The new IRD mileage rates

The IRD recently amended the mileage rates that can be claimed for business use of a motor vehicle expenditure.  The new mileage rates apply for the 2009 income year, ended 31 March 2009.

Self employed business owners may use one of the following methods to calculate the proportion of business use of a motor vehicle:
*  Actual records
*  A logbook, or
*  A mileage rate

The mileage rate applies in respect of:
*  Self employed taxpayers
*  Up to a maximum of 5,000 kilometres of work-related travel each year
*  Motor vehicles irrespective of engine size whether they are powered by petrol or diesel.  It does not apply to motor cycles

The rate set for motor vehicles has been increased from 62 to 70 cents per kilometre.
 
If business related travel of self employed persons is over 5,000 kilometres per annum then they should use one of these two methods:
*  Actual Expenditure – you will need to keep accurate records to determine the proportion of business use.

*  Log Book Method – You must keep a log book for a test period of at least 90 consecutive days, and then apply that proportion for the log book term (up to 3 years).

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How much is your time worth?

Successful people use many time management strategies to manage and value their time.  This article offers a few simple time management strategies to help you use your time more effectively.

Realise that time is running out
Time is a unique resource, which is finite and expires at the same rate for every single person. When it’s gone, it’s gone…forever! Other key resources like money and people can be found – although I accept that it may not always feel that way!

We all start with 1,440 minutes every day. It doesn’t matter how much demand there is for more time, the supply will never increase…ever.

Time is money
Benjamin Franklin said that “time is money”. Every minute wasted will have a cost. How do you value your time and how much is your time worth? It may be time to decide right now to calculate your worth!

What’s the minimum that you want to earn this year? How many hours will you work this year, after deducting weekends, public holidays & annual leave?

Let’s say that you want to earn $180,000 and you will work 1,856 working hours. By dividing $180,000 by 1,856 you’ll be able to calculate you required hourly rate. In this case, you’ll need $96.98 per hour.

But are you 100% productive?
If you’re in business, you’ll need to adjust this figure to allow for down time, etc. Let’s assume that you’re productive for only 60% of the time. Your time is now worth $161.64 per hour (180,000 divided by 1,856 x 60%).

How tolerant are you now going to be of anyone “stealing” time from you?

Find out where you’re wasting your time
So now you know the real value of your time, what (or whom) are the common time wasters?

“Have you got a minute?”; “Of course, I have time for a quick chat”; “My door is always open”. Sound too familiar?

The 1st major challenge you must overcome to manage your time more effectively is YOU!

Successful, productive people know how to handle the never ending barrage of interruptions by using proven time management strategies. Make it hard for people to abuse your time by respecting your own time.

Learn to say “no” and set yourself goals and deadlines to avoid veering off track. Audit your time to identify non productive areas. Eliminate tasks that need not be done at all. Ask yourself: “What would happen if this task wasn’t done at all?” “Which activities that I currently carry out could be done more efficiently and effective by some-one else”?

Learn to delegate. Learn to outsource. Be tough.

The Pareto Law time management strategy
One of my favourite time management strategies is the Pareto Law (or the 80:20 principles). Pareto’s Law can be summarised as follows:
* 80% of the outputs result from 20% of the inputs.
* 80% of your results come from 20% of your efforts;
* 80% of your income will come from 20% of your clients;
* 80% of your sales will be generated by 20% of your products;
* 80% of your problems will come from 20% of sources;
* And many more

Carry out your own 80:20 analysis and you’ll probably be surprised at the results.

Time is the scarcest resource on this planet. Remember, YOU have a choice on how you choose to use yours. Life isn’t always perfect and you may struggle to follow these principles all of the time. Don’t give up and develop better time management habits to create the freedom and lifestyle you choose. And most of all have fun!

Let me show you a few of my secrets that have helped me save time and money which will work for you too!  You’re invited here!

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How to spot if your business is declining

Much has been written about the current economic climate with some reports suggesting that the number of companies liquidated in New Zealand 2008 was up by 40% on the previous year.

Often, one of the hardest things for any business owner is to admit that their business is declining.  This article will help you spot some of the early warning signs.

The following list highlights some of the danger signs that should prompt you to take urgent action: 

*  You’re losing customers; increasing customer complaints or a loss of a key contract;
*  You consistently fail to meet sales targets & operating budgets;
*  You’re not paying staff on time or they resign to seek alternative employment;
*  Your accounts payables are not paid on time; your accounts have been put on hold or you  dread the ‘phone ringing for fear that it’s someone chasing payment;
*  You cancel insurance policies;
*  You are late paying your tax obligations or, worse still, do not pay them;
*  You deal with cash flow shortages by raising finance using your personal assets as security;
*  Your bank dishonours your payments or your account is transferred to the bank’s debt management team.

If you are experiencing just one or two of these problems, the alarm bells may be ringing from Invercargill to Cape Reinga, sounding that your business may be on a downward spiral.  And if your business is experiencing more of these, then you should take notice, immediately, before it’s too late.

Receivership or liquidation is likely to be a costly and very stressful process and is almost certain to end with negative outcomes for you and your company.  It’s also a common misconception that Directors can’t be prosecuted if you trade as a limited liability company.  Liquidators can, and often do, seek to prosecute a company’s Directors if they can prove that they have traded recklessly by continuing to trade whilst the company is insolvent.  Liquidators are often forced to sell assets at below market value for a quick sale.  They may also enforce personal guarantees that you have given.

To avoid the ramifications of this, you should consult with your professional advisors urgently.  Remember:  They have the skills and experience of helping businesses.  They should be able to develop an action plan and implement it to address these issues.  This will probably include:
*  Identifying ways to gain more sales;
*  Reviewing your existing expenses to develop appropriate cost reduction strategies;
*  Existing productivity levels to establish ways to measure and improve them;
*  Reviewing your working capital requirements to help remain solvent;
*  Reviewing your business structure, including your current staffing;
*  Developing realistic financial forecasts and plans to monitor business performance;
*  Securing short term funding by negotiating with your current bank or other lenders;
*  Looking at potential opportunities to sell or merge part or all of your business.

Their 1st step will be to facilitate your ability to continue trading for the foreseeable future.  You’ll stand a better chance if you are honest with both them and yourself.  You’ll need a documented business plan with realistic assumptions and financial forecasts as many lenders now insist that you have them. 

If you are in any doubt or are currently worried that your business is declining, contact your professional advisor immediately.

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How to improve your cash flow with early tax refunds

Many rental property owners generate taxable losses for the year. 

The taxpayer generally has 2 options:

• Wait until the tax year ends on 31 March, prepare their rental property tax return and then wait up to 3 months for the IRD to process their income tax refund.  If the tax refund is significant, extra scrutiny from the IRD may further delay processing.
• Apply for a special tax code.  With a special tax code an employer deducts PAYE from the tax payer at a lower rate. Therefore they effectively receive a portion of their tax refund every pay period instead of receiving one refund after their tax return has been filed.

This may not suit everybody as some tax payers prefer the lump sum tax refund.  However for those tax payers looking to increase cash flow, option 2 may be better.

This is how a special tax code works…At Business Advisory Accounting & Tax Services, we prepare a brief forecast for your rental property to estimate the loss for the forthcoming tax year and submit it to IRD for approval.  After approval, your employer deducts less PAYE from your regular salary, giving you the benefit of the tax loss now.

Both options produce the same tax refund but option 2 allows the tax payer to use their tax refund a lot earlier.  This “extra” cash may come in handy to repay loans, which would further increase cash flow as a result of paying less interest.

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The modern day bank manager

Over the last few weeks, many of our clients have expressed their deepening concern over their bank’s attitude to helping them through difficult times.

During the recent good times, many of them were “courted” by their bankers to take out bigger loans; given credit cards with high limits and nothing seemed to much to ask.  Money was rolling in for the banks.  How different it is now. 

It appears that now the “going” is getting tough, many small business owners face a much different attitude from their bank manager.

I used to work for the Barclays Group in the UK before moving to New Zealand, so understand that the banks are commercial enterprises that need to charge for their services.

But how many of you feel that the balance has shifted too much and when you need help from the banks, they simply turn their backs on you? 

I recently experienced my bank manager ”kindly” opening a current account for me (without my permission); charged me account opening and monthly fees and then hounded me when I refused to pay them!  She was shocked when I asked her who I should send my bill to for the time I had wasted contacting them to sort their error out!  

Whilst not trying to undermine the affect the current economy is having on many small businesses, I thought that a little light relief was in order.  The following video from the Monty Python team offers a few practical tips on raising finance in testing times!  Click here for 4 minutes of tips 

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How to survive the downturn

The current world wide economic downturn has, again, highlighted why small business owners must actively scrutinise their finances.  Many small business owners still rely on old and/or out of date information.
 
Last week, I recently met with a new client who had experienced a 25% decline in their sales.  When I asked them about their cost structure, they admitted that they had no idea and hadn’t had any financial statements prepared since 2006!!

Not only had they ignored the tax man for 3 years, but it’s also poor business practice. 
 
Recessions often provide a “wake-up call” for many business owners as it forces them to evaluate what they are doing.  In the current uncertain climate there is very little excuse for ignoring your key financial indicators. 

One efficient way to understand your business’ financial performance is to prepare a simple cash book.  For as little as $100 per month, you can generally get a book-keeper or accountant to do this for you.   
 
Understanding your current profitability, cash flow and break-even points will help you to review your spending and help you to set budgets.  This may include putting money aside for tax liabilities and owners’ drawings/salaries.

I have seen far too many small businesses suffer because their owners failed to meet their tax obligations or pay themselves.

Talk with your accountant.  They should be able to advise you how much to set aside for tax – I accept that this may reduce cash flow in the short term but it may avoid unnecessary surprises later.  Consider setting a regular amount aside in an interest bearing deposit account or use your credit card for some expenses to take advantage of the interest free periods that many credit card companies now offer.  
 
Also examine your expenditure as there may be ways to easily reduce costs too.  I have put a complete stop to anyone purchasing anything in my businesses without my express approval. 
 
This had an immediate positive impact on our stationery, printing and postage expenses.  Remember it’s your money that your employees are spending…not theirs!

I am currently consulting with a client who “shouted” their staff morning tea twice a week.  On my advice, she now buys the ingredients and asks her daughter to bake home-made muffins and she also now provides on-site coffee facilities.  She is delighted that she now saves over $700 per month from just this one simple change.  What small changes could you make?
 
But be careful…many small business owners cut back on the wrong expenses.  Marketing and sales remains an important area for many of them.  However, I have lost count of the number of clients who blatantly waste money on marketing and advertising campaigns that simply do not work.  They simply throw more money at it, hoping that the ‘phone will ring.  For more marketing tips, visit www.themarketingdude.com

Is it time that you reviewed your business finances?  Who knows…a few hours of your time may result in some pleasant surprises.

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How to improve your reading speed

What if you could TRIPLE your reading speed in under 60 minutes?

That was the question Dr Michael Masterman asked me to consider — when he sent me a review copy of his new speed reading audio course three months ago. And you won’t be surprised to hear that I didn’t believe it!

Now, I’ve always avoided learning how to speed read.

Why? Because I always believed it’d take hours of training to really “work properly.” And I’d heard a couple of horror stories too. (One very well-known six-CD course essentially suggests listening to fast music while reading. Now that’s incredibly draining – and not exactly suited to a slow-paced romance!)

Michael promised I would literally triple my reading speed in well under an hour (without fast music or other gimmicks!) — and said that his audio course included tests to prove it. He also said I’d be able to maintain that super-fast reading speed, even weeks later.

I took the course. It worked. And I’m STILL reading at lightening speeds!

That’s exactly why I wanted to write and tell you about Michael’s “Speed Reading Secret” course today!

But don’t listen to me chat about it. If you want to blast through e-mail messages, Web pages, revision, books or reports (and pick up an amazing new vocabulary along the way), then check out his site:

The course includes tests, so you can literally see just how well you’ve improved. And if you don’t improve enough, claim your money back through his guarantee!

Michael predicts the average person could save one day a week following his advice. I think he’s probably right.

Enjoy!

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What are the ways to eliminate price objections?

Almost everybody in sales has suffered price objections at some point.

However, most salespeople follow the wrong path and try to grab a potential customer by asking invasive questions like:

“If I can offer solution to your such and such problem, will you buy that one today”? or
“Holding back is the only thing that you can do”? or

“What can I do to earn you business”?

Hang on! Such manipulative sales tactics are the real reasons that make the prospective customers feel uncomfortable and they find themselves in a state of pressure to buy that product or services.

But the ultimate answer to this is to eliminate the objections altogether.

You can achieve this by focusing on ways that  will help you meet the requirement of your prospective customers.

It is also a fact that the salesperson who asks more and more questions face lesser objections at the time of sale.

The reason is quite simple; that means that the salesperson reveal many potential objections during the early stages of sales cycle. Moreover, there are plenty of questions that are taken up by a sales person that will help you reveal potential objections:

“What is the time frame that you are working with”?

This question leaves a good effect when asked, which means that “When do you think you will buy”, this will help people by putting them on a self-protective side.

“Who else is involved in the decision process”?

This is the most important question that is usually asked by the salesperson. The main purpose of this question is to find out the other person who is involved in the decision making process.

So, if the final decision is influenced by someone else, then you can end your search, and try to close the sale even without his or her presence.

“Who else are you talking to?”

This is the most frequently asked question. This will enable you to understand what other companies or vendors are making their bids on a particular project. This will help you in differentiating yourself from your respective competitors.

“How was the experience?”

You can answer this question based upon your previous experience with your prospective customer.

You can now position your service or product to excel their experience at your competitors.

So, these are a few tips that will help you ask more pertinent information from your potential customers, which will ultimately allow you to position your service and product in a way that suit best your customer’s needs and demands.

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Terms associated with ongoing financial meltdown

Given all of the problems with the current global financial markets, you might like to reacquaint yourselves with the following terms:

CEO –Chief Embezzlement Officer

CFO– Corporate Fraud Officer

BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius

BEAR MARKET — A 6 to 18-month period when the kids get no allowance ; the wife gets no jewelry, and the husband gets no sex

VALUE INVESTING — The art of buying low and selling lower

P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing

BROKER — What my broker has made me

STANDARD & POOR — Your life in a nutshell

STOCK ANALYST — Idiot who just downgraded your stock

STOCK SPLIT — When your ex-wife and her lawyer split your assets equally between themselves

FINANCIAL PLANNER — A guy whose phone has just been disconnected

MARKET CORRECTION — The day after you buy stocks

CASH FLOW — The movement your money makes as it disappears down the toilet

YAHOO — What you yell after selling it to some poor sucker for $240 per share

WINDOWS — What you jump out of when you’re the sucker who bought Yahoo @ $240 per share

INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse

PROFIT — An archaic word no longer in use

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Choose a good domain name to help promote your business

Did you know that a good domain name can give a big boost to your online business?

In fact, it can help you take your online business to new heights.  Almost every successful company, big or small, is using the Internet to reach its target customers and increase its website traffic. They create their commercial site; create awareness of their brand and market their products and services online.

Personally, I use a company that is based in Australia as I find their customer service and time zones suit me.  Please visit here if you’re interested in using them.   

But does that mean every entrepreneur who opens a commercial site succeeds in conducting online business effectively and in increasing his/her website traffic. The answer to this question is an emphatic “No”. 

You have to be smart enough to grab the opportunity and make your presence felt over the Internet by enhancing website traffic. This will, in turn, give impetus to your onine business promotion campaign.

Now, how do you achieve this?

One of the most important means to increase website traffic is to create a catchy domain name.  Choosing a good domain name and registering it properly can work wonders for your online business. Building a site does not suffice the purpose of online business promotion. There are lot more things that you need to do to achieve your company’s goals.

Creating a domain name is just one aspect but a very essential one. You need to understand creating any domain name won’t help. You have to come up with some unique ideas and decide on a unique name that is catchy and meaningful. 

A Domain name represents your website address and can end with anything such as .com, .org, .biz, or .info. It is necessary to select a relevant domain name, something that relates to your company or its products. Many people think that they should keep the domain name of their site in the name of their company but top shot Internet entrepreneurs say that you should instead keep a name that reflects the main aspect of your company as in what your company deals in.

If Internet users get a quick idea as to what your company has to offer them or what is in store for them if they click on your link, there are greater chances of your potential customers visiting your site, thereby leading to sales conversion.  Be clear in your thoughts and do not confuse your site visitors. It is good to maintain some mystery but don’t hide the thing completely.

Give a clue to Internet users as to what are the benefits they are likely to get if they see your website link and go through its contents. A good idea is to include search engine optimised keywords in your domain name, making your business promotion campaign successful. 

Register several extensions of your website such as abc.com, abc.net and abc.org. This will prevent people from copying your domain name and using it to promote their online business. There are many websites that allow you to register your domain name. Conduct your study and select an authentic registrar.

Further information to help you with your marketing can be found at www.themarketingdude.com

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