Welcome to the Vision Accounting e-newsletter for November 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.
What's very important
The financial year ended 31 March 2015 is now more than seven months ago, and as such it would be prudent to have had the financial accounts for that year finalised. Those of you with overdraft facilities may have already had that call from the bank asking for a copy of these financial statements. As part of the bank’s overdraft facility requirement you are expected to provide these within six months post balance date, if you have not done so yet, you may see your facility put on hold, which can impede on your business cash-flow situation, understandably.
If you have not as yet attended to providing us with the financial data, can we urge you to bring these in now, as the festive and holiday season is upon us shortly. On average we have a turn-around of 8 to 10 weeks, which currently is a lot quicker, but we cannot guarantee that the IRD’s requirement that all returns are filed no later than 31 March following is adhered to, if the records arrive to us in February next year. So we hope to see you soon with your records if you have not already brought them in.
A big “thank you” to all of you who have been organised and brought things in by now.
What's very handy?
In my quest for interesting information for our newsletter, I encountered a handy little calculator provided by none other than our own government. This handy little calculator provides an indication what the actual overall cost of a new employee could be. Please check it out on my website under Other Calculators called “Employee Cost Calculators”
As we all know a new employee costs more than just their wages. Before you hire extra help for the holidays, do the maths with this online calculator. The Employee Cost Calculator helps tailor calculations by industry and workplace, as ACC levies, overheads and other costs can vary widely. It also includes average salary rates by industry to get you started.
What you need to know
In the property market it's a time of change. On 1 October 2015 the Reserve Bank's new property taxation rules came into effect. The changes to the legislation require investors in New Zealand properties to have a 30 per cent deposit (this takes effect from 1 November 2015).
A “quick-flick” test has also been imposed which will tax the capital gain on properties bought and sold within two years.
From October 1, the property purchaser will need to provide an IRD number, a New Zealand bank account and tax records from their country of residence. The rules are designed to put a dampener on the property market but it's too early to say if they will have any impact.
So, please be in touch with us before you contemplate selling your property, as the length of time between purchasing and selling is now even more closely watched, and we would hate to see you pay tax on your hard earned property gains.
This Month’s Top Tips
Exit: stage right
We read a lot about the ageing population and its potential impact on the economy but what does it mean for small business?
In business, typically, it takes a lot of energy and planning to get started and a lot to keep going and keep growing. Very few business owners start a business with exit in mind. It seems completely counter-intuitive. You start with a dream and the tenacious passion to make it real and then you just want it to grow. But when do you start thinking realistically about what you want to happen when you retire?
For some, it’s too hard to think about. Many business owners might talk about funding a lifestyle but actually work has been their lifestyle. Straight up, they’d rather go with their boots on. But then what happens to the business? Economically it’s a waste – a waste of the business’ assets, client base, employees; it’s a waste of the dream and the hard work it took to make it real.
What’s your plan? What do you want to see happen? How much money do you need to retire? How do you start even thinking about all this?
In search of success(ors)
Are there family members working in the business who are interested in taking the business on? Do they have all the training and experience they need? What about your team or franchisees? Do any have management and leadership potential which could be developed further? It doesn’t have to be a single individual – there might be a couple of key people motivated to form an effective partnership with some serious buying power. Is this a good time to start a conversation?
Alternatives to exit
If the idea of selling the business and retiring to a beautiful lifestyle bores you to snores, don’t think about it in terms of complete cessation. If you find the right people, it might be feasible to keep an interest in the business and a slice of the decision-making. It could free you up sufficiently to discover more of the great lifestyle you could have had, if you’d ever had time to have a life. At the same time, you’ll be able to share the rich business knowledge you’ve built up and you’ll have the added satisfaction of seeing the business continue to grow.
Ready to sell
If selling is your best option, is your business ‘sale ready’? To achieve the best possible price, you need your business to be in the best possible shape when it goes up for sale. You need to analyse your business from the point of view of a potential buyer. Is there clear documentation on business processes and performance? Is your business performing at peak? What would it take to be ready for sale and what is the most realistic time frame to achieve it?
These are all things we can help with. At the very least, we can help you to start the conversation and work out a plan.