Hugh's Views
Business Benchmarking
GST
FBT
Use of Money Interest
Repairs after bad tenants
Delight the customer
4th week Annual Leave is here!
Government Act changes ahead
Is your financial year end here?
Systems for business - Where are they needed?
New service available in Roxburgh
A & P Shows
Pride of Workmanship
Congratulations Kathryn & Ellen
Welcome back Mark Tait
Goodbye Cathy Dann
Easter hours
Free files
Disclaimer
HUGH'S VIEWS
Goodbye 2006 – welcome 2007 as another financial year approaches.
From our point of view, 2006 ran pretty smoothly and no doubt a lot of credit goes to Paul Checketts, our Practice Manager, who has kept us all focused on what we should be doing. We had something like 87.5% of our returns filed at the end of February – well above the IRD requirement, and as at the time this publication is completed we probably only have about 40 or 50 to complete. I am sure you all know who you are!
Challenges for this year will include dealing with the new Holidays Act and making sure our clients are aware of the implications for them and also Kiwi Saver. There is further information on both these items in other parts of this newsletter.
There are possibilities of further changes to our tax rules, but as in the past these are not likely to take effect for another year if past experience is anything to go by.
We still have a concern that many of our clients have not put in place employment agreements despite the legal requirement. We can assure you if it goes wrong there is a 95% chance that the employer is the one who will suffer.
I am really delighted to welcome back to the office Mark Tait who many of you will remember from a few years ago. Mark has a strong tax knowledge, having worked in the tax section of one of the large national practices and he will provide some grunt in the tax area where in the past we have relied for much of our advice outside the office, which has not been ideal.
Most of you will be receiving the annual balance date questionnaire, for better or for worse! We do encourage you to fill these out, because it does make a difference for us, being able to complete your work in a timely manner. We will be a little more proactive this year and will be contacting some of our clients to come and complete the questionnaire with you. We are also going to trial a client information folder which will be sent to a number of clients so that they can assemble their records in a tidy manner based on the instructions that will accompany the folder. If you would particularly like to be part of this trial then please contact Paul at the office, and we will ensure that you are provided with one.
When you bring your information in please let us know if you have a particular requirement for the completion of your statements. If we don’t hear otherwise we will be working on a turnaround of 4-6 weeks, which is quite achievable if we get all the information at the start. We think we have plenty of capacity this year so you will find us doing some marketing on the basis of providing a prompt turnaround service for annual financial statement work. If you have business associates who are complaining about the time it takes for their financial statements and tax returns to be completed, perhaps you might suggest they give us a call!
We are looking forward to our new “accounting season” as we proved some points to ourselves last year with regard to processing efficiencies and are looking forward to making more progress this year.
Hugh
BUSINESS BENCHMARKING
We have access to a Business Benchmarking database which compares your business results and key indicators with a database of similar businesses in New Zealand. Contact your advisor to arrange a report for your business.
GST
The due date for filing your GST Return for the period ended 31 March 2007 is 7 May 2007
FBT
The due date for filing your FBT Return for the period ended 31 March 2007 is 31 May 2007. We recommend you check with us before filing this FBT Return as the end of year calculations can become quite complex.
USE OF MONEY INTEREST
IRD - Use of Money Interest rates have risen. From the 8th of March 2007.
· The rate payable to the IRD for underpaid tax will rise to 14.24%, while the rate payable by the IRD for overpaid tax will rise to 6.66%
REPAIRS AFTER BAD TENANTS
If you rent out a property and have to make repairs, do so before the rental ceases. Remember this when changing from rental to private use. If you want a tax deduction, it is no use doing the repairs after the tenant has gone, unless you are going to continue to let the property.
DELIGHT THE CUSTOMER
A CLIENT contacted Amazon and purchased a book. It was to be sent by fast mail and would take two or three days. The book took two weeks to arrive. The client contacted Amazon and complained. Without hesitation, the company apologised and cancelled all charges. He thinks Amazon is wonderful and is telling his friends about the excellent way they handled his complaint. If you mess things up, make sure your customer is delighted with the way you handle the situation. Be generous.
4TH WEEK ANNUAL LEAVE IS HERE
The amended Holidays Act 2003 provides that from 1 April 2007 the minimum entitlement to annual leave will increase from three weeks to four weeks per annum. This means that for each individual on the next anniversary of their commencing employment, they become entitled to four weeks annual leave.
For casuals, this increase entitlement is effective from 1 April.
So for casuals, start paying 8% as their annual leave component and show it separately on their pay slip.
For all other staff – on their next anniversary of employment, after 1 April 2007, add four weeks entitlement to their annual leave record. Annual leave paid is calculated as usual based on the average daily earnings.
If you operate an annual shut-down (and have paid out all staff their part year holiday in their first year of employment) then their next anniversary is your next annual close-down period. This may well be 31 December 2007.
Things you may like to consult us about are as follows:
· Those already on four weeks leave
· Anyone finishing up between 1 April 2006 and 31 March 2007.
GOVERNMENT ACT CHANGES AHEAD
There are a number of new Acts passed by Government which will affect business owners and investors over the next six months. Four weeks Annual Leave, KiwiSaver and Offshore Investment tax regimes, soon will all impact on our clients.
We will be providing information to our clients to help them work through the raft of changes ahead. In the meantime should you have any urgent requests on these topics, contact your advisor, who can assist you.
IS YOUR FINANCIAL YEAR END HERE?
If so, CHECK the following:
Accounts Receivable
Every year we have clients who do not understand they must pay tax on all their earnings, including money not yet received. April invoices for March work are part of March year-end income.
Bad Debts
Write off bad debts before your balance date. This does not stop you from continuing to try and get payment. For a debt to be bad, you must show you have taken every reasonable step to get paid.
Use of Money Interest
If you expect your business income, after deducting expenses, will exceed $112,000, you might have to pay Use of Money Interest (UOMI). Ring us now if you have not previously been affected by UOMI.
Stock and Work in Progress
You must count and value your trading stock at balance date, unless it will be worth less than $5000. Keep your stock sheets to show Inland Revenue if it asks for them. Dispose of dead stock now as it must be valued at its cost, unless you can prove it has a lower market price. A guess is not acceptable. You have to find evidence to support the price. This can be difficult. Work in progress must be valued unless your business is only providing services which cannot yet be billed.
Bonuses
If you want to pay staff bonuses relating to the 2007 year, they must be paid within 63 days of the business’s tax balance date to be claimable for that year.
Company dividends
If you plan to pay a company dividend, you might be able to get a tax refund for a person whose income is less than $38,000, if the dividend is declared by 31 March. If a family trust owns shares, you might be able to allocate the dividend to a low-income member of the family. The law is complicated, so check with us.
SYSTEMS FOR BUSINESS - WHERE ARE THEY NEEDED?
Imagine two businesses – one with excellent systems in place, the other with none.
Imagine the differences! A business with good systems conjures up images of efficiency, success and effective teams, while a business without systems simply spells disaster – inefficiency, customer frustration and possibly even falling profits.
Successful businesses put in place written procedures for all activities of the business. They are the backbone of efficiency, but they’re also important for customer servicing.
Customers appreciate receiving the same excellent service every time they do business with you. That’s only possible when systems and procedures are in place to ensure consistency across the board. If it’s written down, each staff member can complete a task in the same way as the staff member before them.
Detail is important. Don’t overlook the importance of creating procedures for:
- telephone calls – how staff answer; how long the phone can ring before being answered; whether the telephone has priority over visitors, etc
- telephone messages – recorded or personal messaging; time limits for returning messages, etc
- facsimile messages – header sheets; follow-up phone calls, etc
- correspondence in
- correspondence out
You want anyone new to your team to be able to pick up a procedure manual and know what to do. Training is still required for new people, of course, but a written procedure ensures there is only one way of doing the task.
You’ll also need procedures for:
- ordering and receiving stock and stock takes
- balancing of cash registers and banking
- meetings with staff, staff appraisals
- gross profit reports on trading activities weekly
- daily writing up of cash books/computerised records
- checking of creditors’ invoices
- authorising of creditors’ invoices for payments
- payroll records
- time worked records for staff
- payment of wages
- PAYE
- ACC
- income tax
The above pertains to most businesses, but each business is unique and will need its own particular systems and procedures in place.
We can help you streamline your business and have access to a number of standard policies and procedures - call us if you would like to discuss this further.
NEW SERVICE AVAILABLE IN ROXBURGH
On the FIRST and THIRD Tuesday of each month, Roxburgh and Heriot clients can save themselves the time and effort required to travel to Alexandra to see their Accountant. Leo Hulme and George Flannery are both BAS Chartered Accountants and one of them will be found at CAFFEINE from 9am to 1pm on each of these days.
Give us a call here at the office to arrange a time to see either Leo or George, 0800 448 041, or you are welcome to drop into Caffeine when they are there to arrange a time.
Some of the BAS team recently attended the Ranfurly, Omakau and Roxburgh A&P Shows, You may have spotted them there and had a guess at how many beans were in our Jelly Bean jar.
...to both Kathryn and Ellen on passing their accounting exams. All that hard work paid off. Well done.
WELCOME BACK MARK TAIT...
Mark is starting back with BAS in mid April as a Client Advisor and Tax Specialist. Mark will be assisting clients with taxation and business advice. Mark left us in 2002 to pursue the city life in Wellington. It’s nice to have you back !
...AND GOODBYE TO CATHY DANN
Cathy retired at Christmas and is now spending her days, traveling all over the place with Gavin and spending lots of quality time with her Grandchildren. Maxine Drabble has taken up full time residence at Cathy’s desk and now looks after our tax management section. Maxine previously shared her work day between BAS and Spicers. Happy retirement Cathy.
EASTER HOURS
Over the Easter break, our office will be closed from 5pm on Thursday the 5th of April and we will be reopening 8am Wednesday the 11th April.
We hope you enjoy the break.
FREE FILES
We have recently moved to a new filing storage system and now have a number of slightly used lever arch files available for clients to use to keep their records in .
See Ellen at reception if you would like one of these files.
DISCLAIMER
We don’t claim to know it all, so with that in mind here’s what we’re obliged to say; this newsletter has had input from a variety of sources, people and publications. For all input we are grateful. Grateful and careful. Whenever we can, we do our very best to ensure all the information contained in this newsletter is accurate and timely. If there’s something here you plan to place some considerable reliance on and we haven’t made the implications totally clear to you, get in touch and we’ll clarify it for you.