McLEAN AND CO.

 
 
EMAIL NEWSLETTER SEPTEMBER 2003
 

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

McLean and Co. has installed Norton Antivirus software to minimise risk of virus transmission in the provision of this service.

McLean and Co. is a home based chartered accountancy practice based in Clive, Hawkes Bay.    Readers are invited to peruse the practice website www.mcleanandco.co.nz,  which lists services provided, gives contact details and indicates how to become a client, contains an extensive base of articles on business and taxation matters,  and has links to other websites that may assist your business.    Being a small firm itself,   McLean and Co. strives to provide a personal and professional service largely to a self employed person and small business client base.  Enquiries are welcomed.

 

INDEX

  1. Reducing Business Tax Compliance costs

  2. Are you in the Business of Motor Vehicle Dealing?

  3. IRD and ACC

  4. Boarders in Private Homes

  5. New Website for Employers

  6. Incorporated Society filing requirements

  7. The importance of accounting

  8. 10 ways to find more time

 

RELEVANT BUSINESS AND TAXATION ARTICLES

The McLean and Co. website contains an extensive number of articles prepared by McLean and Co. relating to taxation and business matters.    Here are a selection that will be of interest:

 

NEW CLIENTS

We are happy to accept new clients.  Please contact ourselves at the contact points highlighted above if we can assist you in your accounting and taxation requirements. Our website lists information required for this in the following link:

www.mcleanandco.co.nz/Documentationrequired.htm

 

REDUCING BUSINESS TAX COMPLIANCE COSTS

 

 
The Government will soon release a discussion document proposing changes to the tax rules.   The changes are intended to reduce business tax compliance costs and include:
  • a subsidy for small businesses that use a tax agent for payroll management and associated tax obligations
  • aligning the payment dates of Provisional Tax and GST
  • a new way to calculate Provisional tax
When this discussion document is released, a summary of it and an electronic feedback form will be accessible from the IRD homepage www.ird.govt.nz and a full  version of the document will be available at www.taxpolicy.ird.govt.
 
 

ARE YOU IN THE BUSINESS OF MOTOR VEHICLE DEALING?
Do you sell motor vehicles? Import more than 3 vehicles a year? Operate a car fair or auction? Sell vehicles online?

If so, you will probably need to register under the new Motor Vehicle Sales Act 2003 (MVSA) if you want to be in the business of motor vehicle trading.  You can find information about the MVSA and the new Motor Vehicle Traders Register (MVTR) at www.motortraders.med.govt.nz.

This website will be the home of the MVTR when it is launched on the effective date of the MVSA.  That date is currently expected to be in December 2003.  (Until then, the Motor Vehicle Dealers Act 1975 will apply.)

The MVSA has made a number of significant changes to the business of motor trading, and you can read more about them in the FAQ section of the website.  You can also subscribe to a free monthly newsletter, MVTR Matters, by e-mailing editor@motortraders.med.govt.nz.  If you are already in the motor vehicle business or are thinking about registering as a trader, the newsletter is an excellent way to stay informed.

 

IRD AND ACC

IRD have now completely ceased all ACC activities.   IRD ceased processing for payments for ACC and SEA (self employed ACC Levies) from the end of July and all remaining ACC and SEA debt has been written off.
 
If you file late returns for 2001 and earlier years, IRD will not bill you for SEA Levies nor will information be passed to ACC to enable you to bill them.
 
If there is any activity that changes the earnings on which levies are calculated and this results in a refund of SEA, IRD will arrange with ACC to make a manual refund. For employer refunds, you should contact ACC directly.
 
For the 2002 and subsequent years, income tax reassessments arising from changes to earnings  in the relevant key points (Withholding Payments, active Partnership Income, Self-employed Income, Expenses) on the IR3 return will result in information being passed to ACC for them to issue an amended invoice.
 
 
 

BOARDERS IN PRIVATE HOMES

If you have private boarders (except your own relatives)  living in your home, you may have to return some of the board payments you receive as income.
 
If you have one boarder living in your home, none of the board payments which you receive are taxable, and no expenses incurred through having the boarder are deductible.
 
If you have two, three or four boarders living in your home, you can do one of the following:
  • include 20% of the board payments you receive as taxable income in your tax return.  You'll need to keep records of the amount of board that you receive, but you won't need to keep any records of expenses.   You cannot claim for expenses because they are covered by the 80% of the income which you don't include in your tax return
  • If you think that the profit you make from boarders will be less than 20% of the total board payments you receive, you can choose to keep full records of all your household expenses, and work out the proportion of the expense relating to your boarders.  For example, if there are three boarders plus you, you could claim 75% of the rates, insurance etc. as expenses.   You can then deduct these costs of having boarders from the total board payments you receive, and include only the remaining profit in your tax return.  If you choose to use this second method, you'll need to include a copy of your income and expense calculations with your tax return.  
If you have five or more boarders living in your home, you must keep full records of all your household expenses, and work out the proportion of the expenses relating to the boarders.  You then deduct the boarders share of the expenses from the total board payments you receive, and include the remaining profit as income in your tax return.
 

 

NEW WEBSITE FOR EMPLOYERS
A recently launched website ( www.worksite.govt.nz ) combines the resources of a number of government agencies into a one-stop information resource on employment information and employer's responsibilities.
 
It is designed to help employers look for staff, grow their business or get assistance in running their business.
 
For example, the "At Work" section provides information on the minimum entitlements you are required to provide staff, including wages, holidays and leave.   It covers your obligations in employing or dismissing staff, and gives information on workplace health and safety.

 

INCORPORATED SOCIETY FILING REQUIREMENTS
Are you involved in running a society?   Are they up to date with their filing requirements under the incorporated Societies act 1908?
 
It is important that society's file the following information, and not because it is required by the Act:
  • A copy of the annual financial statement that has been presented to, and approved by, the members at a general meeting of the society.  A society only has to have its rules audited if this is required by the rules of the society
  • Advice of any change of contact details including the registered office address
  • Any alterations to the rules must be provided and signed by three members and accompanied by a statutory declaration
Implications for not providing information as required are:
  • Failure to file financial statements can indicate that the society is no longer operating which can result in the Registrar removing it from the register.   This can impact on the society's ability to apply for funding and will mean that it is no longer a separate legal entity
  • If a society's contact details aren't up to date then the Registrar can't send a reminder to file the annual financial statement.   If the Registrar can't contact the society, this may mean that other people cant either-  for example  people that want to make a donation or prospective members
  • Until the Registrar receives and registers an alteration to the rules, the old rules apply and must be used to run the society.   This includes changes to the society's name.
To find more information on filing requirements, visit the "Information Library" at www.societies.med.govt.nz.
 
 
 
 
THE IMPORTANCE OF ACCOUNTING

As well as being necessary for the preparation of Income Tax Returns accounting plays a major role in tracking the performance of a business.

Many small business people fail to recognise the benefits of regular accounting information.

During the year there may not be the need to prepare complete financial statements, but regularly monitoring the following indicators will make the businss owner more aware of his financial situation and give him information which will enable him to plan, react and put into place actions to improve business health:

  • cash balance
  • sales (dollars, number of sales, units)
  • accounts receivable ($, average age)
  • inventory
  • work in progress
  • orders received

Changes in financial position can be sudden, such as the following instances:

  • loss of a major client
  • large uncollectable accounts receivable
  • legal action or fine for breach of regulations

They can also be subtle with a gradual decline leading to a crisis, such as the following instances:

  • growth in sales without increasing funds for working capital
  • excessive drawings by owners
  • poor profitability
  • ageing plant and equipment.

It is therefore important to track financial performance on a regular basis.

 

10 WAYS TO FIND MORE TIME

Do you find that you never have enough time in your business. Some time-management suggestions:

  • Plan your time day/week/month and get clear on your top priorities for each.- get clear on where you want to focus your energy and it can help you make decisions more quickly if an event arises that is not top priority

  • Use the 80/20 rule to your advantage- (the principle that says 80% of your success comes from 20% of your efforts)- as a business owner you need to figure out where your most profitable 20% is and spend the majority of your time in these activities.

  • Ask for help- by hiring assistance, you invariably are able to produce much more in much less time

  • Automate- as much as possible use technology to your advantage.

  • Simplicity-   as you get busier its crucial to simplify your efforts to make your business easier to run. 

  • Consolidate- try and merge several tasks into one instead of repetitive action

  • Leverage- obtain multiple uses out of materials you've already created. In creating new materials for your business, ask yourself "how can I use this again?"

  • Vision- by staying connected to the big picture/big vision for your business, you will be more inspired and find yourself accomplishing great things in less time.

  • Chunking- complete similar types of work at the same time e.g. making a running list of calls to return, writing, scheduling clients etc. and then setting aside a block of time dedicated to accomplishing these- you'll find that its more effective and better use of energy to accomplish similar tasks together

  • Analysis-  keep track of what's working well in your business- what are customers complimenting you for?   what are customers complaining about?   what should you be doing more of?  - analysing your business and its progression over time will often point out places where you can simplify, consolidate, or change in order to save more time and work more easily.

 

f we can assist further, please email McLean and Co as follows:

 CONTACT McLEAN AND CO. BY EMAIL BY CLICKING ON THIS LINK

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