planning, preparation and presentation, so before you rush off half-cock to a business broker or list on Trade Me stop, think, do some research and take some good advice from a decent accountant who’s long been involved in business sales. Disappearing Cash If you, like many business owners, have been pocketing the takings, now is the time to start paying ALL of these into the bank. A client of mine was trying to buy h...

How to avoid a painful tax audit

Even the NZX can be caught out by a tax audit. The sharemarket business paid $1.2 million extra tax after the Inland Revenue Department checked its books. For the average small business owner, the thought of a visit from tax inspectors is enough to make them shiver. We asked two experts how to minimise your chances of a painful dispute: Recognise the risk You may think there’s no chance of being audited if you are a little one- or two-person band. But added together, small-to-medium enterprise...

Getting to Grips with Tax

It’s a sad fact that tax is a big part of being in business. Not only do you have to pay over a large chunk of your money to the IRD in various taxes, but like it or not, you also have to act as tax collector, as well as working unpaid for other Government agencies, whether it’s collecting court fines or child support. Unfortunately some businesses owners and self-employed people never seem to be able to cope or get to grips with income tax, and it just becomes an insurmountable, frightening...

The Importance of Shareholders Agreements

When anyone is buying into an existing company, or setting up a new company with colleagues, friends or even family, it is essential to document how the relationship is going to work and set ground rules for what happens in the unfortunate event of a dispute. When a business relationship is new and exciting, no one wants to think about the bad things that may or may not happen in the future, but ideally the time to prepare a shareholders agreement is before any shares are purchased or issued. No...