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

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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 »

Xero End of the Year Tips

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As the calendar page has turned to show us it is March – which, by the way, happens every year – we see and feel the anxiety levels start to kick-in for business owners and their bookkeeping, accounting and tax professionals.  (Yes, even bookkeeping, accounting and tax professionals get anxiety).  Wouldn’t it be great to change this annual occurrence of anxiety with just a few simple steps? Your anxiety can be eliminated, if you choose now to implement these tips.

How different would your business be IF…. Your record keeping is current and ready to hand over to your bookkeeping, accounting or tax professional sooner rather than later. At this time of the year, when businesses are pulling their year-end info together for their annual accounts and tax preparation we offer the following Tips. Read More »

Understanding the “Debt Cycle”

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  Debt

The “Debt Cycle”

Ever been here I have. There was a time when I was in debt where I owed quite a bit of money to people and the bank. It was so bad that even my Credit Cards were maxed out. There were times when I would see someone I owed money to and I would cross to the other side of the street just so I would not have to stop and talk to them. I was financially, physically, emotionally and spiritually not in a good place.

I am going to share with you, what I believe is, valuable knowledge regarding the “Debt Cycle”. It was given to me during my darkest hour and was to be a major turning point in the way I looked at debt. Read More »

Understanding the Debt Cycle and Business Debt

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The Debt Cycle

If you are in business it is important that you understand the Debt Cycle and how it relates to your customers / clients (your Debtors), you and the people you owe money to (your Creditors). I would go as far as to say that not understanding the “Debt Cycle” is the primary reason I am seeing an increase in the length of time it is taking for businesses to pay their creditors.

Business Debt

As a business we extend debt to our customers and our terms are that “Payment is due in 7 days of receipt of the invoice”. As the business owner, unless the client has a query regarding the invoice, I expect our clients to honour that and on the main this happens.

However having said that if I don’t follow up on an overdue account then the seven (7) days does not mean a thing and can actually lead to the client paying their account later and later. So on the odd occasion that this happens I need to “nip it in the bud” so to speak.

Conversely, I expect our clients, not to ignore their debt to us and to come to me if they are unable to for one reason or another to pay by due date. Believe you me there is a lot of expense involved in chasing bad debts. Read More »

The simple way to save for business taxes

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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 »

Is there a GAAP in your Business thinking?

The GAAP (Generally Accepted Accounting Principles) formula for determining a business’s profit is Sales – Expenses = Profit. It is simple, logical and clear. In the GAAP formula profit is a left over, a final consideration, something that is hopefully a nice surprise at the end of the year. Alas, the profit is rarely there and the business continues on its cheque to cheque survival.

Sales – Expenses = PROFIT

With Profit First you to flip the formula to: –

Sales – PROFIT = Expenses

Logically the math is the same, but from the stand point of the entrepreneur’s behaviour it is radically different. With Profit First, you take a predetermined percentage of profit from every sale first, and only the remainder is available for expenses.

If you want help or have any questions in regards to the above then please contact us or find out more about Profit First

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

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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.

 

 

How a British naval historian from the last century can make you more profit

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Author and British naval historian Cyril Northcote Parkinson theorized that our demand for a resource increases to meet the supply of it. That is why when we are given two weeks to do a project it takes two weeks, and when we are given eight weeks to do the same project it takes eight weeks. That is why when given $1,000 to complete our work we get it done with $1,000 and when given $10,000 to complete the same work, it takes $10,000. Profit First makes Parkinson’s Law an asset. By taking profit first the money available for expenses lessens, and we are forced to find ways to get the same things done for less money.

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.

Further 4% Penalty applied on 15th January 2015 Unpaid GST

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Last Thursday, 15th January 2015, for many entities (read our post about what an entity is) was the GST Due Date for the GST Period 1st October 2014 to the 30th November 2014. If you were you unable to pay the GST due then please note that: –

  • An initial 1% late payment penalty has been charged on the day after the due date.
  • A further 4% penalty will be charged if there is still an amount of unpaid tax (including penalties) at the end of the 7th day from the due date.

Read More »

Unable to pay GST? Take action NOW

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The 28th of this month is the GST Due Date for the GST Period 1st June 2015 to the 31st July 2015. If you are unable to pay the GST due then please note that: –

  •     An initial 1% late payment penalty will be charged on the day after the due date.
  •     A further 4% penalty will be charged if there is still an amount of unpaid tax (including penalties) at the end of the 7th day from the due date.
  •     Every month the amount owing remains unpaid, a further 1% incremental penalty will be added.
  •     As well as the penalties above you will be charged interest on tax that remains unpaid until it is eventually paid.

Read More »

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

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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?

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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.