McLEAN AND CO. Chartered Accountants

Accounting                               Taxation                                   Business Advice and Development Assistance                                        

 P.O. Box 10 , Clive         133 Main Rd, Clive           Tel. (06) 8700952          Fax. (06) 8700955 

Email murray@mcleanandco.co.nz                                  Website www.mcleanandco.co.nz

 
EMAIL NEWSLETTER  JANUARY 2014
 

Welcome again to the McLean and Co. Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  

 

NEW CLIENTS

We are happy to accept new clients.  We would be happy to assist colleagues and acquaintances as new clients.

 

INDEX

  1. Reminder- Outstanding Year ending 31 March 2013  Income Tax Returns due for filing by 31 March 2014

  2. Financial Planning for the New Year

  3. Reasons why People don't get Rich

 

REMINDER- MARCH 31 2014 IS THE FINAL DATE FOR FILING YEAR ENDING 31 MARCH 2013 TAX RETURNS

A friendly reminder to clients who have not contacted our office for filing of your year ending 31 March 2013 Income Tax Returns as yet- they are due to be filed by 31 March 2014.  It is therefore recommended you contact the office in the near future, as your records will be required sooner rather than later so this date can be met.

 

FINANCIAL PLANNING FOR THE NEW YEAR

Detailed financial planning should be completed at least once a year to enable you to make good business decisions about the financial resources your company needs to continue its operation and help it grow.

Your business will only be as strong as its financial plan. Make sure you have a plan that projects your cash flow for the upcoming year. Then you can find the resources to get the funding you need before you actually need it.

With January traditionally being a slow month to do business, there’s an opportunity for you to do some serious financial planning for the upcoming year.

Cash Flow Forecasting

It’s smart business to forecast future cash flow. A cash flow forecast is an estimate of when you expect to receive cash and therefore when you can expect to pay your creditors. Being able to show how much money will flow in and out of your business is a critical part of your financial plan.

Effective forecasting involves projecting some scenarios to determine how much you can save to pursue future growth opportunities. You should consider a most likely scenario, a best case scenario and a worst case scenario.

When making these estimations, take into account your previous year’s sales and even the past few years’ sales if there’s a general trend. Researching your market can be useful to find avenues for growth.

Incoming Payments

If you’re expecting significant business growth over the coming year, you should consider how quickly new customers will pay. Will they pay as quickly as your current clientele? Will growth in your business by powered by these new customers or by a few larger clients who’ll be purchasing more?

Larger customers may have the ability to push out their payment terms which can affect your cash flow situation.

Outgoing Payments

With growth in sales comes growth in purchases, so you need to question whether this will cause your business to reach any credit limits with its suppliers. It may mean you’re forced to pay your debtors faster than you had prior.

January is also a great time of year to check your tax payments are up to date. Provisional tax payments are a way of managing your income tax throughout the year by paying instalments. They’re based on your expected profit or sales.

If you’re GST registered, the number of provisional tax payments you make will be decided by how often you file a GST return.

Resources

To deliver on plans for growth you have to consider what extra resources you might require. That may include more staff, an upgrade or increase in fixed assets like vehicles or equipment, or more space to store greater inventory.

Also take into account an increase in your overheads. Electricity usage, phone and internet bills, and rent will probably increase with the growth of your business.

Market Research

Market research is an important tool for any business. It can help you to identify opportunities and possible threats in your area of expertise.

To make a good decision you need to be well informed. Thorough market research can provide accurate information that will help you make better financial planning decisions. It’ll also reduce the risk involved in making those decisions.

When planning your projected sales and costs for the coming year, you’ll want to know the likely effectiveness of certain sales initiatives you have planned and if current customers are satisfied and likely to continue to do business with you. You should also be interested in which advertising medium works best and is most cost-effective for your business moving forward. Consider conducting some market research to get an accurate idea.

It’s important to estimate your future sales and purchases as accurately as possible so you can forecast your business’s cash flows throughout the coming year.

Business.govt.nz has a whole host tools and resources to make business planning easier. Find out more about cash flow forecasting or complete an interactive lesson.

 

REASONS WHY MOST PEOPLE DONT GET RICH

Heres some reasons, as per an article I read recently:

Reason 1 – People wait too long to start

Many investors are waiting for everything to be “perfect” before they get going.  They wait for the right time in the cycle, the right property, the right economic environment or the right interest rates.  Which means they never get going.  The longer they wait to get started with  investing, the longer it will be before wealth is increased.   It takes time to grow real wealth. It takes time for the power of compounding to increase wealth.   Invariably the timing will never be perfect or you will never have all the information you want.  There is a need to develop the confidence to make an investment decision based on knowing enough and realising that you will learn the rest along the way.

Reason 2 – Fear stops them
Fear keeps many of us from getting what we want, especially in matters of money.  Fear holds many investors back.  Some fear taking on more debt, others fear failure and some even have a fear of success 
  Successful investors have learned to harness their fears and rather than focus on the negatives, they use fear to force them into positive action. For example, rather than allowing fear of debt to stop them taking on the commitment of buying an investment property, they use the fear of not moving forward with their investments to motivate them. They use the fear of being stuck in their job for the rest of their lives, without the financial independence that they are craving, to motivate them to take on the commitment of an investment property.

Reason 3 – Waiting until they know enough
The fear of not knowing enough prevents other investors from getting started.
  The irony here is that the more you learn, the more you learn that you don’t know! Once you start learning some basic investment concepts you suddenly realise there are a whole lot more things about investing  that you don’t understand.   The way out is to recognize that while you don’t know it all, and you never will, you do know enough to get started with your investing and you will learn more along the way as you apply your knowledge in the real world, surviving any mistakes and challenges along the way.

Reason 4 – Focusing on linear income instead of passive income
All income is created equal. Some streams are linear and some are passive.
  Linear income is what you get from a job. You work for an hour and get paid once for that hour’s work, and that’s it.  If you don’t turn up to work you don’t get paid.  Passive income is when you work once but continue to get paid over and over again from work you’re no longer doing. The way to become wealthy is having passive income coming in whether you go to work or not.  To put it simply “if you’re not making money while you sleep, you’ll never become rich.”

Reason 5 – Not using systems for making money
A system for making money is something that takes the emotion out of your investment decisions and makes the results more reproducible.

Reason 6 – Not being patient
Warren Buffet once said: “wealth is the transfer of money from the impatient to the patient.”
  To become a successful  investor requires patience and persistence.   There is a requirement to not only get started, but you must continue on and follow through.    Many investors speculate rather than invest. They look for that “big deal” which will land them a jackpot in a short period of time.  In general these types of deals rarely occur and if you find them, are speculative in nature and more risky.

 

McLEAN AND CO KNOWLEDGE CENTRE AND ARTICLES ABOUT TAXATION AND BUSINESS IN GENERAL PRESS HERE FOR BUSINESS STARTUP KNOWLEDGE CENTRE PRESS HERE
FOR INFORMATION ABOUT COMPANY INCORPORATION PRESS HERE FOR PREVIOUS MONTH EMAIL NEWSLETTERS PRESS HERE

FOR PROPERTY INVESTMENT AND TAX INFORMATION PRESS HERE

FOR FRANCHISE INVESTMENT AND TAX INFORMATION PRESS HERE


The information provided in this email newsletter is for informational purposes only.   McLean and Co. accept no responsibility for the opinions and information expressed in the information provided and it is provided "as is" without warranty of any kind.    The user assumes the entire risk as to the accuracy and use of this document.   Readers are asked to seek professional advice pertaining to their own circumstances.    The McLean and Co. email newsletter may be copied and distributed subject to the following conditions:
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