Accounts team update
Set up a good accounting software system such as BankLink or Xero; The use of electronic technology to process your accounts will dramatically decrease the time you (and we) spend doing your accounts. Accounting systems allow you to have better control of your business - they make it easy to keep an eye on how you’re tracking during the year which helps you to avoid surprises when it comes to your tax bill. Accounting software means that we can also offer you services such as management reporting, budgeting and cash flows, to name a few.
Keep your invoices and receipts; When we prepare your accounts, we use a number of documents - from bank statements to hire purchase agreements, shareholding statements to invoices. It makes a huge difference if these are easy to find. Should you ever be audited by the IRD, the onus is on you as a business owner to prove that you can claim any deductions. The IRD requires that you keep your tax records for seven years.
Keep business and personal expenses strictly separate; Your business bank account should only be used for business transactions. If you need to lend your business funds, make a transfer from your personal account. And if the business is supporting you, then transfer money to your account at regular intervals.
Use technology to simplify your record keeping; Paying with eftpos or online banking is preferable to paying with a cheque. This is because the name of the vendor will be displayed on the bank statement. This significantly cuts the time spent processing your accounts.
Avoid using cash as much as possible; When you pay with cash, the only record of the transaction is the receipt, a piece of paper. Even for the most organized person, some of those pieces of paper will disappear. You could be missing out on deductions you’re entitled to.
Make sure your tax payments are made correctly; If you are paying your tax online, make sure you choose the correct tax type and period. It takes time to find and correct tax payments if they are applied to the incorrect tax type or period.
Watch out in our next newsletter for tips on how to automate and streamline the processing of your accounts on BankLink and Xero.
Payroll team update
Rules with cashing up the fourth week of annual leave; The following rules are useful in understanding what can and what cannot be done when cashing up the 4th week of annual holidays:
1. The employer does not have to do it; they can set a policy stating this or do it on a case by case basis.
2. The employee can only cash up the 4th week of current entitlement and cannot cash old entitlement from previous periods.
3. The employee can only cash out a maximum of a week in any one entitlement year but that could mean a day at a time if a request is made and the employer agrees.
4. Cashing out any additional weeks (a 5th week provided by agreement) is by agreement and is not covered by these rules for the 4th week. It could be cashed out tomorrow if agreed.
5. The employee cannot accumulate leave going forward and cash out all at once (wait three years and cash out three years all at once).
6. If the 4th week is cashed out it is treated as an extra pay (taxed on a lump sum basis like taxing bonuses).
7. If the 4th week is cash out it is not included in gross earnings for Holiday Act calculations going forward (if a 5th week or subsequent week is cash up it would be included as part of gross earnings).
If the 4th week is cashed out then it must be part of the Holiday and Leave record for the employee that is kept for 6 years. For further information please go to:
Payroll team at Accounted4
Anne Bland (extn 831)
Carolyn Lawrence (extn 837)
Maree Craig (extn 825)
Business Advisory team update
When business is going well and you have a million ideas of ways to do things better, faster and more profitably it is very easy to just start flying. This often works in the short term, but business growth without careful planning – building your Launchpad – can have big consequences. Here’s why:
- Getting wrapped up in operating the business rather than running the business; Many business owners race ahead and secure more orders, order more stock or hire more staff without thinking of the longer term strategy they are trying to achieve. Are those new orders profitable? Can you store (and pay for!) that extra stock? What sort of new staff member do you actually need? Taking the time to plan your growth properly generally won’t slow you down much at all, and pretty much always pays off
- Biting off more than you can chew; It can be a bit of a hamster wheel at times – to grow you need those new customers, but to service their needs you need to grow. What do you do first? If you go ahead and take on a huge new order or contract, but then can’t deliver, you can do much more damage to your brand than if you hadn’t taken it in the first place! Think carefully about the capacity you have, and what you need to have in place to make your new (and existing!) customers love you. It may mean getting that new staff member on board now so they have time to get up to speed before throwing them in the deep end, or sorting out finance with the bank to take the pressure off when you order a lot of extra stock
- Forgetting who you are; Many businesses start as small operations with the owner doing most of the hands on work. As you grow, you have more demands on your time, meaning you are doing different things than when you first started. It is important to remember – whatever the stage your business is at – that you are a business owner, with everything that comes with that. That means you need to understand so much more that just how to do the job – you need to know how to run the business!
- Seeing your business grow and succeed is an amazing thing. Doing it properly will ensure the success lasts.