Welcome to Business Advisory Accounting & Tax Services Limited

Welcome

Welcome to the Business Advisory Accounting & Tax Services (BAS) website and thank you for visiting.

We’re a firm of Chartered Certified Accountants based in Auckland with clients all over New Zealand.  We provide high-quality accounting, tax and business advisory services at affordable rates to small and medium businesses.

Before I introduce us, I’d like to clear up some common misconceptions and then I’d like to focus on how we can help you.

I want to dispel these common misconceptions you may have about accountants:

• Top flight accounting & tax services are intended only for large companies and are out of reach for small and medium businesses – Not with us.  We use our skills and experience to focus on helping small to medium sized businesses like you;
• It’s okay to economise on these services in order to save money – It’s not always the case, but we recognise that we need to add value;
• Accountants that provide accounting & tax services are primarily interested in inflating their billings as much as possible – Again, not with us as we pride ourselves on our transparency and encourage you to compare our fees with others.  We don’t hide anything.

Like many, I’m sure you’ve experienced frustrations with your accountants such as these:

• “My accountants just don’t seem to care – I’m just a number”
• “Now and then, all I need is some practical business or tax advice – not just mumbo jumbo bean counter language”
• “I quite often want information that will help me but I can never it in one place”
• “I wish I had accountants who understood what I need”

Please allow me to explain how we’re different.

I urge you to regard our fees as a tax deductible business investment, not an expense.  As a prudent business owner, we’d like you to make your decision on which accountants & business advisors you hire based on the return on your investment or value added;

Some key benefits that we bring to the party that I’d like you to consider are:

• We want to save you time and effort (not to mention stress) to concentrate on what you know best, whilst leaving accounting, & tax to dependable and efficient specialists;
• We want to achieve maximum tax savings for you;
• We know that you’re keen to know exactly what your accountants’ fees are, so you can make informed decisions and budget for them accordingly;
• We know that you’d welcome a personal service that’s tailor-made to your specific requirements;

We understand that you want confidence that your tax returns and other returns are being handled by professionals who will file them correctly, and on time.

At BAS, we have a competent, friendly team of accountants & tax professionals who are committed to making all of the above happen for you, with unparalleled levels of dedication and integrity.

Since we’re committed to “walking our talk”, I’d much rather offer you a concrete demonstration of our skills.

So why don’t you get in touch with us on 09 449 0417 and let us show you that some accountants really do care and want to help you succeed.

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You And Your Business Idea

One age-old question has puzzled many entrepreneurs to this very day – “what does it take for my business to succeed?”

Many budding entrepreneurs, with aspirations of succeeding, dive headfirst into their new business venture. Some triumph; others fail.  With so much uncertainty in the current economy, many hopeful entrepreneurs may have to toil hard just to keep their business viable, let alone make it thrive.

3 fundamental factors to succeed in business

There are myriad factors to consider when starting a small business.  Many will agree that three critical factors will help facilitate success. They are:  Having a viable idea; relevant skills & attributes; and adequate capital to invest in the business to sustain it until it generates income on its own. 

How viable is your business?

It may seem obvious, but one critical aspect is to test your business’ viability before your start.  Having a good idea is not always enough.  You must have a market and customer base that want your products or services and will pay your asking price. 

To begin, do some research to determine if there is a specific market need that is not being satisfied by others and then form a market niche using your results.  This will provide a solid platform for your business with opportunities for it to grow into a viable enterprise.  Solicit feedback from potential customers to determine if there is a market for your products or services and what price they’d expect to pay.  This feedback is an essential part of building your business.

Acquire a good measure of the competition you’ll face, since it will give you a clearer understanding about what demand exists for your products & services.  If you can’t use the information you gather to gain an “upper hand” against your competitors, you’ll find it much harder to turn your business idea into a viable one.  Your data gathering will enable you to create your business plan – tailored to you and your customers’ needs.  You might make minor adjustments, major changes or even abandon your business idea altogether.  But the exercise will be worth it and will set you on a path to achieving success.
    
Consider your skills & attributes

It’s essential that you have “what it takes” to turn your business idea into a sustainable business.  Your knowledge & experience, as well as your personality, skills, attitude & commitment to your business will add great weight behind your quest for success.

But if you are lacking in some areas, don’t panic.  Admittedly, having natural ability will be a huge advantage for many aspiring entrepreneurs.  But that doesn’t mean you have to start off with all of these attributes.  You can acquire experience & knowledge as you go, and seek advice, support and resources from others.  Many will argue that other qualities such as; ambition, passion, drive, resilience, commitment, self-confidence, belief & discipline are just as vital and separate the losers from the winners.

Can you afford to start your own business?

To earn money, you may need, at first, to invest or spend money.  Having adequate funds at the outset is likely to be essential to pay for your business’ overheads and your own living costs until your business produces a livable wage for you.  A few achieve success almost instantly – but most do not. 

Use the 3 tips in this article to give yourself a “head-start” and make your business the success you dream of.

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Ask and you will find – some great questions to ask yourself

I’ve been scribbling notes in note-books, backs of beer mats, etc for many years now.  My notes are typically about quotes that motivate me, ideas that spring to mind & books to buy or get from the library.

Do you take notes?

Great questions can generate great ideas & insights, provide much needed clarity and help stay focused.

Here’s a quick summary of some questions that you could ask yourself:

What have I been putting off (procrastinating) recently that I could/should begin today?

>>  By asking yourself this, you’ll be taking a giant step towards something better.

What’s the BEST use of my time right now?

>>  Delegate those tasks that you can get someone else to do more cost effectively & focus on the important tasks that’ll propel your business forward.

What tasks or jobs could I eliminate or do much less of, so that I can achieve MORE in my week?

>>  Many business owners become obsessed with looking busy (I call this busyness).  But being busy can be akin to laziness – taking the easy route and not the hard one!

What MUST be done in my business?

>>  George Bernard Shaw wrote “Doing what needs to be done may not make you happy, but it will make you great”

What can I do right now to create more value in my business?

>>  Rather than complaining about falling income, demanding customers, etc, ask yourself this searching, but powerful, question to help you produce some great ideas.

I believe that the quality of the question generally dictates the quality of the answer & many great things are achieved by asking a question.  Ask any 4 year old with a thirst for knowledge!

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IRD tax filing dates

It’s that time of year when the nights are colder, and the IRD want their pound of flesh from taxpayers.
 
For the majority of Kiwi tax payers, the last day for filing their 31 March 2011 income tax returns is this Thursday, July 7 2011, unless their returns are prepared by an IRD approved Tax Agent. 
 
Tax Agents have a unique arrangement with the IRD which allows them to file clients’ tax returns over a 12 month period.  This “extension of time” (EOT) arrangement means that many tax payers have longer to file their returns, without fear of late filing penalties.  There’s also an added benefit in that tax payers generally receive an extra 2 months before their terminal tax is due.  Payment due dates for clients with a Tax Agent is extended from February 7 2012 to April 7 2012.
 
So, if you’ve just started a new business venture, bought an existing business, or invested in a rental property & haven’t signed up with a Tax Agent yet, now is the perfect time to do so.  But be aware.  Not all Tax Agents are qualified.  Choose a Tax Agent who belongs to a professional body and is subjected to strict professional rules by their supervising body. 
 
You don’t need to submit your records to a Tax Agent immediately but you must be linked to their Agency by July 7 to qualify for the EOT arrangement.
 
Business Advisory Accounting & Tax Services is an approved Tax Agent with the IRD, and by becoming our client you qualify for the same EOT arrangement as all of our other clients.  You will also receive ongoing business, tax & and investment property advice as we focus on delivering cost effective small business accounting & tax services that not only save our clients money, but leaves them to focus on developing their businesses. 
 
To get started with us, please download our “Authority to Act” form in our resources section and return it to us so we can legally act for you.

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How good are you at customer retention?

Retaining customers has never been more important than it is today. 

A lot of businesses take pride in being excellent at customer acquisition.  Some business owners even use this as a primary measure of their success.   It’s probably a good time to ask yourself how much time and effort you actually spend in acquiring new customers, formulating marketing strategies, regulating lead generation expenses, finding lead distribution channels, and controlling conversion rates.
 
There’s no doubt that prospect generation is essential in running a business.  But if you think about it, having your best people running around winning new customers does not necessarily differentiate you from your next competitor. They are most likely doing the same things as you – devising new strategies to acquire more customers and converting your existing customers as their own.
 
You have to be wary of just chasing the next best customer.
 
Ask yourself the following:
 
*  Do the people in my company truly understand that their job is to keep existing customers?  Standard customer service isn’t always enough – You have to be certain that your team is dedicated in retaining your existing customers, to help ensure that they continue to do business with you. 
      
If you answered yes, there should be a direct connection between your team’s compensation and the positive or negative outcome of retaining customers – How will they feel the loss if one of your customers cancels their business with you? 

*  Do you have clear-cut retention goals incorporated into your business plan? Have you made these retention goals clear to all your team and how these goals may affect your business if they are not achieved?

*  Do you have a reporting process to determine if your company’s performance meets its goals? Are your managers regularly updated about the company’s performance against the current business plan?
 
Every dollar spent on customer retention generally exceeds the benefits and returns of money spent on acquiring new customers.  This is especially true in today’s challenging economic environment.  However, that’s not to say that you should not invest in customer acquisition as well. 
 
Finally, you need to distinguish the difference between retaining customers and providing customer service.  Customer service is the process of providing your customers’ needs with high levels of competency, efficiency, and customer satisfaction. There is an emphasis on customer satisfaction, which underscores the pleasure to serve rather than being a chore.
 
On the one hand, customer retention is about valuing customer relationships; finding ways to serve them better; or offering something more to ensure their loyalty and satisfaction.
 
How can you enhance the service you’re currently providing your customers?  Do your customers have needs which they haven’t realised they needed? 

If you don’t ask yourself these questions now, you may find your competitors enticing your customers away by fulfilling their needs!

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4 tips to survive a weak economy

Like the Auckland weather, it’s often just as difficult to predict the economic climate accurately.  During a recession or economic downturn, disaster can quickly strike small business entrepreneurs who are not prepared to weather the storm.

Fortunately, all is not lost.  You can stay strong in lean times and help is often at hand to help you keep your small business operating during tough times.  Here are 4 tips that I have put together for you to survive a downturn:

Reduce overheads

Cash flow is the number one killer for small businesses and the last few years has seen record numbers of bankruptcies and liquidations.  It’s crucial to manage your cash flows, at all times.

Reducing overheads means finding ways to keep more hard earned cash in your bank account.  Look to trim off some of your administration overheads – can you email quotes, invoices, etc, rather than pay for postage?  Look for opportunities to produce your product or deliver your service more cheaply – do you need to produce as much?  Review your rental and loan agreements – could you renegotiate better terms?

Staying solvent is crucial and trimming the fat on some discretionary overheads will help.  Use your time effectively. 

Maintain good lines of credit

I recently wrote about maintaining good business relationships with your Bank Manager.  Banks also have to adapt to market conditions and regularly change strategies to survive.  One way they do this is by reviewing their lending policies and tightening their belts. 

Don’t give them any reason to terminate your loan.  Make your repayments on time.  If you have a good track record with your bank, you’ll probably be an ideal customer for them, so you should still be able to open lines of credit with them if you need a “helping-hand”.  Lines of credit can give you a financial buffer to ease cash flow.

Revise your marketing

I’m not suggesting that you slash your marketing budget.  But you should look to make sure that your marketing budget is used wisely and that you’re not wasting money on advertising that doesn’t work for you.

What is your target market?  Sit down and review your current marketing strategies.  Look to tailor your marketing efforts so that your money and effort is allocated towards your preferred customers.  Consider using the internet more – with the correct approach you’ll be able to focus on targeting the right customers for your business.

Seek out an Online Publishing & Media Distribution firm who specialise in designing highly focused, marketing campaigns.  

Seek help

Government departments know that small business entrepreneurs are finding it tough at the moment.  They understand that small businesses contribute significantly to the economy and want to do whatever they can to help. 

If you’re finding it difficult to honour your tax and payroll commitments, don’t be afraid to discuss repayment options with them.  Or better still, ask your accountant to liaise with them – you’ll find that a good chartered accountant or business advisory services specialist will have skills and experience to negotiate on your behalf.

Many small business entrepreneurs do survive economic downturns.  The successful ones take responsibility and seize the opportunity to analyse their situation and then act appropriately. Keep your Bank Manager happy, stay in touch with chartered accountant and use a small business advisory services specialist when necessary.

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Your bank manager – friend or foe?

Maintaining a good businesses relationship with a financial institution (such as a bank, credit card company, etc) has always been important.  This is becoming more prevalent as many lenders are consolidating, borrowing becomes harder and options become scarcer.    

In the past, we may have regarded this relationship as a partnership, where each party stood to gain something – a classic win/win situation.  Sadly, as the credit crunch continues, this is becoming less so as banks are tightening their belts.  But for many business owners, especially ones who are feeling the pinch, or seek funds to help grow their businesses, this relationship is important.  It needs to be fostered.  If your bank has lent you money for your business, it’s important you create the right environment so they continue to lend to you.    

Lenders hate surprises.  Keep communicating with your bank even if you are irritated by its approach.  Ensure that your correspondence and communication remains cordial – remember that honey and sugar catches more flies than salt and vinegar.  Inform them of any major plans you may have for the future and don’t be afraid to ask your bank manager for advice and help.

Most banks want to be confident that:

*  You will be able to meet loan repayments from your business’ operating activities (or net profit before interest and tax)

*  You have adequate security – banks are continuing to decrease their loan to value ratios (LVRs) regularly and will regularly adjust asset values, which continue to decrease.  Banks will rarely value your assets at book value or open market value and will take a very defensive stance by valuing them at “fire sale” values.

*  Your business will remain solvent and continue to trade, profitably.  Build some “margin” into your financial projections as most lenders will adjust your financial assumptions as a precaution

It’s important that your bank manager knows your business.  Do you rely on sales at peak times of the year?  Do you understand the market you’re in?  Bank managers are likely to have dozens of lenders to look after and can’t be expected to understand each customer’s markets thoroughly.  But look to ensure that they know yours, as you’ll find it much easier when you need their help.

Remember that maintaining a healthy business relationship with your bank may be the difference between success and failure.  They are a business too – don’t give them a reason to seek an alternative for your custom.

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How these 3 common misconceptions about accountant affect your business

Many small business owners assume that a healthy business will remain healthy – despite overwhelming statistics that suggest that 80% of businesses fold within 5 years.  Just like you take your car for regular servicing, it’s just as important that you remain proactive and give your business a warrant of fitness. 

You pay your mechanic to diagnose problems with your car before they become serious or cost more to fix (or even worse – potentially dangerous).  Equally, when problems are evident with a business, much bigger issues (and potentially threatening the business’ existence) can be averted. 

My team and I at Business Advisory Accounting & Tax Services pride ourselves on being more than accountants.  For many of our clients, we provide monthly management accounts to help them perform their own “business health checks” and help them project cash flows and profits.  Correctly timing some financial transactions can affect a company’s bottom line quite dramatically.

Another misconception is that using an accountant is expensive.  A small business, operating under the benefits of a limited liability structure, should be able to have monthly management accounts, annual financial statements and tax returns prepared for less than the cost of a latte & biscotti in a swanky Auckland cafe. 

Isn’t it worth investing less than $5 a day to eliminate the hassles and stress of maintaining your books?  Wouldn’t your time be better invested growing your business, rather than crunching numbers?  It’s well known that businesses that do not use an accountant are more likely to be “selected” for an audit.

The final misconception is that business owners think that they can do their own accounting.  And in many cases, they aren’t qualified to do so.  I know that as New Zealanders we are famous for our DIY approach.  But there are some tricky jobs that are best left to professionals. 

I wouldn’t attempt to build a new extension on my home, so why would a builder handle their own book-keeping?  The person who carries out the same job, day in-day out, will have the proper training, skills and tools and complete the work more efficiently.  My extension would probably fall down or leak after the first storm.  At the same time, the builder’s business may be “leaking” cash or is unprofitable. 

Just as I may not detect a small leak in my roof for a while, a small business may “leak” cash and it may be too late to fix.

I hope this article has dispelled a few common misconceptions about accountants.

If our monthly management accounting service sounds like something that you might be interested in, Mark Gwilliam can be reached at 09 449 0417.

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Survive 2011 With 4 New Year’s Goals

As you settle into 2011, you may be sighing with relief from the last couple of years.

You may have made resolutions or goals to do things differently for the next 12 months.  And for many of you, many of those resolutions will be broken by the end of January. 
 
Understanding that most people break their resolutions is not a good basis for not even trying, is it?
 
To help you prepare for the year ahead, I’ve compiled 4 tips for 2011 for you to think about:

Focus on adding value
The last couple of years have forced many small businesses to reduce debt, review costs, be more efficient, trim stock levels and much more.  Make 2011 a year about adding value to your customers, as well as adding value to you, your family and to anyone else connected to your business.  Ask yourself why you are in business and why your company is in business.  If you or your business is not adding value, you’re going to find 2011 a difficult year.

Take nothing for granted
I’m certain you already know but the world and the economy are constantly changing.  You must be ready to adapt.  Becoming complacent by assuming that your customers’ needs are the same as they were a few years ago will result in you being on the scrapheap sooner than you think.  You must innovate and be prepared to modify your product or services.

Learn, up-skill and utilise your strengths
Identify and enhance your top 3 strengths.  Competition is likely to become even fiercer, so you must find a way to stand out from the rest.  Your best option is to review what you already excel at and then build on those strengths

Take a calculated risk once in a while
Entrepreneurs have always taken risks.  They just don’t take silly risks or gamble with their livelihoods.  Think outside of the square as risk and innovation may mean the difference between success and failure.   

For me, resolutions symbolise optimism and goals.  I applaud anybody who makes them…and I challenge you to stick to yours! Transformation can occur and often does; it’s achievable for you to stick to your resolutions.

Whatever you choose to do in the next 12 months, I wish you and your families a healthy & prosperous year ahead.

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7 ways to pay your accountant less

Using a Chartered Accountant and paying their accounting fee is often considered a normal part of running a business. It’s important for you to consider what you’re getting for your money.  Before shopping around to reduce your accounting fees, compare the value that you’re receiving from your accountant.

Let me elaborate with some examples:

Scenario 1: You pay $3,250 during the year for monthly management accounts and statutory tax returns. Over the year, you’ve made a couple of ‘phone calls and been given some practical business advice. After following some of the advice, you increase your profit margins by 15% p.a. with very little extra effort.

Scenario 2: The only time you talk with your accountant is at tax time and your accounting fee is $1,750. You receive no monthly management accounts to identify any early warning signs and you receive no advice at all.

Which accountant do you recognise? Which accountant will give you more value?

I am often asked how people can receive even better value from their accountant.  Here’s a list of just a few things you can do:

* Get them to explain how you could organise your financial information better and how accounting software would help you.

* Most accountants charge for their time (in 6 or 12 minute units) and therefore if they have to contact you to locate missing records your accounting fees will increase. Retain your bank statements, invoices, cheque stubs and deposit books and keep them neat and tidy and in order as your accountant will need them.

* Keep it simple.  If you simply need a basic set of financial statements and tax return, tell your accountant.  We are often instructed to prepare detailed financial statements using a client’s complex chart of accounts. This additional work adds to their accounting fees and is often unnecessary for most small businesses.

* Separate your personal and business spending. Open a new account with your bank and pay all business expenses from that account as much as possible. Try to avoid paying cash for your business expenses and personal expenses (drawings) as these can add to your accountant’s time. Try to remember to keep receipts and write on each one a brief description of what you spent your cash for.  Consider putting yourself on your payroll as it’s a good financial discipline to get into.

* If accounting is not your strong point, consider getting someone else to do your book-keeping.  If you don’t need someone full time, hire someone on a part-time basis or maybe your accountant has book-keeping staff who can help you.  Accountants often have junior staff doing book-keeping work at reduced rates.  You’ll often find that paying them will save you money as their accounting fees are tax deductible and they should do the job in less time than you will.

* Discuss decisions that will have a major financial impact on your business with your accountant before making them.  Poorly considered business decisions that affect your business’ financial performance may be very costly to rectify after you have made them.

* Speak with your accountant every few months or so to establish feedback on your business’ performance.  The stability of your business and its future health is way too important to take uncalculated risks.

Don’t be tempted to save a few hundred dollars by going to a “cheap” accountant because it is sure to cost you in the medium to long term. If it’s just number crunching you want, there are plenty of accountants out there to help you. But you should view your accounting fees as an important investment.

If it’s value for money you’re after, I hope you’ll use these tips to ensure your Chartered Accountant gives you more than bean counting.

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The emerging benefits of debt factoring

One question that clients often ask is “how can I get people to pay me quicker?”.

As they say “cash is king” and with ever spiralling bad debt due to the recession, everyone seems to be feeling the pinch.  It’s possible that your customer is waiting to be paid before they can pay you.

But there are options for you to boost your cash flow.  If you are a small business owner and extend credit to many of your customers and don’t want the hassle of chasing debts, consider collecting your debts via debt factoring or invoice discounting.

1.  Debt factoring – With debt factoring you “sell” your credit sales to a debt factoring company for a discount.  In return, the debt factoring company advances a percentage of your invoice totals upfront to give you some immediate cash flow.  Typically, you’ll receive about 80% upfront.

You can choose a full service debt factoring option, which sees the debt factoring company carry out much of the adminstration associated with collecting accounts receivables (sending statements, chasing late payers, carrying out credit checks, etc).  The debt factoring company charges a small adminstration fee.  But compare this to the time it takes you do all of this, which is probably preventing you from focusing on growing your business.

2.  Invoice discounting – The 2nd option is where you discount your invoices to a debt factoring company.  Essentially, you’ll be given a “line of credit” by the debt factoring firm that you can use.  Again, you’ll be charged a small administration fee and you’ll need to pass a credit check as you are effectively being given credit. 

Most debt factoring firms won’t accept all invoices.  They are unlikely to accept invoices in dispute and/or invoices overdue by 90 days or more.

So, if you’ve got a good track record, sound terms & conditions and a reasonable level of turnover, consider using one of the many debt factoring companies.  Your cash flow may thank you for it!

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