Welcome to the Vision Accounting e-newsletter for July 2015. This is a great way for us to share important information you need to know, helpful tips and hints and practical resources to help you in business for 2015.
More exciting news
Introducing our newest member in the office.
If you have been visiting our offices from Monday the 15th of June onwards, you will have noticed that finally the room at the front is now occupied. We have sub-let this room out to Andy Burrows, of Icon Business Solutions Ltd. Andy is a Business Coach, whose primary focus is on coaching Trades People. He does this one on one and in a group format, see the article about his MasterClass
further in the newsletter.
What's very important
Although we have mentioned this before, we are again reminding you that the IRD has changed their policy on when payments will be considered to have been received on time. Payments made by post are now treated as made on the day Inland Revenue receives them; the date of posting is irrelevant. It's therefore up to you to make sure you post your cheques in good time to reach IRD on time. There's no guarantee that a payment posted on the 18th will reach Inland Revenue by the 20th, especially as NZ Post now only delivers mail in some areas every third day.
If you’re sending a post-dated cheque, Inland Revenue will not bank it until the date specified. So even though it’s physically received before the due date, it will still be treated as received late if the specified date is after the due date. You can also make payments in person, either at an Inland Revenue office or at a Westpac branch (note Westpac no longer accept cheques for tax payments) as long as you do so before close of business on the due date. So, now it really is a good time to think about making your payments online, if you don’t already.
Companies and Partnerships
As the new residency and recording requirements have come in for companies and partnerships, if we don’t already know the residency status of partners and company directors, we’ll be contacting you soon about this.
We’ll also be asking you for details of date and place of birth for partners and company directors if we don’t already have this information.
What you need to know
Call before you click
If you have a company, we’ll let you into a secret. We know, each year when we speak with you about what you want to do about dividends, that the minute we start to talk about imputation credits and the imputation credit account, we watch your eyes glaze over and we know the ‘la la la la la la’ soundtrack is playing in your head. It’s okay. Almost everyone finds them hard to understand. And really, that’s okay with us because… that’s what we’re here for, right?
So, we know it might not occur to you, when you log on to the Companies Office website to update your shareholder details, that you could have made your tax position more complicated by doing yourself out of tax credits.
Because the Companies Office has made it really easy to update details on their website and that’s great. Particularly for small companies, it makes it quick, easy and convenient. However, it’s not the Companies Office’s job to look out for your tax position. It’s ours. So when you go to update shareholder details for prior shareholding changes, there’s nothing to remind you that if your company’s shareholding has changed by more than 33% each year, you lose what they call ‘continuity of shareholding’. Put another way, if your company doesn’t have 66% commonality of shares in any given year, it loses its imputation credits. You may end up paying more in tax, and you’ll lose the credits you built up in previous years and there’s nothing you can do about it.
The rules around shareholder continuity are about making sure that this year’s shareholders who enjoy the benefits today of the tax losses that were carried forward and the imputation credits that accrued last year are largely the same people who were shareholders when those benefits were building up. To calculate a company's shareholder continuity you generally have to track the voting interests of the individuals who ultimately own the company. This is not always straightforward.
Size and timing of the proposed change?
If you want to make more than a 50% change to shareholding, can we talk about it to make sure you understand all the implications? Should the company pay a dividend now to utilise available imputation credits, before you make that change in shareholding?
Did the company have tax losses last year which were carried forward? If the proposed change in shareholding affects more than 49% of the shares, then the company won’t be able to carry the tax losses forward.
Look Through Company?
If the company is a Look Through Company, a transfer in shareholding may cause the company to fall out of the Look Through Company regime. Will you be happy with that? Do you want us to advise Inland Revenue? Do you want us to arrange for the company to re-elect to be in the Look Through Company regime for the next tax year?
Does the proposed change affect directors’ interests in any way? We should make sure the register of directors’ interests is updated, in that case.
So, next time you want to just make a quick update to your company details on the Companies Office site, put down that mouse and pick up the phone. Talk to us. We can look at your situation and what options are available. And we can also put together the documentation you need to record the transactions so everything is squared away.
So, please call us before you venture onto the Companies Office website and change anything.
This Month’s Top Tips
Why use a Mortgage Broker?
It’s funny how we wouldn't think of drilling our own teeth if we needed a filling, flying the airliner if we're going on holiday or taking out our own appendix but many people spend a lot of time running round arranging their own mortgage funding, even though they have no experience in this area. Mortgage Brokers’ specialty is to arrange that mortgage for you.
The above may seem like extreme examples but they highlight the fact that, unless you work in a bank or are directly involved in funding in some way, arranging a mortgage is not your specialist area. Here’s how that can hurt you:
- It takes time and energy to arrange funding to make sure you are getting the best rates, money toward legal costs and the most borrowing you can (if that’s what you need)
- Borrowing money from a bank is not a right. Banks are designed to make money for their shareholders not hand out cash to everyone who wants it. Presentation of the deal is paramount. We've all heard the expression “first impressions count” and with a wrongly presented bank application the first impression could be your last
- If you do manage to get a mortgage approved - at the necessary level, with the right bank, at a good rate, with good money toward legal costs then you have the mortgage “structure” to worry about. Here’s what everyone knows – banks make profit. A bank is a business and any business makes money by selling their product at a premium. You need to ask yourself whether, even if the bank could give you structuring advice, would they do it so it saves you money or makes them profit?A good Mortgage Broker has a great relationship with all the banks, who have a ready supply of what you need to get you into a home – money. However, the Broker doesn’t work for the bank he or she work for their clients. That means getting the best deals, presenting applications in the best way and putting a structure in place that works for the borrower, you.
Note also that their services don’t cost their clients anything when they are arranging a standard mortgage through the banks. Whether it’s arranging a new mortgage, restructuring an existing one or simply helping re-fix your lending, they are there to help. Get in contact with us to put you in touch with a broker near you. (Article courtesy of Finware and Discovery Mortgages)
Sharing news from my clients with my clients
As mentioned earlier, herewith some more information on the services that Andy Burrows – the Trades Coach, now sharing space in our offices, provides. I am confident my hard working tradespeople will have benefit in attending his Master Class, now held in the boardroom of our offices.
Why Group Learning Beats One-to-One
In Africa, there's a saying: If you want to go quickly, go alone.
If you want to go far, go with a group.
A distinct trait of the New Zealand psyche is the "do it yourself" attitude. This is both a great strength in people and a great weakness at the same time. And frankly, as the world changes, it is probably becoming more of a weakness than strength. Back when the country was young, and support was weeks or months away, being able to DIY a solution was a great trait, even a life-saver. We are not a young country any more. The world has become smaller, more complicated and more competitive. Going alone with a DIY attitude, including developing your business, is old school thinking and will probably keep your business small and lagging behind others in the technological and profitability stakes. This may be where you want to stay. It's familiar and comfortable. If so, that's fine, but if you want to grow into something bigger, look at learning with other like-minded business owners, share your knowledge, experience, frustrations and questions, and go far.
While working in a group can have its frustrations (ever tried being on the work Christmas party committee!), when it comes to learning, the group environment has distinct advantages. Some advantages include:
- Mutual support
- Public commitment
- You get to copy
If you are the sole owner a business it can be a lonely place. Problems tend to seem bigger and more complex when you have to tackle them on your own.
One of the first advantages of being in a group is that you discover you are not alone in having problems and frustrations to deal with.
The old saying, “a problem shared is a problem halved” is definitely true, and others may have dealt with your problem already and have a good-to-go solution for you to try. That leads on to another advantage; you get to copy.
Assuming the other group members are not direct competitors, there is usually a willingness to share good ideas. People naturally try to help one another, especially if there is a natural affinity such as fellow business ownership and the stress that it sometimes brings.
With public sharing of problems comes a degree of public commitment to implement the suggested solution. This tends to increase the effectiveness as it reduces the natural procrastination that many of us suffer from.
A good place to start is joining one of the Trades Coach’s Business MasterClass groups. A monthly group meeting is conducted to cover key strategies and systems for each building block of the business. Problem and knowledge sharing forms part of the learning process. To maximize the effectiveness, and ensure strategies are implemented into each business, a 1-on-1 meeting per month is conducted with each member, at a mutually suitable time. Generic strategies discussed in the group meeting can be customized for each business owner’s situation.
Groups are started at regular intervals and limited to a maximum of six members. Although aimed primarily at the owners of trade-based businesses, a wider range of business types can be accommodated.
For further details contact: email@example.com or phone 027-688 6721.
A wise man once said:
Experience is that which you learn from your own mistakes, while wisdom is learned from the mistakes of others.