Small Business

Smart at running a business. As Smart at looking after your own health?

Smart at running a business. As Smart at looking after your own health?

Working smart pays off when running a business.  But how about your health – are you as smart at looking after yourself?  The business does not run itself, not without your hard work and guidance.

Consider the effects on your business if you have to take extended time off, because you ignored or missed some warning health symptoms? 

Certainly there’s no glass ball to gaze in for knowing our future life events but there’s never any harm in reviewing the preventative health checks we could do:

For the ladies:

Mammography –  Every woman should learn to do self-examinations in their early 20’s and onwards.  Unusual discharges, change of breast shape, lumps either soft or firm, surface skin changes – get it checked.   From the age of 45, women can be enrolled on the National Register for free mammograms every 2 years.  This should be sorted by your GP.   

Cervical Smears –  Women who are sexually active should be having pelvic exams and cervical smears every two years, at least.  This is one of the easiest cancers to pick up and treat when caught early.  Here’s more information on them: Cervical Smears.   Ovarian Cancer, is more difficult to detect.  This is because the cancer cells grow deep in the ovaries, and the symptoms are often masked with other illnesses.  It’s worth making yourself aware of what to look for. Click on this link: Ovarian Cancer.

For the Men:

Testicular Exams – Testicular cancer is actually more common for young men in their 20’s!  Experts say every 3-4 months, check your balls.  If you feel anything unusual do get it checked with your GP at the earliest. When caught early, it is fully treatable.   

Prostate Health – Recommendations is that you should begin having regular checks of your prostate health once you reach your 40’s.  particularly if you have male relatives in the family who have, or had prostate cancer.  Prostate Cancer is the most common cancer for men in New Zealand and the risks increase with age.  Click here for more information: Prostate Cancer.

For everyone:

Bowel Cancer:  The second highest rate of death from cancer, is from bowel cancer (also referred to as colon, or rectal cancer). Globally, New Zealand has one of the highest rates of this form of cancer.  Leading symptoms are usually a change in your bowel discharges, or blood in your motions.  A genetic history of bowel or colon cancer in your family does increase your risks, so inform your doctor.  For more information click here:  Bowel / Colon Cancer.

Skin Cancer:  Our climate with glorious summers combined with our love of doing activities outdoors raises the risk of skin cancer, or melanoma.  And as with Bowel cancer, we have the higher rates in the world for this cancer, too.  Not good, at all.  So heed that ‘Slip, Slop, Slap’ message and cover up.  Use quality sunscreens, and reapply them. One application in the morning, is NOT going to last all day. Remember to watch the children’s skin too, read more here: Sun Smart

Mental Health – Are business issues creating high stress, anxiety or feel you are not coping.  Trouble sleeping?  Review your lifestyle balance and check you allow time to unwind? Going solo in business often means you cannot share the management load and so you are wearing several hats at once.  Consider joining a business networking group or local professional business organisations in your area.  There will be members who empathise on the stress of running a business and can offer support and advice. If you cannot manage growing demands on your time from your work, consider outsourcing some responsibilities.  Have a read of our blog: Balance in your life.

If your mental health continues to deteriorate do contact your GP, and please reach out for support soonest.  This link provides a listing of useful organisations who may be able to help:  Helplines  

Heart Disease & Strokes – are right up on the top of the charts for leading causes of death in New Zealand. High blood pressure is a risk factor for serious conditions such as stroke and heart disease.  As a significant risk factor, it is also probably the easiest thing you can change to improve your health. Blood pressure can be regulated through a low cholesterol diet and exercise and is definitely worth looking into. Getting regular blood pressure monitoring by your GP or nurse should always be a key part of an annual checkup.

Life can throw curve-balls regardless. But getting checked regularly may save your life especially if health issues are picked up earlier as we can appreciate treatment is likely to be more successful in early stages, or as soon as we become aware of a problem.  Don’t be an ostrich, take time to check your own health, so you can continue to run that business successfully.  

A word here. If it is the financial bookwork that is causing stress, contact us at Do The Sums Bookkeeping and More.  We can review with you some available options  on processing services to match your budget. We are happy to review its health with you, and hopefully come up with a diagnosis to help your business back to humming along happily …

Do The Sums Bookkeeping and More

027 379 0992 or message Rebecca@dothesums.co.nz

GST Returns – FBT Returns – Payroll – Monthly Reports – Annual Returns – Tax Agents – & More….

Understanding Two-Step Verification and Two Factor Authentication

Understanding the need for the Two-Step Verification or Two Factor Authentication

The last few years it has become obvious that having a single password for some applications is not secure enough, especially with increased hacker attacks and phishing scams.  Unsuspecting users are being misled into sharing accounts with password codes to fake organisations.  In other situations, it’s sometimes tricky to screen passwords entered from prying eyes.  And truthfully, some users have become a little too relaxed over keeping passwords private and secure.  Changing passwords often was always an option, but higher security was needed.

This brings us to newer security procedures.  The two-step verification or authentication.  A process where you need to present two pieces of “ID” to verify your identity, or authority to use an application, instead of a singular key or password.  Two steps?  Think of the process of getting money out of ATM machine.  You enter your bank card, and then you enter your pin number in.  You cannot access your funds with the card alone or just pin numbers.  You need both to access your bank account funds.  Can you see that two-step process?

Two-step verifications or Two-factor Authentication processes are becoming more common. Online banking organisations, Microsoft, Apple, Google and other leading brands now require or will offer two-factor authorisation processes.   It’s worth making use of these more detailed login processes.  Believe us – those who’ve been hacked or found fraudulent interference with their accounts find it a painful and trying experience, especially when funds have been taken, and/or their business integrity affected.  Not to mention valuable time lost with resolving things back to order. 

Now Xero and MYOB offer this process – please do use it

If you use either Xero or MYOB, this is an option offered.  We strongly suggest you set them up for your business if you have not already done so.  We can never be too relaxed about security – especially with protecting business data and financial records, and we have a duty to secure any data held about our clients, too.  

How does it work?  With Xero and MYOB – Users are required to download an ‘Authenticator’ application into their mobile phone, from Google Play.  (This is quite a straightforward process explained with accompanying instructions in the links we’ve listed for Xero/MYOB below.)   

Whenever the User logs into their accounting application with their usual password, it activates the ‘Authenticator’ application on their mobile phone.  A unique passkey number (or barcode) flashes on the mobile screen.  The User then enters the passcode (or holds the barcode to the computer screen), and full access is usually granted.   The procedures are slightly different for Xero and MYOB, but the concept is the same.  Doing a two-step ‘ID’ process is needed to access the application.  The Authenticator passcodes (or barcode) changes each time you access the software applications, and have a time expiry – in other words, the codes must be used within a short time to be effective.  We assure you this set up is quite straightforward, and codes come through instantly each time you need to access your account.  Authenticator codes do not need mobile coverage – the number is generated from within the application – triggered by your login process.   

If your phone is not handy or you do not have your mobile – alternate 2 step options are offered by Xero and MYOB. They involve either a listing of back up codes which you need to store carefully or pre-arranged answers to security questions.  You can review Xero and MYOB’s alternative processes on links below.  

Should you lose your phone or have it stolen, you have these alternate options to access your accounts. (We’ll assume you do use pin code security on your mobiles and do utilise lockdown applications for any lost/stolen mobile devices).  More instructions are outlined on both Xero and MYOB websites. 

If you have staff accessing your Xero/MYOB accounts – they need to set up this authentication process, too.  Passkey codes will then show on their own phones, to match their logins.  You or persons who hold the ‘User Settings’ control can always check and review security access at any time.

Here are the links:

With Xero? Setting up two factor with Xero      Video demo: More information plus video

With MYOB? Setting+up+two-factor+authentication   More Information: About MYOB two-step authentication

We should point out this won’t be a total foolproof process. But it helps raise the barriers to increasing fraudulent attempts by hackers to access accounts.  They’re getting smarter, and phishing scams are becoming common. Don’t open or click on links or videos you haven’t requested via email or messages – delete them.  If you do have a connection or link with that organisation – call your own contact person there, and check.      

Do continue to review other security measures within your business to protect access to your computer or software applications –  refer to a previous blog here: Security.

If you have queries or concerns about using two-step authentication processes for your Xero or MYOB subscription – do contact me.  If you’d like to consider a Xero or MYOB subscription or have other queries on bookkeeping or business financial work you need help with, call me for a friendly chat to see what we can offer.

Call 027 379 0992 or message me on rebecca@dothesums.co.nz.

Annual Returns – GST Processing – FBT – Payroll Processing – Bookkeeping Online – Tax Agents

Terms of Trade for Small Businesses

Terms of Trade for Small Businesses

Terms of Trade for Small Businesses: What are they about and should I have them?

Company Trading Policies:  When businesses trade –  a sale (or service) contract process is occurring.  Sometimes the trading processes do not run smoothly and conflicts or misunderstandings arise. Other than resorting to expensive legal actions, this leaves a grey area for traders to deal with issues. Hence some framework is needed … which brings us to the Terms of Trade.

A number of NZ Acts, Laws and Regulations have some influence over contracts and business trading practices but do not cover all the issues of trading processes.  This means businesses have scope to retain rights to set some trading policies to protect their own company’s interests.  This includes how issues or disputes will be dealt with.  These are called Terms of Trade, or some businesses may refer them as Conditions of Sale.  (We say ‘some’ as there are certain legislations businesses cannot contract out of.)

In a nutshell, ‘Terms of Trade’ is a business’s published contract statement that outlines the rights of their business, and what the obligations of the other party (purchaser) will be.  It will outline expectations of the trading process.  Purchasers then have the opportunity to view the company’s trading policies and can either accept or reject at the start of trade.

What is covered in those Trade Terms?

One usually finds a listing of reference points.  They outline any specific actions or rules on that topic or issue during the trade process.  Examples of reference headings are:

  • Parties of the Contract.  Identifies who the seller and buyer are.
  • Goods or Services Provided.  Any limitations, like installation costs, may be mentioned here.
  • Pricing.  The right to set prices,  and trade discounting may be mentioned.
  • Return of Goods / Refunds.  A discussion on rules over refunds,  damaged or incorrect stock returned etc.
  • Payment Terms.  Payment processes and due dates may be mentioned, for trade buyers.
  • Ownership of Goods.  As in when ownership of the goods will pass to the buyer?

The above is just a brief summary of the common points usually covered in Terms of Trade.  Terms will differ from business to business, depending on the type of business and whom they trade with.  Some businesses will have long detailed trade terms, others will be a few paragraphs.

A Binding Contract:   It is important the Terms of Trade are viewable by the buyer at the time of contract or purchase.  Once terms are accepted they are legally binding on both seller and buyer. If the buyer had no opportunity to access or view the trading terms, then the terms will not apply to the contract.  Terms of the contract may be altered after start, but only if both parties agree.

Making the Trade Terms visible:  Potential purchaser must be able to read them.  Display them on Service Contracts, Account  Application forms, Quotes/invoices or on walls in retail premises.  Business websites need to display them, or a clear link to access them.  Have some purchaser action with either a signature or a click action online, to show they accepted the Terms of Trade.

Debtor and Asset Control: Businesses will state their policy on cash and credit transactions, refunds, and other payment arrangements offered. They can highlight any late payment penalties or debt recovery costs will be passed on to debtors.  It is important to mention, this action is not enforceable if this advice is not stated in the Terms of Trade, or at time of contract being signed.  Trade terms often mention until goods or services are paid in full, the Ownership of the goods shall not pass to the buyer.

Certain procedures must be followed when businesses wish to do credit checks for account applications.  There are very specific rules to follow on requesting authority to do credit checks because of the Privacy Act. Your business legal advisor should be able to help here.

Disclaimer: this blog is written only for the purposes of outlining what Terms of Trade are used for and the reasons businesses have them.  Setting Terms of Trade involves complex contract law.  Existing Trade Acts can impact on trade terms written, and it all depends on your type of business.  Contact a business lawyer or professional financial advisor if you are considering a Terms of Trade policy written for your business.  

How can having Terms of Trade help my business?

Surely with time and money invested into your business, is it not worthwhile making the effort to protect business income and assets?  Having a term of Trade notice is one useful tool to help this process.  Being able to pass debt collection costs to non-payee.  (Why should your business bear the expenses chasing them because they won’t pay?)  Use a retention of title clause that states your business retains ownership over the goods until payment is made in full.  Notify any applicable financial limitations or clauses in case of possible events that may affect completion of contracts. For example, third parties (shipping, courier deliveries) or weather events.  A well set out Terms of Trade can help minimise potential business costs and future liability claims for your business.

Here is a useful document to read about trader responsibilities, click here:  Fair Trading Act.  Another Act we believe worth making yourself familiar with is: Consumer Guarantees Act.

Do The Sums Bookkeeping and More is a friendly bookkeeping business working to make number crunching easy for your business.  We work with a wide variety of small-medium businesses across New Zealand.   If you are needing some assistance with your accounts or tax returns, or other financial services for your business – contact us today.

GST TAX RETURNS – INVOICING – INCOME TAX RETURNS – PAYROLL – CASHFLOW MANAGEMENT

Ask that Question

Ask that Question

Recently we read some comments from some business owners saying they felt stupid asking certain questions, that seemed too simple.  At Do The Sums Bookkeeping and More, we believe asking questions however simple they may seem, is NOT a stupid thing to do at all!   

You should not be shy about asking any questions.  A Questioning mind is a great business tool you can have, as you can’t progress in your business, without learning. Then processing the answers to your questions.  Even if they might lead to other questions …

Life is about learning,  and business owners should feel free to ask questions about business systems. Or taxes.  Or how to process accounts correctly.  It may be about simple calculation process – or a deeper question of working out how much capital you have in your business?  Or it could be about your sales; why am I not making as much profit this year as I was last year?  Is there a better way to price goods to this market?  Do I need to register for GST?  How can I set up better security measures in my business?  

Just a wee notice.  Do please be aware of whom you are receiving your answers from, especially in online forums or social media posts, especially if it directly concerns your business finances or legal administration processes e.g making tax deductions.  It’s sensible to check and confirm the sources of whom you are getting answers from, or it could end up being a costly mistake if the answers are not quite correct.  Your business structure may be quite different to theirs.  Tax laws can be complex and there are different tax rules for different entities. It may be wise to contact professional advisors or the relevant government department directly.  

However, that’s not to say you can not ask questions on social media posts or amongst your friends, as with lively online conversations, you can end up with some great business information too! All we suggest is to be careful using some information that may or may not be suited to your business.

Some of our clients are new to the world of running a business, and some are well experienced in the world of finances – but all still need help from time to time, and all can ask questions.  We are happy to work on educating, training or helping them along with the way in understanding their business financials. Often we do go around asking questions from other sources, to build up our expertise and information about finances. We network amongst other business contacts and professionals, whom we are happy to refer you to if we are unable to help you with your question or problem.

Grow your knowledge, forget your fear of how you might look asking questions, and just ask that question!   Do The Sums Book Keeping and More:  If you have some questions or issues on managing either accounts or finances and unsure of where to go or what to do – please do come asking questions.  We offer a wide range of services and expertise and we may be able to solve your financial questions.

Xero and Sarah, Sarah Makes Her Business Bloom – Case Study


Sarah is having a hectic day.  She knows she must stay at work late tonight entering her orders and invoices for the last month to evaluate how her business is doing. Her bank balance seems a tad low. Despite best intentions, she’s behind with her accounts, again. She does not mind doing her accounts.  Honestly,  she would much rather focus on designing and creating stunning bouquets. Sarah owns Blooming Love, a floral and giftware shop in the Tannery, Christchurch.

Sarah needs to rise early tomorrow to get to the flower market and check the availability of hydrangeas for wedding bouquets on Saturday. Her days are getting longer, what with early starts and trying to catch up on accounts and orders in the evenings. Sarah popped into Lucy’s café yesterday and Lucy advised she has contracted a book keeping business, and mentioned how it’s lifted a load off her shoulders.

She calls Rebecca the bookkeeper at lunchtime.  Rebecca asks her questions about her business, and suggests Sarah emails through what she would like covered. Rebecca will review Sarah’s accounting needs and arrange a time later in the week to discuss pricing options for her bookkeeping needs. Rebecca advises Sarah that they should set up Xero, a cloud based accounting application.  This would allow them to work collaboratively on managing Sarah’s financial records online without frequent meetings to exchange paperwork.

Sarah thinks over Rebecca’s comments on Xero, the cloud based accounting application for her business. There are nifty applications she can download on her iPhone too, to tag business transactions to go to her Xero account.  That would be handy at the flower markets in early mornings when making payments for her purchases. Have her monthly bills like power and rent emailed straight into her Xero accounts pre-coded, ready to reconcile.  Plus, she will be able to clear all that paperwork over her desk at the shop, by saving documention to online files.

There were more useful features in Xero for Sarah to learn, but already she is thinking.  Maybe remove her paper cluttered desk.  Then extend her workbench for creating her flowers as she needs more room. Her slim laptop with accounts access, can be stored to the side easily.  Plus with this free time in the evenings, she could attend those Advanced Floral Art courses at the local polytechnic.  She also wants to add an online shop to her Website, too.

If You’re Passionate About Your Business……

If you’re as passionate about your business as Sarah is, and wish for time to upskill your knowledge or focus on other parts of your business – then why not outsource your book keeping to Do The Sums Book Keeping and More.  Use that free time to keep your passion alive on the more tasks focused on growing your business. Maybe expand your skills or investigate new products to add to your business.  Explore other sales opportunities.  

Tell us what you need done with your accounts, and share where you would like your business to go … and we’ll work to help you reach your goals. Send me an email today and we’ll talk soon: Rebecca@dothesums.co.nz

Matt Barbershop – Tax Returns – Case Study

Does this sound like you?

Don’t mind doing the daily or weekly transactions, but not GST Tax returns?  Need time to grow your business, so looking to outsource some accounts work?  We can help with your financials, so you have more time to focus on other areas of your business or social time in your calendar.
Matt is a barber, with a Barbershop business located near the Cuba Mall, Wellington.

Matt has one staff member, Lance, who has almost completed his barber apprenticeship. Trade is good, there is plenty of foot traffic outside his store being Cuba Mall. Now he is considering opening another barber shop over in Thornton, near where his partner works.
Lance is well regarded by regular clients now and he has indicated to Matt he is willing to help manage the Cuba Mall barbershop business, whilst Matt starts up the new barbershop in Thornton.

Matt is pretty account savvy and quite comfortable with processing the weekly accounting transactions for his books, but still, engages a bookkeeping business to oversee his Xero Cashflow books.  Because Xero is cloud based, they can easily go online into his accounts and review them remotely.  At GST filing time every two months, they check in and make any corrections needed.  The tax returns are filed for him and his bookkeeper sends an update of work done and advice of any amounts due to Inland Revenue.

At financial year end, his bookkeeper will also process both business and personal tax returns too.

Matt can control user access to his Xero business accounts, and currently, he has it set up for Lance to access the payroll portal only and enter his own time-sheet hours in there.  That means Matt can just check in weekly and approve Lance’s hours before payroll processing.

Later in the year, when Matt hopefully opens his second store, he’ll ask his bookkeeper to set up tracking in Xero too, so he can see how each store is doing.  Xero can handle this with a tracking option to transactions for either certain clients or locations/stores.  He’ll be able to see how Lance is doing in managing sales in his original store.

Matt reckons life is for living, and after a long week on his feet cutting, supervising Lance and maintaining the barbershop – he just wants to chill with his partner in the evenings. And Sundays. They often head out to local bars or cafes with friends.  Or take out their surfboards after work if the waves are right.  He enjoys balancing his life with time to play, against his hard work on his business.

Does this sound like you?

Don’t mind doing the daily or weekly transactions, but not keen on doing much more, or the tax returns? Need time to grow your business?  Yearn for more social time for family and friends?

Do The Sums Book Keeping and More can help. We are happy to fit in with your bookkeeping needs and do as little or as much as you require. Contact us today, and discuss bookkeeping options for your business. Outsource your business tax filing returns, and focus on growing your business. Create some balance in your life and make some time for hanging out with your mates or family.

Why feel Blue about doing those Books

Why feel Blue about doing those BooksGot the Bookkeeping Blahs?

When it comes to doing the books or accounts and you feel just … blah?

If processing the numbers isn’t easy, and tedious …

What are you using now?  Might be time to get yourself acquainted with the newer accounting software applications that are around, today?  Xero. MYOB, and others. Thanks to technological and software advances today, and their user friendly interfaces – many have inbuilt automatic processes to help make entering data easier and faster, and some offer interactive visual graphs to help show you how your business is doing, too. There are some cool applications that make recording and processing your business numbers easier.  Hit us up for a chat!

You only like doing some of the numbers work – not all …

Maybe you can handle the weekly or monthly transactions but doing certain reports like GST and PAYE returns just has you gritting teeth, trying to add the numbers and extract the figures. Not sure what boxes to fill in on forms.  Would you prefer a monthly update to pop into your ‘inbox’ each month telling you what we’ve done, and what needs paying?  Talk to us at Do The Sums about the numbers you’d really like not ‘having to do’ and see if we can handle those blah tasks for you.

Argh …doing the number’s is now eating into your personal time …

Missing a little too much of the family life.  Having too many lonesome evenings at your desk whilst your friends head out for fun. Feeling a bit blah as you’ve had to skip on an arranged date due to work pressures?  Dishwashers came along as people didn’t like spending time doing dishes and wanted to do more fun things.  Well – us Number Crunchers are around so we can crunch your “numbers” whilst you do more fun things too!  Outsource those growing jobs keeping you a little too tied to the business, and go spend time with your family or friends.

A little stressed with managing the numbers and need some guidance?

Being a business owner can be a lonely job. Making decisions alone. Not sure where the money is going exactly but not sure what to start with. The bank account’s a little low. Hate chasing the money from debtors. We can review your accounts, cashflows over past periods and help set up budget planning, and discuss some options. Some professional feedback, and guidance with the accounts can help get you feeling more confident on managing and understanding your business finances better.  

Don’t sit there feeling blah about doing ‘numbers’ in your business.

Hit on us now here: Do The Sums Bookkeeping and More. Working together on solutions to banishing those blahs you feel when facing your Business Numbers …Email Rebecca@dothesums.co.nz or call 027 379 0992  

Thanks for visiting my part of the blog tour and I’d love for you to visit the next stage by clicking on Gemma Knight Writes‘s blog to continue the tour!

budgeting and forecasting

budgeting and forecastingTwo dirty words; budgeting and forecasting. Does the idea of creating a budget give you cold sweats? Or you’re wondering why you should do a forecast for your business? After all, weather experts get their forecast wrong all the time! Surely these two jobs are not necessary for your small business?

Sorry to burst your bubble, but budgeting and forecasting are essential. One tells you what your goals are, the other your best guess on where you’ll soon be. So come and jump on board the Mystery Machine and we’ll find out exactly what they both are!

What’s Budgeting All About?

When you work out a budget for your business, it’s your best guess at how much money your business will need and get. Both fixed expenses such as rent and variable ones such as your phone bill are predicted for the year. You then state how much you are going to pay for different things. You also need to work out what your income will be too. Your budget is something you need to stick with over 12 months.

Your budget is your plan of where your business is heading financially. It is something you use to compare against the results you actually get. This then tells you whether you are in the red or in the black. All in all, your budget helps you to manage your money.

What’s Forecasting All About?

A forecast is an estimate of where your business is heading based on your financial information. Your forecast is what you use to help you set your budget. Unlike a budget, your forecast can be updated many times based upon where your business is heading. It is mostly used for large expenses and income.

Your forecast will then tell you if you are going to need to borrow any money. Then it estimates how much you can pay back and when. It considers upcoming trends and events, based upon the past and what is happening right now.

What’s the Difference Between Budgeting and Forecasting?

Your budget will tell you what is happening over 12 months. It sets a target for the business to achieve and it is basically a plan of what is going to happen. It is done once a year.

Your forecast may break what you think is going to happen into smaller monthly or quarterly chunks. It is an expectation based upon what’s been happening. It has no target and estimates what your business will achieve. It can be done once a month.

Check out my 5 Tips for Sorting Your Budget. Right now is the perfect time to set or evaluate your budget. Don’t be afraid to give me a call or send me an email. I’m here to help!

Yay, your business has made a profit! You’re living the dream all business owners have and you now make more than you spend.

Yay, your business has made a profit! You’re living the dream all business owners have and you now make more than you spend.Yay, your business has made a profit! You’re living the dream all business owners have and you now make more than you spend. While you’ve become an expert in making a loss, deducting expenses from your income and balancing up any profit against previous losses, things are now different. So, what happens next?

Tax is what happens next. When a business makes a profit, it is required to pay tax to the IRD. I’m not talking about GST here, but business income tax. You are required to pay income tax on the net profit you make, with the tax rate varying depending on what type of business entity you are:

  • Sole trader – at individual tax rates of between 10.5-33%
  • Company – 28 cents in a dollar
  • Non-profit – incorporated at 28 cents in a dollar, non-incorporated at individual tax rates

How Do I Know How Much Income Tax to Pay?

Each year you are required to fill out a tax return stating the income you had and then work out how much tax you must pay. Since this will be the first time you have made a profit, you will not have paid any provisional tax before. But if in your first return you have a tax bill of over $2500, then you will need to start paying provisional tax the next year instead of your tax bill in a lump payment.

This means that you must pay your tax in advance in small bits throughout the year. It is a way of helping you make sure you have the money to pay your tax and avoid getting a late payment penalty, as well as a way of the IRD making sure they get paid! The IRD have a good introductory video on provisional tax on their website which is worth watching.

Spending Your Profits

Now that you’ve made a profit, besides paying tax, what else can you do with it? Obviously, the smartest choice is to pay off debt, but once you’ve done that, what else can you buy?

Now I’m not suggesting you go on a wild shopping spree, but it is sensible to make some of those big-ticket purchases while you have the cash. If you can invest in technology which boosts the productivity of your business or an employee who can help you grow it, then those are great investments to make! It may also be time to start paying yourself a wage if you are not already doing so.

If you are unsure about anything tax related, we offer a free consultation to help you out. Book yours today and together we’ll get you and your tax on the right path to success.

What exactly should I keep for my business records?

What exactly am I meant to keep as business records?  And for how long?  First, let’s review what Inland Revenue have set out for records you must keep.   Apart from your business bank statements, and those Invoices or bills you have sent out- here’s the other records you need to keep.  These will be important to keep, if you are claiming business expenses …

For items for $50 or less:

To claim them as business expenses you do not need a ‘Tax Invoice’ but you still need to retain some ‘evidence of payment’ – it may be a cash sale docket or till receipt. Like what you get from your local dairy or stationery stores for small items.

If your purchase is over $50:

The requirements are stricter. Inland Revenue requires your records should have the following evidence for your business expense claims:

  • The words ‘Tax Invoice’ must be clearly marked on the document (unless the seller is not registered for GST, in which case ‘Invoice’ is acceptable. If they are GST registered, their invoice must show their GST number).
  • The name and the address of the supplier.
  • Date of the sale, and a description of the goods and services supplied, including quantity or volume where applicable.
  • Total amount charged – and a clear indication of whether this amount is inclusive or exclusive of any GST charged when applicable e.g. Total $123.21 GST inclusive, or having separate lines: $100.00 + GST $15.00 = Total $115.00

If you are GST registered and processing GST returns, then the necessity for retaining evidence for accurate calculations to support your filed GST records is important.

There is a slight anomaly – Inland Revenue states:

“For GST you do not need to hold a tax invoice for items costing less than $50, but you do need to maintain a record of such payments. For Income Tax, you should have invoices for all expenses, whatever the amount.”

So, bottom line, let’s go with keeping all your receipts, as you will definitely be filing Income Tax returns.

For how long?  Seven years. Yes, regardless of whether you cease trading or on sell the business, you need to retain your own business’s records for seven years.

“But I’m drowning, and struggling to keep everything tidy” …

“I just haven’t time to keep them filed”…. “Where am I going to keep them all?”

“I keep losing my bits of paper when I’m out and about on business…”

Good news. Inland Revenue now accept accounting records and supporting documentation in electronic format. In fact, not surprisingly, they encourage it!  Here’s a statement from their website:

“We encourage you to record and store your data electronically (disk, tape or other electronic media) as this lets us carry out the more efficient computer-assisted audits.”

Here, we really recommend Xero and MYOB, the newer modern accounting software programs are very useful and practical for small/medium business owners. They offer easy features to enable uploading of your digital business transactions to store them as links, alongside relevant accounting transactions within the accounting records. It makes for a clear tidy system of tracking and detailing your business transactions over the year.

But how do we upload the data? Scanning and photo shots are acceptable. Make sure the images are clear and capture the required data the Inland Revenue requires – the full page. There are some new applications available for ease of capture of business transactions via electronic images to be incorporated into the newer accounting systems today – with Receiptbank for example, you take a photo of your receipt and it uploads the photo and enters the details of the transaction into Xero too once you’ve checked details are correct. (That’s pretty handy – how many of us leave our receipts in our purse, or in our car for days meaning to put them into the office records … but mislay them?).

Another plus of having your data records linked with the accounting transactions, is your business records are easily searchable. “We need to reassess our retail price, let’s recheck what courier costs were for those imported materials back in March from X supplier were?”  A quick search online, and you can bring up the attached digital record of the invoice or receipt of goods from the supplier. 

Remember two other conveniences with using newer Cloud based accounting software? As they store data off base on remote servers – there’s less worry of damage to your records through accidental or natural events eg fire or flooding.  Secondly they feature the mobile accessibility of being able to access your financial records from different locations. (See our previous blog on The Cloud)

What you do need to do, is ensure both security and maintenance of your current and historical data is reviewed and completed over the required time frame of seven years to keep it accessible.

So are you ready to kill those paper piles?  Get in touch and we can help work with you on improving your existing accounting processes … we may be able to recommend compatible applications or suggest better accounting software applications that make managing your business records easy.

 Check out these links for further information:

Load More