Client Gift Deduction Rules

By Timaru. Posted in Small Business, Small Business Advice, Tax Advice.

While we encourage giving your valued clients gifts to say thank you, congratulate them on an achievement, or whatever the reason for celebration may be, there are certain rules in regards to deducting these gifts as a business expense that we want you to be aware of.

The rules around deducting client gifts can have a few grey areas, so remember that only certain client gifts can be fully deducted. The tricky part is when you are gifting food or drink – if you provide or consume the gift away from your business premise, the gift is only 50% deductible. However if you provide or consume the food or drink at or from your business premise, the gift is 100% deductible.

Any gifts outside food and drink, e.g homewares, are 100% deductible whether you provide them on or off your business premise. The IRD have given a real world example to help understand the rules around this, which we’ll put below to help you understand the rules a little more. If you have any questions or concerns about gifting, get in touch with your Sidekick Accountant and they’ll happily help you out.

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IRD EXAMPLE

Bob is a real estate agent. Each time he arranges the sale of a house, Bob delivers a bottle of champagne to the owner. He also sends a gift basket by courier to the purchaser. The gift basket contains a bottle of wine, some cheese and various household items such as tea towels and soaps.

Bob will only be able to deduct 50% of the cost of the bottle of champagne. This is because he is providing entertainment in the form of drink and doing so off his business premises.

For the gift basket, Bob can deduct the full cost of the tea towels and soap, because an appropriate apportionment should be made for items that are not food and drink. However, he can only deduct 50% of the cost of the wine and cheese (or, if the cost is not separately identifiable, an amount appropriately apportioned as the cost of the wine and cheese).

How can Social Media help your business?

By Timaru. Posted in Business Growth, Sales and Marketing, Small Business, Small Business Advice, Solutions.

Social media is being used more than ever to the advantage of people and businesses. And why not, when it’s a free way to show potential customers what they’re missing out on? Here are six tips from our London Sidekick team to ensure you use social media to your advantage.

1. PROMOTE. The likes of Twitter, Facebook and LinkedIn hold enormous potential for promoting your business. Make the most of these tools by creating account in your company name and regularly updating them with relevant content.

2. PUBLICISE. Along with relevant content, make sure you post your content to help spread it around out there. Blog posts, case studies, offers – anything that would appeal to clients (or potential clients) will be happily accepted by followers.

3. EXPAND. Making sure your audience is continually expanding is one of the most important ways to ensure you continue to get new custom. Take the time to find people who you think would be interested in your business. Reciprocation is an innate human behaviour, and the majority of people will return the favour if you demonstrate some interest in them. Even if some people do not need your service, the chances are they’ll still take a look at your page and might even click through to your website, thus increasing traffic and spreading awareness.

4. CAMPAIGN. Use social media to run marketing campaigns such as competitions. At the very least, share the competitions through this, but where possible, make the post the competition. Create a Facebook app or ask your followers to compete in a photo challenge with the offer of a small prize and your customer base will begin to increase.

5. ADVERTISE. Most social media pages now allow you to advertise or boost posts with them for a fee. Don’t go hell for leather on this, but dedicate a small budget towards doing some advertising testing. It is not always fruitful, but works incredibly well for some businesses so is worth a try if nothing else. Remember, you can also advertise your job vacancies through social media, which will enable you to reach out to as many people as possible and provide you with plenty of options.

6. ENGAGE. One very important, and often underestimated tool of social media is engagement. Try asking questions and commenting on other posts. Social media is all about creating some transparency to your business; people like to see that companies are not run by a bunch of robots. Engage with your audience and try and have a sense of humour about it – people will warm to you and become more interested in your business as a result.

Pedro’s House of Lamb – Client Spotlight

By Timaru. Posted in Business Growth, Company News, Small Business, Small Business Advice.

If you live in Christchurch or Queenstown and you haven’t tried Pedro’s House of Lamb, you’re missing out! We had a chat with the Pedro’s team to learn a little more about how they’ve come to be so successful.

Tell us about Pedro’s House of Lamb, how did you get started?
We launched Pedro’s House of Lamb at the end of 2012. We had run a restaurant in Christchurch successfully for 30 years until the earthquakes. The new situation meant we had to think differently about the business and adapt. Which is how Pedro’s House of Lamb evolved – we took a product that was well loved in our restaurants and found a way to offer that when the city was short on premises.

Where can people find you guys?
You can find us at 17B Papanui Road in Christchurch and at 48 Gorge Road Queenstown.

What is one piece of advice for business owners? Can you share any lessons learnt from business struggles or challenges that you’ve overcome?
We did something in the food industry that was a little bit unusual. We offered just one dish –roasted lamb with a side of potatoes. People often asked us to extend the menu or whether we’d start providing accompanying dishes. But we’ve stuck with our original business plan and that’s proven to be successful.

By keeping it simple we’ve been able to produce a quality product, keep operating expenses lean and predictable.

Our experience has taught us to:
Trust your instincts.
Know your market.
Stick with what you’re good at.

What accounting system (if any) were you using before moving to Xero? How did that compare to Xero?
Prior to moving to Sidekick we operated a traditional accounting system – paper, paper and more paper. Moving to Xero has allowed us to streamline our accounting and provided more day to day visability.

Why did you choose our Sidekick service for your business?
We approached DJCA about Sidekick on the recommendation of our digital marketing agency, Empire9. After finding out more we saw that the sidekick offer would compliment our business and simplify our businesses finances.

Find out more about Pedro’s and how you can order from your local store here.

New Financial Year Tips

By Timaru. Posted in Small Business, Small Business Advice, Solutions.

The new financial year has kicked off with a bang and we’re well underway with helping our clients process their end of year accounts.

To make sure this financial year starts smoothly for you, we have a few tips to share. As always, any questions you can get in touch with the Sidekick team here.

Review Your Receivables
Now is the best time of year to review the accuracy of your receivables. We recommend to take a thorough look through your aged receivables to see if any are bad debts, or there are any other inaccuracies.

TIP: To write off a debtor as a bad debts expense, you must determine that there is no reasonable likelihood that the debt will be paid. A clear indication of a bad debt is if a debtor has become bankrupt or has gone into liquidation. In other words, you should only write off a bad debt if you have no hope of receiving the money.

If you use Xero, you can review your Aged Receivables Ledger by clicking “Reports”, then “Aged Receivables”.

Stock-take
If you hold stock, try to set aside some time as soon as you have the time to do a stock-take. It’s in your best interest to do this as soon as you can so you can work with accurate margins and data going forwards.

Donations
Donations to an approved charity are deductible, so if you’ve made a charitable donation this year, be sure to let your accountant know.

Fixed Assets
You can claim a deduction on the purchase of fixed assets that cost $500 or less (excl gst). Now is also a good time to look through your fixed assets and ensure all assets are currently in use in the business. You can review your fixed assets in Xero by clicking Reports > All Reports > Depreciation Schedule. A deduction can be made for the book value of assets if they are no longer in use.

Legal Fees
Legal fees of less than $10,000 (excl GST) can be deducted as revenue expenditure. If your total legal fees are over $10,000 (excl GST) they may be recognised as capital expenditure, and therefore not deductible for tax purposes.

Employee Related Provisions
A deduction can be made for employee related provisions (such as holiday pay or long-service leave) as long as they are paid within 63 days of your balance date. For example if you have a standard balance date (31 March), payment needs to have been made by June 2nd for the amount to be deductible.

Reconcile
Be sure to keep reconciling your bank accounts in Xero. Did you know you can reconcile easily on your phone? For a step by step guide click here for Apple and here for Android.

New Property Tax Rules & 2 Year Bright-line Test

By Timaru. Posted in Small Business Advice, Solutions, Tax Advice.

New Property Tax Rules & New 2 Year Bright-line Test

Effective 1st October 2015, the following rules are coming into play in New Zealand. Get in touch with us if you would like to know more.

Transferors and transferees must, for the transfer of land:
• Provide IRD number (including non-resident persons), and
• Their “Tax Identification Number” (TIN) if resident in overseas jurisdiction, and
• Must provide this at the time of transfer of land – This “Tax Statement” goes to LINZ as part of transfer documentation (they send to IRD)

Exemption from the new rules applies to persons who are:
• Not an “offshore person” and
• Transferors selling their main home, or
• Transferees buying with intention for their main home

The Main Home Exemption
• Exemption only applies to residential land
• Not available where residence is on a commercial farm (economic business test)
• Not available if used mainly for investment purposes nor if mainly as business premises
• Exemption can only be applied once – won’t apply to other homes (eg. holiday home)

Exemption is not available where:
• Person is an “offshore person”
• The property is to be, or was, owned by a trust (and estates)
• Exemption used twice or more in last 2 years before current transaction

Trusts
• The main home exemption can’t be used
• All trusts will be required to provide IRD number
• And foreign TIN and NZ bank account if offshore person

Regular Sale of Main Home
• If home sold 3rd time within last 2 years IRD number required
• Government aim is to catch person’s with regular pattern of selling family home
• Gives IRD information to target these persons and determine whether taxable

New 2 Year Bright-line test

A disposal of residential property within 2 years of acquisition will be taxable unless an exception applies.
Date of Acquisition
• Current rules: the date of acquisition is generally the date the S & P was entered in to
• IRD state this date could be difficult to find and may not have access to S & P
• Therefore bright-line acquisition date = date title registered which will show on land online

Disposal Date
• Date the contract is entered into
• For gifts and other similar distributions where no sale contract – Disposal date will be normal rules = depends on documentation
• Subdivided land: lots acquisition date same as original undivided land
• Different dates for acquired and disposed make the 2 year period a tighter squeeze

Transitional Rule
• New rules only apply to a S&P entered into after 1/10/15
• Example – Shania Twang enters in a S& P on 2/6/15 – 1/11/15 title registered for purchase – 1/12/15 Contract to Sell
• Not caught by the new rules due transitional provision

Definition of Land
• Any estate or interest in land
• Option to acquire land, estate or interest in land
• Therefore includes freehold and leasehold

Main Home Exception Proposed Rules
• Bright-line test will not apply to main home
• Will only apply to one property at a time – different from current rules
• Proposed rule: the land has a dwelling on it; the dwelling is occupied mainly as a residence by the owner; and the dwelling is the main home of the owner.
• Can be owned by a trust so long as beneficiaries occupy
• Must be occupied mainly as a residence
• Based on actual use rather than intention
• Where several residences, main home = property with most connection

All Hail Content Marketing!

By Timaru. Posted in Business Growth, Cloud Software, Events, Sales and Marketing, Small Business Advice, Solutions.

Recently we had a new client join us in the tech/marketing space that we thought stood out! It’s called Hail, a platform for you to collect and collaborate on your content. And it seems as though the timing is spot on for them.

Many of our customers talk to us about their needs around their marketing (and often sales but that’s another story) and how they can get their message out there. Who will create the material? How will they deliver it? How can they present themselves as the experts they ARE in their industry?

The answer is often, Content Marketing.

But like many things, it’s not just knowing what the solution is, it’s how you apply the solution, Hail makes the solution easy. You can collaborate with your colleagues or marketing partners. You can share the content and get it out there really easily across many platforms.
We’re about to start using it! Because believe or not, it’s not super easy getting the accountants round here to jump into action and write a blog!
We think there’ll be many people like us that need this kind of solution – So we want to share it and get it out there.


“Hail provides a one-stop, collaborative content creation, management and publishing system. Now you can efficiently leverage your content across online publications, blogs, email and social media.”

If you’d like to find out more, please RSVP to one of the regional roadshows by following the links below:

RSVP for the Christchurch event now
RSVP for the Auckland event now

Many thanks, Ric

p: 03 377 0700
fp: 0800 SIDEKICK
m: 021 708 255
Book a time with me here: Thanks too to Concentrate for their images regarding the stats of US tech co’s

Get your Payroll back on track with SmartPayroll

By Timaru. Posted in Cloud Software, Company News, Small Business, Small Business Advice, Solutions, Tax Advice.

You’re invited! Next Friday, the 7th August, SmartPayroll are holding a free course for local Christchurch business owners and they’d love to see you there.

Their course isn’t just about the awesome time saving features of the SmartPayroll system. It’s also an opportunity to ask the experts any questions you have around your obligations as an employer.

See below for full details, you can rsvp to chelsea@sidekickca.co.nz or to the email stated in the invitation. We look forward to seeing you there!

A little bit about SmartPayroll:

SmartPayroll are the very smiley specialist payroll people for small to medium NZ businesses. SmartPayroll is an easy to use and cost effective online payroll system. Its highly secure payroll processing saves you time, money and hassle by automating your payroll tasks. SmartPayroll pays your employees’ wages directly to their bank accounts, deducts PAYE, KiwiSaver and all other deductions, then files the necessary schedules and returns with IRD for you. Easy.

Client Focus: Costas Taverna

By Timaru. Posted in Business Growth, Small Business Advice, Solutions.

There is only one thing that we love almost as much as Xero at djca and that is great food and drink. And boy do we count ourselves lucky to have Costas Taverna as one of our clients! Straight from the guys at Costas, here is a bit about how they came to be so darned popular in Christchurch.

Tell us a little bit about Costas Taverna…

Costas Taverna is a place to celebrate the simple joys in life… family, friends, conversation and great food. We will always do our very best to ensure you receive great value, fast, efficient, friendly service, and outstanding food sourced from the best and freshest local and imported ingredients. We believe that eating great food, in good company is one of life’s greatest pleasures, so we want you to sit back, relax and celebrate the moment!

Where do you operate?

Costas Taverna is now operating on Cranford Street 478 shop 3 in Christchurch. We are open 7 days from 5pm till late.

Why did you choose to get into that industry?

In 1904, in a small village near the bank meadows of the river Evros, Greece, the Lakakis family developed a passion for cooking. Not with the advanced cooking methods used today; but it was honest. It was the best food the Village Kiani had ever tasted. Food is something that we have been incredibly passionate about for many decades. We have literally poured our hearts into every detail within our restaurant. Watching our guests enjoying our hospitality is absolutely priceless for us, that is why we are in the restaurant business.

What is one piece of advice for business owners in your industry? Can you share any lessons learnt from business struggles or challenges that you’ve overcome?

Control your numbers using a food and beverage costing calculator and good stock control. The use of Xero to form an accurate budget will do wonders for you.

What accounting system (if any) were you using before moving to Xero? How did that compare to Xero?

We didn’t have one. We used to use Microsoft Office Excel and we worked closely with our accountant who managed it for us.

We hope that with Sidekick on board taking care of your accounts, you have found more time to do the things you really enjoy. So what is it that you love to do with your spare time?

We love to take mini holidays to relax and unwind.

Do you have any deals or specials that you’d like to share?

October is coming up with some exciting promotions at Costas Taverna. Monday is 2 for 1 Souvlaki Platters (Regular), Wednesday 2 for 1 Cocktails or Coolers all night and Sunday kids eat free from 5 pm to 6:30pm. You can find our promotions and deals on our Facebook Page: www.facebook.com/CostasTaverna and on our Website www.CostasTaverna.co.nz