COVID-19 Wage Subsidy Scheme
If you’ve had to close your business or reduce your hours due to Level 4 restrictions, you can apply for the COVID-19 Wage Subsidy scheme. To be eligible, you must expect a 40% drop in revenue. You can get $600 per week for each full-time employee, and $359 per week for each part-time employee.
Apply here (Note that you can’t get the Wage Subsidy, Leave Support Scheme and Short-Term Absence Payment for the same employee at the same time).
COVID-19 Resurgence Support Payment
This helps to cover wages and fixed costs for businesses who have been directly affected when there is an increase to Alert Level 2 or higher for a week or more.
You must have experienced at least a 30% decrease in revenue over a 7-day period due to an increase in alert levels to be eligible. You can get $1,500 per business plus $400 per full-time employee.
Small Business Cashflow Loan Scheme
If you have less than 50 team members in your business, you might be eligible for the Small Business Cashflow Loan scheme. This is a one-off 5 year loan. You can borrow up to $10,000 plus $1,800 per full-time employee.
You’ll need to be able to declare that your business is viable and has experienced a minimum 30% decline in actual or predicted revenue over one month, compared with the same month last year.
This loan is interest free if you pay it back within 2 years. The interest rate is 3% for a maximum of 5 years.
COVID-19 Leave Support Scheme
If you have employees who are required to self-isolate and can’t work, you can apply for the COVID-19 Leave Support Scheme for them.
This support payment covers employees who:
With this one, you can get $600 a week for full-time employees and $359 a week for part-time employees.
Apply here (Note that you can’t get the Wage Subsidy, Leave Support Scheme and Short-Term Absence Payment for the same employee at the same time).
COVID-19 Short-Term Absence Payment
This payment helps you to keep paying employees who need to stay home and can’t work while waiting for a COVID-19 test result for themselves, their dependents or someone they live with.
You can get a one-off amount of $359 for each eligible worker.
Apply here (Note that you can’t get the Wage Subsidy, Leave Support Scheme and Short-Term Absence Payment for the same employee at the same time).
House insurance
If you already have house insurance, let your insurance provider know that you are running your business from home. Some providers will continue to insure a home when it’s partly used for business purposes, but it does depend on the level of risk. They would need to know the type of business, whether clients come to your home, and the kind of materials you keep on the premises that could increase the risk of fire or theft.
Contents insurance
Similarly, with your contents insurance you would need to disclose the assets that you use as part of your business. Contents insurance policies do tend to exclude items used for business purposes, but it will depend on what your policy includes. It’s best to check in with your broker or provider to make sure you’re covered where you need to be.
Vehicle insurance
If you’re using your personal car for business reasons such as running work-related errands or meeting clients, you’ll need to have a commercial vehicle policy. Sit down with an insurance adviser to make sure your policy covers everything you need. The last thing you want is to face the costly consequences of an accident where repairs or loss of stock in the back seat won’t be covered.
Liability insurance
It’s important to keep yourself protected in the event of any legal proceedings resulting from damage or injury. If you’re a hairdresser who used a product that a client had a severe reaction to, you might need to provide a refund and pay any medical bills. Similarly, if a client comes to visit you at your home and has a fall, you could be liable.
If you want to sit down and talk to an expert to make sure your home business is covered, get in touch with us today!
Firstly, what exactly is GST?
If you’re a business owner, you should already have an understanding of GST, but to refresh your memory, Goods & Services Tax (GST) is a tax that’s added to goods and services in New Zealand. The current GST rate is 15%.
When you own your own business, you are collecting GST on your product or service on behalf of the government, which you will then potentially need to pay back when you file a GST return.
Do I need to register for GST?
You are required to register for GST if your turnover was $60,000 or more in the past 12 months, or if you expect it will be at least $60,000 in the next 12 months.
If your turnover is less than this but you are adding GST to the price of your goods or services, then you will also need to be GST-registered.
I’ve registered for GST – now what?
Once you’ve registered for GST, you’ll need to charge GST in the pricing of your goods and services, and keep records of your GST payments and charges.
You’ll also need to file GST returns regularly – you can select how often you would like to do this, the options are monthly, two-monthly, or six-monthly.
Why do I need to file a GST return?
When you are selling your products or services, you are collecting GST, but when you make a business purchase, you are paying GST. When you file a GST return, the difference between how much GST you’ve collected, and how much GST you have paid in expenses is calculated. You may need to pay more or you may receive a refund depending on this difference.
If you collected more GST than you paid, then you need to pay the balance to IRD when you file your GST return. If you paid more GST than you collected, you can get a GST refund from the IRD.
I’ve closed my business down, can I deregister from GST?
You can deregister from GST through the IRD, just head to your myIR page and click on the GST section. You can then choose to cancel your registration.
If you’d like to know more about the GST obligations of your business, get in touch with our expert accounting team today!
Sole Trader
Setting up as a sole trader is one of the easiest options for someone starting out, particularly if you’re just going to be working on your own. This is a great option for someone who wants to make a living out of a hobby.
You have control over your business, you’re entitled to all profits, and there aren’t any formal or legal processes to get started.
Pros: It’s quick and easy to set up, you have full control over the business and the profits, and you can offset your losses against other income you may have.
Cons: Because you are solely responsible for the business, you’re also liable for any and all debts you might incur which could put your personal assets at risk. It can also be difficult to grow and expand this kind of business, and getting loans could be trickier.
Tax: As a sole trader, you pay tax on all of the income you earn. You can also claim business expenses to help reduce your income tax. You are responsible for all of your business debts, including tax and ACC levies, and at the end of each financial year you will need to complete a tax return.
Partnership
A partnership is a good way to go if you plan to run your business with someone else.
With a partnership (which can be more than two people), all partners are jointly responsible for the business. You need to create a partnership agreement to declare how you will share profits and responsibilities.
Pros: You are able to share the responsibility of running a business, including any costs involved. Because profits are paid out to the partners who then individually pay their own taxes, it makes it clearer to see just where your business profits are going.
Cons: Because you share responsibility, you are all also liable for each other’s debts which could put personal assets at risk. A limited partnership that can reduce this risk.
Tax: Within a partnership, all income is distributed between the partners who then pay income tax on their own share. At the end of the financial year, each partner needs to complete an individual tax return.
Company
A company is a legal entity which is separate from its owners. The company itself owns the business assets, and is responsible for any debts.
Conducting business as a company is often more difficult than other business structures because you have extra legalities and tax responsibilities to be aware of.
Pros: A company gives your business a more professional and reliable appearance and boosts your credibility. Your tax rate is also often lower than personal tax rates. Your business can also grow as much as you like and can be sold when needed as it isn’t tied to any person, it’s an entity in its own right.
Cons: It can be quite costly to register and set up a company. There are also more regulations for companies, and more complex taxation requirements. Any directors of the company also need to be aware of their responsibilities within the company for legal purposes.
Tax: A company pays tax on any profits it makes after expenses, and if the company gives out profit to its shareholders, the shareholders will need to pay income tax on the dividend.
If your company’s expenses are more than the income, it makes a loss and may not have to pay tax. You will need to file annual returns with both the Companies Office and Inland Revenue.
If you’re not sure which business structure is right for you, book in a consultation with our expert business team today!
1. No long-term thinking
Particularly in the wake of the pandemic, you’ve probably been focusing more on the next few months rather than the next few years. It’s all been about survival rather than long-term growth. But now it’s time to take a look at the longer-term goals you have for your business. Where do you want it to be in five or 10 years from now? If you’re not sure where to start, or how to forecast that far into the future, our expert team of business strategists can help.
2. No Unique Selling Point
A USP should be one of the first things you think about when starting a business, but over time, this will need to be reviewed. It’s not enough just to think you have the best product or service in the market, potential customers also need to think that too. When was the last time you checked out your competitors? Maybe you have the same USP as another company but they’re marketing it more. Are you still the best? If not, it might be time to pivot.
3. Focusing too much on one thing
It can be easy to get caught up in one particular aspect of your business such as a new product launch. Whilst it’s important to be across these things, your role as business owner is to always be looking at the bigger picture. What are your plans for the few months after your product launch? You should always be looking ahead and planning for growth where you can.
4. Focusing on too much at once
On the other side of the coin, it can also be a mistake to focus on too many things at once. If you’re trying to be involved in everything that’s going on in your business, you could end up spreading yourself too thin. If you have a team you can delegate tasks to, be sure to do that. That way, you can check in with them for progress reports but you don’t need to be trying to manage everything at once.
If you want some strategic business advice, or just a fresh perspective on how to grow your business, get in touch with our team today!
To help you prepare for future risk
This is a pretty obvious reason, but if you want to know how your business will fare based on how you’re currently tracking, a cashflow forecast will give you great insight. Not only can you get an overview of your situation, but with a forecast, you can test out various scenarios and put a plan in place for any potential risks that might arise.
To identify patterns
By looking at your business as it stands now, a cashflow forecast can help you to identify patterns and predict when you might need to scale up or down. For example, if you have a business where your product demand is seasonal, you’ll need to identify where your slower periods are and factor this into your planning and growth.
To reach your business goals
You might have certain targets you’re hoping to hit in your business in terms of profit or growth, but to make sure you can reach them, you need to know your current trajectory. By looking at a cashflow forecast, you can get an idea of when you are likely to reach your goals, and if it’s not within your specified timeframe, it gives you a chance to readjust or put more resources into making it happen sooner.
To demonstrate good practices
If you’re looking to secure a loan for anything in your business, a bank or lender will be much more likely to consider you if they can see that you can plan ahead. A cashflow forecast enables you to provide a detailed financial projection for your business, and shows that you are aware of any potential issues and have a plan in place to mitigate them.
Cashflow forecasts typically include:
If that seems like a lot, and you’d like some help putting together a cashflow forecast for your business, just get in touch with our expert accounting team today – we can help get you on the path to success!
1. Review your financial situation
It’s probably not something you’re going to enjoy, but taking a deep dive into your current financial situation is the only way you’re going to know how everything really stacks up and what you need to do to fix it. This is where it’s a good idea to get some professional advice – an accountant can objectively look at your cash flow and suggest practical ways you can get your financial situation back on track.
2. Zero in on any cutbacks
You might have already made quite a few cutbacks on certain things out of necessity, but once you know exactly where you stand with your cash flow, it’ll make it easier to see what else you could review. Is there a particular supplier who gives you a headache whenever you think about them? It’s easy to stick with people you have a good relationship with, but if you’re in dire straits, it could be time to review what other options are out there for you.
3. Double down on your marketing
Usually when you’re trimming the fat in your business, it can be easy to think that reducing or eliminating your marketing efforts will help. But marketing your business is actually a very important piece of the puzzle, particularly during COVID-19 where people are engaging online more and more. Your marketing plans should be focused on your online presence, rather than on flyers or other more traditional materials.
4. Make a risk management plan
Now that we generally know how an alert level change works, it’s a good idea to have a plan in place for how you will manage the next one. Particularly for Auckland businesses, the numerous lockdowns have been stressful, but perhaps you fared better in the latest one than you did in the first. It’s all about learning from each situation and putting a plan in place to mitigate any risks and disruptions as much as you can.
5. Keep doing what you do best
Especially during times like these, clients will be a little more picky about who they’re choosing to give their hard-earned money to when they need something. Make sure you’re promoting any good client reviews and testimonials, and ask for referrals where you can. Focus on your strengths, and keep providing the best products and/or services you can.
It’s a pretty tough time for businesses at the moment, but our team is here to help. If you want to take a look at your cash flow, or you want some practical advice to help you bounce back, get in touch with our accounting team today.
Know what you can and can’t claim as an expense
Knowing when income is gained and expenses incurred can have a significant impact on your taxable income for the year. Haven is well-versed on what expenses you can claim – we can help to make sure you’re correctly recording income and expenditure in the appropriate year.
If you own a rental property, the determination of whether expenditure is repair/maintenance or capital in nature is an important one to make. There is a thorough step-by-step process involved in identifying the asset, and then determining the nature of the expense. Haven can talk you through these new guidelines and what they mean for your rental property.
Check when your income needs to be recognised
Did you know you can recognize some income on a cash basis? Other income needs to be recognized on an accrual basis, where income is deemed to have been gained once the services have been performed and businesses need to pay tax accordingly.
Review your accounts receivable for bad debts
An important step in your year-end processes should be the thorough review of accounts receivable balances to determine which of these are no longer likely to be collected. These can then be written off as a bad debt and a deduction can be claimed.
Check your imputation credit balance
If your imputation credit account is in debit at 31 March, you’ll need to pay further income tax and will be charged an imputation penalty tax. Get in touch with Haven today for assistance on how to clear any imputation account debits.
Understand your Government Tax Relief options
There are a few options the Government has put in place for tax relief, including the reintroduction of depreciation on commercial buildings, the temporary loss carry-back scheme, and the employee reimbursement of $400 plus $20 per week tax free to cover costs associated with home office and working from home during COVID. If you’d like to know more about these initiatives and what they mean for you, just give us a call!
Important things to note:
1. Figure out your unique selling points
Before you start setting everything up for your new business, it’s important to have a think about how viable it will be. Consider what makes your business unique, and what will differentiate you from your competitors. Do you have a product no one else has? Or will you be providing fast and quality service?
2. Know who your customers are
It’s important to know who your ideal customers are. How old are they? What do they love? Once you know these traits, you can then decide how to market your product or service accurately. There might also be gaps in the market for this customer demographic, so be sure to do your research.
3. Set yourself apart from the competition
So you know what your USPs are, and you know who your customers will be. So how can you make yourself stand out from your competition? Take a look at your competitors’ operations to see how they do things. Do they offer free shipping? Do they offer 2 day turnarounds on quotes?
4. Have a business plan
You might want to jump straight in and get your new business going, but you’ll need to have a solid plan first. A business plan helps you organise your goals and provides a map for where you want to be, and how you will get there. Check out this handy guide for writing a business plan.
5. Work out your profit forecast
On top of having a business plan, you’ll also need to know whether you’ll actually make a profit. This is where the professionals come in handy. Engage the services of an accounting expert who can create a cashflow forecast for you, and give you an idea of how to structure your business. At Haven, we’ve got just the team to get your new business started on the right foot – give us a call today!
Work backwards
The best place to start is actually from your end goal, and then work backwards. Set a date for when you want to achieve your goal, then work backwards to plan what you need to have done at each step to get there. Set milestones as you go so that you’ve got smaller goals to achieve each week or month to get you where you need to be.
Set SMART goals
You might have heard about SMART goals, but do you use them regularly? SMART goals are goals that are Specific, Measurable, Attainable, Relevant, and Time-Based. Making sure your goals are SMART will make a world of difference when it comes to actually achieving them. You can read more about SMART goals here.
Review your goals
Your goals shouldn’t be a set-and-forget approach. Your circumstances might change, and the way you reach your goals should change with it. Make sure you’re taking the time to review them regularly so you can check that you’re on track and that your goal is still relevant and important to you.
Remember your ‘why’
As you go along, it can be easy to lose the motivation to achieve your goals. This is where your ‘why’ comes in handy. All of your goals, even though they might be related to your business, should have some significance to you personally. This makes it easier to stay motivated and remember why you have those goals in the first place.
What are your business goals for 2021?