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.
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.
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.
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.
Creating a Successful Business Plan
By Timaru. Posted in Business Growth, Small Business, Solutions.Simon Telfer from Stimulus is an independent director and business adviser specialising in governance strategy and succession. He shares with us some advice on creating business plans that stick around. You can contact him via www.stimulusnz.com Let me share with you how a strategic plan can still be alive, well and far from gathering dust in the bottom drawer one year on. As my client says “It is a great feeling to know my team is enthusiastic about the future – they can now see what I see.” So, what went right?
Personal goals were nailed down
The business owners spent a couple of months thinking, documenting and refining their personal goals. What they deemed important included good health, flexibility to travel, passive revenue streams and to remain commercially active and involved. These personal goals were the foundation on which the rest of the strategy was built.Key business themes were identified
The shareholders defined five high level themes for the business. They believed focus on these would be required to ensure the business supported the achievement of their personal goals. The themes were: · Remaining true to the Company values · Increasing turnover & profitability over next 5 years · Strengthening internal systems & procedures and external governance · Removing owner responsibility for staff and operations · Readying the company for a change of ownership in 2015Careful choice of planning team members
The team had breadth and depth, understanding that two people with similar ideas are, in effect, one person. Strength was derived from the team consisting of an employee, a customer and an independent facilitator, as well as two shareholders.Customer wants and needs crucial
The customer was always at the forefront of the planning discussions. Their wants and needs were researched and discussed at length. This client distilled it down to three key needs: speed, quality and reliability.Concise output resulted
Although the benefit from planning derives as much from the process (journey) as it does from the final document, the strategic plan itself is seven pages in total. It is clear, concise, relevant and real.Staff engagement continues
Employees were fully engaged in the strategy’s initial roll out and this has continued via company workshops, three times a year. Examples of involvement include employees defining the Audacious Goal, allocating responsibility for actions plans and regularly being asked to present examples of the Company values being put in to action.Accountability established early
The owner managers were under no illusion that an external, independent individual would be required to ensure accountability and monitor progress of the execution of the strategic plan. The plan is regularly referred to at Board meetings and the strategic goals drive real decision making around resource allocation and priorities.The plan was durable
Almost a year in to the 4 year planning period the Company is still some way off achieving their strategic goals. This is a good thing. A robust strategic plan is not a glorified “to do” list – it took much thinking and discussion to ensure the goals were stretching yet achievable.And the client is happy!
“As an owner / manager I had a vision for the future but it was clouded with many different options of how to get there. The strategic planning has given me a clear and concise focus for the immediate and long term future. It encompassed the entire company – we are now all working toward the same vision.”
Loving Life in The Cloud
By Timaru. Posted in Cloud Software, Small Business, Solutions.What is the cloud we hear you say?
Why it’s only the backbones of our company! The ‘Cloud’ refers to the Internet. Instead of buying software and installing it directly on your computer, cloud software is simply accessed online. Just log in from any computer with internet access, and away you go.Why switch to the cloud?
Ever had your computer crash and lose all of your work? Well that is no longer a problem with the cloud. Any data, files, or documents in the cloud are there for good and won’t be lost if your laptop dies or computer crashes. We also think the cloud is fantastic because it is cheap! Most cloud products are inexpensive with a small monthly fee, or even better are free.What do we love about it the most?
You can take your work anywhere! At home, on holiday, waiting in line at the post office, you can access what you need to as long as you have an internet connection.Is it safe?
Yes, it is. Software like Xero have whole teams dedicated to the safety of your information. If you use internet banking, then you can trust the likes of Xero as they have the same encryption code.How do we know?
Because we speak from experience. Each djca staff member is cloud based and we are proud to say it! We use Google Apps for communication and appointment booking, Box for document storage and collaboration, WorkflowMax for job and customer relationship management, SmartPayroll for our payroll, and of course Xero… and that is only naming a few! These applications allow us to be an almost paperless and totally mobile office.Want to know more?
Get in touch with us today. We are happy to have a chat with you on how the cloud can help your business as much as it has helped us. Without the use of the cloud, we wouldn’t be where we are today helping as many people as we do.
Xero Add-on Focus: Deputy
By . Posted in Cloud Software, Small Business, Solutions, Startups.
This online business software is putting an end to staff roster issues and endless hours of administration. We recently caught up with Kristin from the Deputy team to tell us more about their cool system.
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You can do Anything, but not Everything
By Timaru. Posted in Business Growth, Small Business, Solutions.When you start out in business, you often need to wear a lot of hats – sales, marketing, administration, support, production, coffee maker, cleaner… You name it, it’s probably going to be your responsibility. A few months or years down the track and the business has grown up, and yet a high number of business owners struggle to move on from this ‘hands on everything’ stage. Although we’re all smart enough to realise this approach is neither the best use of our time or sustainable in the long run, business owners still struggle to delegate.
As a business owner, you need the time and the head-space to continue driving towards your goals. We’ve all heard the saying ‘the more time you spend in the business, the less time you can spend on the business.’
Without good delegation in place you’ll find your growth potential is restricted, as if it’s being smothered by an old clunky small business straitjacket.
For us, delegating meant:
– Freeing up the owners time to focus on more exciting things, like growing the business and planning for the future.
– Being one step closer towards creating self sufficient offices that managed themselves, without the owners day to day input.
– Letting our staff specialise in what they were good at, which would create more efficiencies across our internal procedures.
– Gearing us up for good scalability and sustainability, so that we wouldn’t burn out in the next phase of growth.
– Taking the highly time consuming and administrative sales process out of the busy owners workload, by delegating this task to a Business Development team member.
– Not losing out on any quality or managerial control, as long as we maintained good training, systems and communication. (Being supported by integrated cloud systems was a big part of this, as they gave us good online connectivity, communication and collaboration as a team.)
Delegating may seem easier said than done at first. But once you’ve done it, everything is easier. It’s not rocket science, so here are a few simple suggestions to get you started:
– Write a to do list and ask yourself – Is each task the best use of my time? Could I add more value to the business elsewhere? Is someone else in my team better at doing this than me?
– Surround yourself with a good team who are well trained and resourced efficiently. When delegating to someone, clearly define their new responsibilities and expectations, and what sort of ongoing reporting you would like from them.
– Simplify your accounting services into easy to sell and understand bundled packages (more on this next week), so you can delegate this process out to your new sales team. Unlike you, they will actually have the time to make sure that follow up call happens and that new business enquiries don’t slip through the radar.
– Make a real effort to stay available to your team for assistance and guidance, especially in the early days. Remember you’re not abandoning them, you’re empowering them. Communication is key.
– Ensure you’ve got in place the best cloud based business systems. Not only will this provide you with automated processing and online integration, but keep you connected and in control wherever you may be (because now that you’re delegating, prepare to be out of the office more!).
We assume you didn’t get into business just to tidy up the paperwork after you’ve put the kids to bed, and we hope you’d prefer to be working towards a self sufficient business model rather than working all weekend.
So go on, admit you are time poor and start delegating.
How to Keep Investors on Your Side
By . Posted in Business Growth, Cloud Software, Contractors, Small Business, Solutions, Startups.This is a featured Blog from our friends at SeederBoard.
Raising funds for any business is notoriously difficult. Any number of factors can slow things down or get in the way, preventing you from taking your business to the next level.
Once you have completed endless elevator pitches, a frantic search for due diligence paperwork, then working out a fair term sheet, you might finally close the fundraising round.
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