Welcome to Business Advisory Accounting & Tax Services Limited

How top-flight accountants can help businesses navigate financial troubles

High quality accountants are not generally the first thing that comes to mind when your business is in financial trouble and that’s a pity.

Inevitably, your focus is on trying to resolve your cash problems and to raise enough money to stay solvent. If you can get accountants to help you at an early stage, you can approach your problems in a planned and sensible fashion, instead of stumbling from crisis to crisis. Your accountants should also provide you with an informed and unbiased view of your situation and likely solutions.

Your over-riding emotion is likely to be embarrassment at having to share your problems with your creditors, your employees and so on. It is amazing how little helpful content is available for businesses in financial difficulties. Unsure about what to do, most people simply let the situation drift in the hope that somehow a solution will magically appear.

Doing nothing while your business is collapsing around your ears is poor management to say the least and will totally destroy your credibility with creditors and employees alike.

Timely and decisive action is the key to solving your problems but you are unlikely to have the know-how or the experience to know what to do and when to do it.

Call in your accountants immediately and proceed to do the following:

Establish where you stand: Ask your chartered accountant to establish your current financial position, the underlying causes of your problems and whether your business is viable.

Establish if the problems can be resolved with the help of your chartered accountant: address the causes of your problems to ascertain if they can be fixed. Also determine what else you need to do in order to make your business viable.

At this stage, two alternatives will emerge. If your business is potentially viable, you can go on to:

Establish a business revival plan: This is a plan that will identify in detail what is required to be done to turn around your business. Specific actions and timelines need to be established.

If your business is not potentially viable, you should move on to:

Establish an exit plan: This may involve winding up your business and planning to sell assets in an orderly fashion. The objective will be to extricate you with the minimum possible damage.

You are unlikely to succeed in either revival or exit without the wholehearted cooperation of your creditors and your employees. The above plans will provide you with a solid basis for negotiation. Your accountants should also be able to negotiate on your behalf and save you considerable personal embarrassment.

If you feel that all is not going well with your business, you must act decisively and quickly. Commence the process today by hiring an outstanding firm of accountants.

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How your accountant can help you go into business for yourself

Can your accountant help if you are planning to go into business?

Yes, they can and in many more ways than you think. There are many reasons why you might choose to go into business for yourself. Perhaps you like the freedom of being your own boss.  Or you would like to make money on a scale that may not be possible if you were working for a salary.

Whatever your objective, the help of your accountant will be invaluable in achieving it. Your accountant is likely to bring knowledge and insight that you are unlikely to possess. Always keep in mind that your own contribution is critical in making a success of your business though it will take its toll in terms of time, effort and personal sacrifice.

Investigate feasibility with the help of accounting services providers You probably have a business idea in mind already.  But what you need to do before making any irrevocable commitments is to carry out a feasibility study.

Your accountant can help.

You will need to determine:
*  If there’s a market for your product or service?
*  What kind of investment is required?
*  When is your business likely to start making profits?
*  What are the risks involved and are they manageable?

If at any stage, you have doubts about the viability, or if the risk appears to outweigh the reward, walk away from the project.

Research market potential and potential customers:

This is one of the most difficult parts of the process and even large companies find it difficult to predict reaction to new products and services.

Hire a market research specialist if you like, but it is often useful to discuss your data and findings with your accounting services provider.

It is also useful to distribute questionnaires to a few potential customers to determine:
*  Whether they would buy the product or service?
*  If so, at what price?
*  What they would look for in the supplier?

Profile your potential customer:

Put all your findings together and create a profile of the customer that you are targeting.  This will help you create a marketing plan in terms of communication, promotion and pricing.

Create a business plan:

This is where your accountant is going to be invaluable. You’ll need to take all of the above and create a business plan with objectives, strategies and timelines. Your accountant will help you to translate all of your findings and ideas into meaningful financial terms. 

You will benefit in the following ways:
*  You will create a route map and a blueprint
*  You will create strategies for risk management
*  You will create a solid basis for approaching potential investors and lenders

So, are you planning a new business?  Get started on your project straightaway by finding a top notch accountant.

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Brief overview of Goods & Services Tax (GST)

GST is a tax on the supply of goods & services in New Zealand by a GST registered person on any taxable activity that they conduct out. The current rate for GST is 12.5%, although it may be zero-rated for exports.

Some supplies of goods and services are ‘exempt supplies’ and may include:

>  Some financial services

>  Sale proceeds or rent from residential properties

>  Salaries & wages and nearly all Directors’ fees

GST registration will be compulsory if your business’ annual earnings/income for a 12-month period exceeds (or if you estimate that it will exceed) $60,000. 

Generally, you can choose whether to file yoru GST returns on a monthly, bi-monthly or 6-monthly basis.  There are certain requirements about who should or can file monthly GST returns and who may file 6-monthly GST returns.

There are 3 methods to account for GST:

>  Invoice basis

>  Cash basis

>  Hybrid basis

If your revenue exceeds $2million you are not permitted to use the Payments basis alternative.

If you’re selling or are considering selling your services or goods via your website, please refer to the IRD’s section on GST & E-Commerce.

For additional information on GST & how you can register, please call us or visit the IRD’s website.

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Claiming NZ income tax deductions for travel expenses

You’ll generally be entitled to claim a NZ tax deduction for all work-related travel, which may well include:

• Business travel between business premises; 
• Business travel overseas
• Business travel to acquire assets and equipment

Note:  The Inland Revenue Department may request that you support your claim for business travel expenses with appropriate records.

One of the best ways to ensure that you can demonstrate that your travel is business related is to record the nature of your trip.  Keep a log of expenses and receipts. 

This is a good habit because IRD investigations/audits tend to occur sometime (often a few years) after a NZ tax year ends and you’re unlikely to remember the details of your trip then. 

Your overseas travel expenses are tax deductible if you “incur them in the course of your business”.  You will need to separate any element of your trip that relates to a holiday, as this is a “personal expense” and is not tax deductible.

So my tips to legally maximise your travel expenses are to:

1.  Establish correspondence with your business associates or “letters of introduction” well before your trip;

2.  Retain a full diary and/or an itinerary and keep it up to date;

3.  Keep as much contact information as possible from your overseas contacts, such as business cards, brochures and even photos.

Your business agenda/itinerary should, ideally, provide enough supporting information so you can easily calculate all expenses, and make a fair and reasonable apportionment between personal & business expenses.

But remember, that if you are GST registered, you must treat the GST correctly.  Typically, overseas travel is zero rated, unlike domestic travel.

NZ tax rules can be relatively complex, so we recommend that you seek advice that’s specific to your individual circumstances.

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Want to strengthen your business with some business transformation tips?

Business transformation needn’t be a process that’s restricted to the big corporations.  In my experience, as an accountant and business consultant, one of the biggest challenges that most small business owners face is how they cope with the demands of doing everything.  From formulating their business plan, to marketing their services or products, to managing their cash flow, and countless other tasks. 

No wonder so many have of them have so little time to “work on their businesses”; exerting themselves by “working in their businesses” instead.  A subtle difference in wording, I know, but those who focus more on the former will succeed much quicker and experience the rewards they deserve. Read the rest of this entry »

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7 ways to grow your business in a recession

Are you struggling to survive the recession?

If your business’ systems & structure are solid; you have the right team on board and you have your cash flow under control, there is every chance you will survive a downturn or recession.

At the height of our recession, many small businesses focused on surviving, which is hardly surprising.  Some economic & business confidence surveys have recently shown that confidence is starting to increase for many small New Zealand businesses.

For businesses suffering with “poor financial health” (generally when liabilities exceed assets) recovery and adjusting to market place realities as well as seizing emerging opportunities is not easy.

I have put together these 7 tips to help your business develop:

1.  Stem the flow by immediately addressing any worsening position and seizing control of your cash flows and short term lending.  It begins with you identifying ALL of your cash flows (both incoming and outgoing) and determining the nature of those cash flows.  Where possible, minimise your cash outflows until you have developed a “recovery plan”.  Consider using short term lending as a way of bridging or filling any gaps.

2.  Lead.  Re-evaluate your “people needs” (or “human resources”) and ensure that you have the right people filling the right positions in your business.  Challenge the status quo and ask your staff to prove their value to you.

3.  Focus on strategy.  An essential ingredient to rejuvenating your business is your strategy.  Where will you focus your efforts?  What markets will you target?  What opportunities will you exploit?  How will you resource your recovery or expansion?  If you don’t know where you are going, how will you know when you get there?

4.  Assign accountability.  As soon as you have decided on your business’ strategies, you’ll need to develop the right environment to make it happen and you’ll need the right people to help you make it happen.  Establish new job descriptions for your team and make them more accountable for day to day results.  Align their objectives (and pay structures) to your business’ objectives.

5.  Cost re-engineering.  Take the opportunity to fully evaluate your business processes.  Look for ways to reduce cost (without compromising service delivery), increase your sales and improve quality and efficiency.  Identify your core business processes and look for ways to run your business more effectively and efficiently.

6.  Debt re-engineering.  List your debts and liabilities and separate them into short term and long term arrangements.  Consider approaching your creditors and lenders and work out if it’s possible to renegotiate their rates or terms.  Consider using short term lending (temporary overdrafts, for example) until your cash flow and profits stabilise and return to some predictability. 

7.  Communicate with key stakeholders.  Regularly communicate with your business’ key stakeholders.  Keep them up to date to prevent them being caught by surprised or off guard

So, as you can see, by making a few minor adjustments to your business, you will have the right platform to survive any downturn.

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Are you at risk of you becoming another business failure statistic?

Every person who has ever tried to establish their own company knows it’s a difficult challenge to carry out.  I’m in no doubt you know that more than 50% of small business ventures fail in the first 12 months & 95 out of every 100 fail within the first 5 years.  But, that statistic doesn’t alter much from year to year.  Why not? 

Many small business owners start their business ventures with nothing more than a “good” concept or product.  But business ventures remain viable because those who have the dream also know how to implement it and have solid industry background, or they engage experts who have extensive background and will endeavour to make them successful. 

The worry is that several businesses fail because the industry owners don’t have the industry and management experience to propel their dream to the next stage, and completely implement all of the components necessary to stay in business.

Numerous entrepreneurs are overly optimistic and overestimate estimated earnings and undervalue what needs to be undertaken in order to be successful.  One common oversight that new industry owners make is to never “let go” of several jobs that they are simply not competent in carrying out and believe they will save funds by refusing to ask for assist.

Don’t think you can do it all.  There will be tasks that you can’t or should not do by yourself and it’s alright to inquire about 3rd party help.

Part of doing business means allocating time to a large range of government driven paperwork and tasks, excise forms, and proper accounting, including goods and services dues and tax returns. 

Naturally, all you want to do is focus on why you began your business in the 1st place – carrying out what you like to do and being paid for it? 

I’m confident you’d choose to ignore  the bureaucracy and piles of paperwork .  However the reality is that it has to be done at some stage. 

You have 2 choices: Knuckle down and do it yourself; or get some help by outsourcing some tasks to people who will do it better than you.  When you do, you’ll have more time to focus on what you do best. 

As a newbie, you’ll need to ensure you meet the obligations imposed on you by government tax departments, health and safety, customer service and much more. 

Select a reputable partner that you can trust to make sure you lay a good foundation for your industry to build upon as it grows.

As you start to consider the workings of your own business, you’ll probably notice new things concerning your business.  Shifting your mindset and how you think about your company might shed new light and repeatedly present you the improvements you have been looking for.

You have at least set the ball in motion and began on the pathway to a completely new approach of undertaking business.  Don’t end now!

I challenge you to look carefully at your company and put into practice the changes you need to be successful.  Extend the limits of your imagination and do not be afraid to try something new.

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A few straightforward tax planning tips for the small business owner

For many, tax is a sizeable “expense” of doing business.

Business owners have always had opportunities to lessen their tax bill, legally. The focus has always been on the small business owner to “find” an accountant who is prepared to help them. Until they did, they were repeatedly oblivious of what “clever” business owners have already been claiming all of these years.

Every month, I notice entrepreneurs who fritter enormous time, effort and funds setting up and growing their business ventures but facing contant pressure with poor cash flow. When they do ultimately earn a return and have capital to spare, the prize for the success is a tax demand!

Like you, I regard my time as being valuable and I don’t enjoy the thought of working more than I have to, only to pay the tax office. Simply envision how many days you toil for each year solely to settle your tax bill! Simply imagine how many “bonusr” days you would have if you didn’t shell out so much tax.

Time and time again, I have seen too many people pay too much tax due to a lack of know-how, information, and terror from the tax department. How often do you squabble over whose round it is at the pub; or that you have been overcharged 50 cents at the check-out?

Yet extraordinarily, countless entrepreneurs aren’t ready to scheule any time to understand how they can lessen their income tax bill. As a chartered certified accountant who has worked in the UK, Europe and now New Zealand, I have been honored to become involved with many small business owners.

However, many of them have never had the faith to pose demanding questions to their accountants and have never challenged the “status quo”. That’s a shame as so many have taken risks, worked incredibly hard and made countless sacrifices along the way with little remuneration.

Just imagine what you would buy with an extra few thousand dollars if you did not pay as much to the government!

Recently, I had a conversation with a very upset ex-small business owner (who was not one of our clients) who informed me she’d recently gone out of business. As we talked about her business in more detail, it became noticeable that she hadn’t deducted anywhere near all of the expenses that she could have done over the years.

As tax laws changes regularly, every small business owner should engage a competent accountant. Whilst several small business owners try to organise their own tax affairs and think that they could save expert accounting and tax consultants’ bills, a skillful tax accountant ought to be able to save you cash. Tax planning is often broken down into two types:

The 1st one involves identifying the effects of accounting for either one separate business transaction or a group of similar transactions; the 2nd one relates to looking at the overall business structure, either when it’s being set up or at a later stage.

Although, the same tax law applies in both cases, tax planning steps for each will possibly be distinct.

The effect of tax planning is more often than not to either reduce or remove (legally) any tax liability and 2 important steps to do are by allocating income to a taxpayer who may attract a smaller tax consequence; and increasing the amount of taxable deductions you get. So, as the 2009/2010 income tax year draws to a close, take some time to ask your accountant the “tough questions”.

Remember: You may be paying more tax than you need to!

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New Zealand is now ranked the best country in the world for starting a business

 2009 World Bank “Doing Business Indicators” have just been issued and New Zealand has been ranked as the easiest place on earth to start a new business.

Starting a Business indicators evaluates the steps & and expenses related to forming a new business.  This excellent result is primarily attributed to the Companies Office & Inland Revenue Department’s shared project which allows new companies to apply for IRD numbers and also apply for GST registration at the same time, during its incorporation.

Additional factors that contributed were New Zealand’s recently lowered company income tax rates and revised insolvency legislation.

New Zealand also retained its second place in the overall Ease of Doing Business ratings; ranked second only behind Singapore – further showing New Zealand as an excellent overall performer overall. The Ease of Business results is an annual initiative carried out by the World Bank which evaluates more than 180 countries’ economy and policy frameworks. It evaluates each country’s regulatory framework and how that structure translates to achieving regulatory targets – for example: providing separate legal identities businesses.

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How to design your core message

How you design your core message is probably one of the most critical and primary steps in marketing.  It sets the foundation for creating clear, focused and specific marketing messages.  The key message produces valuable strategies for many other marketing applications like your emails, brochures, your “elevator” pitch, sales letters and more.

Developing your core message takes you closer to market control, as your message grabs the attention of your target audience and affirms your branding and product positioning.

Conceive it with insight  
Whilst creating your core message, concentrate on your customers’ problems and come up with practical solutions for them.

The reply to the next questions will unquestionably help you to do so.

Who is your market?  You must understand your core audience, and the factors that stimulate them.

Why do they want your services?  Recognise what their problems actually are, and how you may really help them.

Think about the following points to make your key message more effective.

Keyword analysis - Meticulously evaluate the keyword phrases that you want in your key message to impart your brand and value.  And, make a list of words that you ought to keep away from.

Remember your sales cycle: Your key message must be suited to every part  of your sales cycle.

Message testing:  Assess it to guarantee that it works in all situations.

Train your teams:  Everyone in your team who will use this message must be taught why you’re using it and its consequence.

After you have created your core message, it’s time to use it for all your marketing communications such as your website, professional biographies, introduction letters to potential referral sources, networking introductions, radio and print advertisements and even in media releases or while talking to the media.  

At Business Advisory Accounting & Tax Services our core message is “helping you succeed” because that’s what we firmly believe in.  Our process are designed to do that.  Or staff are taught to achieve that.  And our philosphy as soon as we walk into our office is that.

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