Did your Business start in this Financial Year? Will you have to pay the IRD Use of Money Interest?

IRD_UOMI

As a new Non-Individual (Company or Trust) business you could have to pay Use of Money Interest to IRD?

A new business (Company or Trust) is one of the categories of taxpayers that may be liable for interest even if they have no provisional tax liability in their first year of operation.

You may have to pay Use of Money Interest (UOMI), if the Residual Income Tax (RIT) is greater than $2,500. Note: RIT is the amount of tax you have to pay, less any tax credits you may be entitled to (excluding working for families’ tax credits or other tax payments made during the year) and any PAYE deducted.

In the first year of operation of a business there is normally no Provisional Tax Due. This is because Provisional Tax is based on the RIT (tax to pay) on the last income tax return when it is more than $2,500. Therefore because this is the first year of operation the tax liability is often overlooked and a Company or Trust ends up with UOMI to pay. Read More »

The simple way to save for business taxes

certIntroduction

As a Profit First Professional helping our clients to increase profitability, I educate the business owner / self-employed contractor that like all other business expenses, taxes must be saved for. In Profit First methodology, regarding saving for taxes, we encourage clients to have a minimum of three bank accounts: –

  • Their current operating account which is normally a cheque account which we ask them to rename as the Income Received Account,
  • A savings account named Operating Expenses Account, and
  • A savings account named Tax Account.

For the purpose of this discussion I will keep the explanation simple as to what I require you to do:-

Read More »

How can I increase PROFIT? Have you heard of the Bank Balance Accounting principle?

Profit First Book Cover

Most entrepreneurs do not have the time or gumption to read the different accounting statements necessary to manage the financial aspect of their business. Theoretically you should review and correlate your Income Statement, Balance Sheet and Cash Flow Statement monthly (or more frequently), but few entrepreneurs do. Most resort to “bank balance accounting,” where we check our bank balance every day and make financial decisions based upon what we see. Per Parkinson’s Law, we consume what we see in our bank account.

Profit First encourages the entrepreneur to continue “bank balance accounting” by first allocating money to profit (and other accounts) so that the entrepreneur sees the actual portion of deposits that are available for expenses and they automatically adjust their spending accordingly. About Profit First

“If you always do what you’ve always done, you’ll always get what you have always got.”

Thank you for taking the time to read this. I trust that the above has been informative and if there is any aspect that you wish to discuss further please contact us.

Disclaimer: This publication has been carefully prepared, but it has been written in general terms only. The publication should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.

 

 

Yippee!!!! Today is our Quarterly Distribution Day.

Profit First Book Cover

We are about to take our quarterly distribution cheque. That’s right, our business is serving us, now and we take a distribution cheque every quarter, every ninety days profit is shared to us.

An important aspect of the Profit First Methodology is for the business owner on the first day after the end of a quarter, to take a Quarterly Profit Distribution.

Let me explain: By implementing Profit First on the first day of each new quarter (or the first business day after), you, will take a profit distribution. This is done by adding up the total amount of profit in the Profit Account, taking 50% of the money as a profit distribution with the other half remaining in the Profit Account, as a reserve.

Not paying a quarterly distribution and want to start? Find out how

 

Are you taking a Quarterly Profit Distribution?

Profit First Book Cover

An important aspect of the Profit First Methodology is for the business owner on the first day after the end of a quarter,to take a Quarterly Profit Distribution.

Let me explain: By implementing Profit First on the first day of each new quarter (or the first business day after), you, will take a profit distribution. This is done by adding up the total amount of profit in the Profit Account, taking 50% of the money as a profit distribution with the other half remaining in the Profit Account, as a reserve. Read More »

What is profit first?

Profit First Book CoverOne of the best small business thinkers today, Mike Michalowicz recently released his third book, called Profit First. This book solves one of the biggest problems most entrepreneurs have: how do they actually get paid to run their business!

The story goes like this: The owner works really hard to sell and pay all their bills every month. When they go to pay themselves last, there is no money left! Mike’s new system proposes to change all of this and pay the owner first. Read how…

New Zealand’s Only Certified Profit First Professional

We are the only firm in New Zealand to have received certification as a Profit First Professional.

certNot only do we have direct access to Mike Michalowicz (mi-‘kal-o`-wits) the author of the book Profit First and the Profit First Professionals Team, we also have access to all the global Certified Profit First Professionals, who are all working with clients using the Profit First Formula.

What does this mean for you? As you can see we have access to a wealth of knowledge and experience, through the Profit First Professionals network, to be able to address any situation you find yourself in. We are able to guide you using the Profit First methodology to greatly increase the profitability of your business.

Of course, we are able to help you with your books, manage your accounts and do your tax returns – but any bookkeeper can do that.  Where we differ is that we also provide the most important financial factor – helping you make more profit.