Embracing Cloud Accounting

Why You Should Embrace Cloud-Based Accounting

What do clouds, rainbows and accounting have in common?

Normally those are three things that you wouldn’t necessarily hear in a sentence together. But cloud-based accounting really can make rainbows appear in your business. And that is why we think you should embrace it wholeheartedly!

Let’s face it; if you are self-employed or running your own business, your bookkeeping obligations can be a bit of a drag. You got into this to do what you love and be your own boss – not to spend hours at a computer screen trying to make sense of invoices, transactions and tax.

But then, cloud-based accounting entered the market. Many small business owners are choosing to move to the cloud due to the increased ease and efficiency. So if you are still doing your accounting the old-fashioned way, it might be time for a change!

What does it mean to be cloud-based?

Is my information literally floating in the sky?

Kind of! Cloud-based software gives users access to accounting technology on a subscription basis. You pay a monthly or annual fee, and the provider remotely and securely hosts the databases and servers. You can easily access your data from anywhere at any time by simply going online.

Let’s explore why cloud-based accounting is so much better than the old traditional paper methods!

Problems with traditional accounting systems

  • It’s inflexible – Older accounting software is installed on your computer and is usually limited to exactly that – your one Data cannot be securely transferred from one place to another, it often requires the use of a USB drive or something similar. That jeopardises the security of your information and limits where you can do your work (hint – that means you can’t sneak in cafe working hours!)
  • It’s risky – It’s also common to only have one account or user login, because buying additional licences for other users is very expensive. This means if your computer is lost, stolen, or has a virus – you’re up the proverbial creek. Computers can be vulnerable to viruses, and if all of your data is stored on one PC, you could lose it in one hit.
  • It’s outdated – As the software gets older, it gets more out of date and inefficient for your growing business needs. It can be an expensive process to upgrade existing software and keep access to your old data.
  • It’s unreliable – Speaking of data, some older systems do not have the capacity to back it up at all. We’ve all accidentally deleted something that we really shouldn’t have. Not being able to get it back is a less than ideal situation.
  • You’re on your own – It’s almost impossible to get help or support when something is going wrong with your old accounting software. There is usually a customer support phone number, which is either never answered or it’s disconnected.

Benefits of cloud-based accounting systems

  • It’s accessible – Wherever you have Internet or mobile data, you can access your business information. This is essential for meetings on the go or for work trips where you can’t be at your desk, but need to be able to see or edit your data. It also means that your accountants have a clear and up-to-date overview at all times. No more frantic searching for receipts and invoices at tax time!
  • It’s streamlined – Cloud-based accounting systems are relatively new and have been designed to be user-friendly and largely automated. This cuts out a lot of the administrative work for you, giving you more time for other things.
  • It’s really smart – Most cloud-based systems are sophisticated and go way beyond basic spreadsheets and calculations. They feature detailed budgeting and financial analysis and come with heaps of other features to help you run your business better.
  • It Saves You Time – Systems like Xero offer one-click reconciliations, tax and GST reporting (with a direct link to upload to IRD), the ability to set up repeating invoices, automatic invoice reminders and so much more. That means it saves you hours of time completing these tasks manually.

As you can see, we are complete cloud advocates here at Accountants Plus. If you are interested in knowing more about how cloud-based accounting can streamline your business, or even how we can help you manage your cloud accounts then get in touch with us today.

Key Metrics In Your Business

Key Business Metrics You Should Be Monitoring

Do you know how healthy your business is? Could you say with confidence how much money is in your surplus budget, that all of your expenses are accounted for, and that there is little chance of a nasty surprise popping up?

If you answered no to any of that, you need to be monitoring aspects of your business more closely.

The secret to success is tracking key business metrics within your operation. Those metrics are…

Your Cashflow

Monitoring your cash flow is Business 101. It means looking at the physical dollars that are coming into your bank accounts, and the ones that are exiting your accounts too. The money that you pay out is known as negative cash flow, and the money that comes into your business is positive cash flow.

If you don’t know what is coming in and going out, then you don’t know if your business is doing well or not. Do you have enough to cover your expenses? Or do you have surplus money that you should be investing into a growth strategy? Remember this one key thing, positive cash flow does not equate to profits, it is simply the money that you have to spend in your business.

Short-Term Debt

Your most common form of short-term debt is your Accounts Payable. That is the bills that your business has received, but hasn’t paid yet. They will show up as a liability in your financial reports and statements. Tracking this metric is important, as you need to know that you have the cash flow to cover these upcoming bills.

You don’t want to fall into the trap of paying bills late as this can result in penalty fees or a black mark against your business’ credit rating. You also don’t want your bills to impact any debt repayments or your ability to pay your payroll. Keep a close eye on your short-term debt and manage it well.

Funds Owed

Generally, the biggest part of funds owed to your business is from your Accounts Receivable. This is generated by invoices you have sent out, or products sold and services completed that you have not yet been paid for. These funds will show as an asset on your financial statements, as they are revenue that you expect to receive in.

You should not recognise your funds owed as money in the bank until it actually hits your account. Encourage your customers to pay on time so that it doesn’t negatively impact your cash flow. If they are late in paying your invoices, make sure you follow up as quickly as possible. The longer a debt is outstanding, the harder it is to collect.

Direct Costs

Direct costs are also known as the cost of goods sold. They are costs directly associated with providing your products or services – wholesale costs, the cost of materials to make your products and even specific labour time specifically dedicated to producing your products. Monitoring your direct costs will show you how much it cost you to provide your products and services. If these costs become too high then you need to consider the viability of your offerings, or if you can make some cost savings.

Direct costs show on your Profit and Loss statements. If you subtract your direct costs from your revenue then you will be able to calculate your gross profit. Your direct costs do NOT include indirect fees like the cost of advertising, marketing, rent, or insurance.

Operating Margin

Your Operating Margin is the money you have left in your business after your income has been generated, and your direct and indirect costs have been paid. It is a good indication of how well your business is performing after you have paid for your products, all of your marketing and general expenses.

If the amount leftover is low then you might not have enough left to pay your taxes. This may mean you need to review your business model or pricing structure. But if you have a lot leftover, then there is potential you can reinvest the funds.

Net Profit

The net profit is the bottom line of your business. It is the money that is left over after you have paid all your costs, as well as Tax and GST. They are the funds that don’t have to be reinvested into your business. Tracking this helps you to establish how much money you have to invest in the growth of your business, or how much you can draw out.

Cash Balance

How quickly do you burn through any funds left in your business? Do you spend it as soon as it comes in, or can you maintain a healthy balance of positive cash flow? You should think long and hard about how you spend your cash balance as it is the funds you have to invest in your business. If you spend everything you have the second it hits your account, then you will have nothing available to support your future business growth.

While it is important to track these metrics in your business, it is not always possible to do it yourself. Financial terms can seem like a foreign language and who has the time to decipher a new language? After all, time is always an issue when it comes to running a business as you want to focus on the things you do best to generate revenue.

So, if you would rather rest easy knowing that your finances are being looked after, consider letting Accountants Plus monitor them for you. We have a team of financial gurus who are experts in measuring the financial health of your business with these metrics. Get in touch with us today to see how we can help.

Is Business Tax Really That Scary

Is Business Tax Really That Scary?

T… A… X. Three little letters that can strike fear into the heart of any small or medium business. And what about all those other acronyms… FBT, GST, IRD, ACC, and PAYE.

But is tax really all that scary?

Your business tax does not have to be an unsolvable mystery. Let’s have a look at how it works and what you can do to make the whole process easier for your business.

Is Business Tax Really That Scary?

When it comes to tax, you need to be well informed of what is going on in your business and what obligations you need to meet. Unless you are a financial whiz, it is 100% recommended to have an accountant on board to help you meet those obligations.

Here are the benefits of having an accountant when it comes to your tax:

  1. Accountants deal with tax on a day to day basis so have all the up to date information on changes to regulations
  2. There are many ways that you can streamline your tax process, an accountant can help you set up systems that will save you time and keep you compliant
  3. Dates are a fundamental part of your tax obligations, these dates are ingrained in an accountant’s brain so they will always be able to remind you of when milestones are coming up
  4. An accountant can help you claim on all the expenses that you are entitled to which can save you money
  5. Accountants can provide advice on the tax advantages for large purchases, leasing equipment, using a private vehicle, or other business queries

Here at Accountants Plus tax does not scare us at all. In fact, we are actually tax experts. So don’t hesitate to get in touch with us if you need help figuring out what you have to pay and when you have to pay it.

What Is Tax?

Let’s cover off the basic question first. What is tax?

Tax is a compulsory financial payment that every New Zealand business must pay to the government to fund various public services and expenses. The amount of tax you have to pay will depend on your earnings and the setup of your business.

The different tax types are:

Income Tax: The main compulsory form of tax. It is calculated on your net profits (your total revenue, less your expenses) and the rate will differ depending on whether you are a sole trader, partnership or a company. To prevent the shock of a large tax bill, you are encouraged to pay in instalments throughout the year called provisional tax payments.

ACC: An annual levy that you must pay to cover the cost of workplace injuries. Even if you work in a low-risk profession or from home, you will still need to pay this levy. It is like an insurance policy in case injury does occur.

GST: Your business must be registered for GST if you have an annual turnover of more than $60,000. GST stands for Goods and Service Tax and applies to any product or service that is sold within New Zealand. The current GST rate is 15%.

PAYE: If you employ staff and pay them a wage or pay yourself a salary, then you will need to pay PAYE (Pay As You Earn) to the IRD on a monthly basis.

ESCT: A tax paid on any contributions to employee superannuation schemes including Kiwisaver.

FBT: This is payable if you provide perks or benefits to your employees as part of their employment.

This does look like a long and scary list of taxes. But, if you manage your business well and get the required help, then none of them should come as a shock when the bill arrives.

Ways To Make Tax Less Scary

There are a few things that you can do in the day to day running of your business to make tax less scary.

Have A Good System

The key thing with tax is having a clear picture of your earnings and expenses. The best way to do this is to have an effective accounting system in place that allows you to see your numbers at a glance. Something like Xero is easy to use and has great reporting that will help at tax time.

Regardless of the system you choose, it is important to stay on top of your financials regularly. So take the time to reconcile your incoming and outgoing funds on a daily or weekly basis.

Put Money Aside Regularly

It can be really difficult to come up with a large sum of money at tax time. If you set aside a portion of your earnings each month then you will never have to worry about being caught short. Have a chat with your accountant to find out how much you should be setting aside to cover all of your tax obligations.

Don’t Try And Muddle Through Or Stick Your Head In The Sand

Paying tax is a part of business. In fact, it is a positive part. If you have a tax bill then you must be turning a profit. So don’t ignore your tax and hope that it will go away because it won’t.

Likewise, don’t be naive about the process. There are some strict and specific regulations when it comes to tax. If you don’t really know what you are doing, seek help. You can end up paying more tax, or have penalties applied if you don’t follow the process correctly. There is information available online for free, but it is generic information. It is far better to get individual advice specific to your business from your accountant.

If you don’t have an accountant in place or you aren’t happy with your current one, then get in touch with us at Accountants Plus. We will be happy to take your scary tax monster and turn it into a very manageable process with no monster spray required!

Things to check before buying a business

10 Things To Check Before Buying A Business

Buying a business that is already established can be an exciting opportunity… if it is the right business. You can get the benefit of a solid reputation, steady cash flow, loyal customers, proven processes and a reputable brand. But if you aren’t careful, you can end up with a bunch of negatives you weren’t expecting.

When you consider buying a business, it is essential to do your research to ensure you actually want what the seller is offering. It might seem great at first glance, but there could be some skeletons lurking in the closet upon closer inspection.

To prevent any nasty surprises, these are the things we recommend you investigate…

10 Things To Check When Buying A Business

Instead of jumping in blindly with both feet, there are five important questions that you need to ask before you even consider purchasing a particular business.

They are…

1: Why Is The Business For Sale?

This is the first and most important thing to look into. Is the owner selling the business for a legitimate reason, or are they trying to desert a sinking ship? There are many reasons that people decide to sell, just make sure a significant decline in the business is not the reason.

2: What Is The Business’ Reputation Like?

Does the business have a good name? If so, then it is likely to have the loyal customers and steady cash flow that you are after. If it does not have a good reputation, then you need to ask yourself why that is and can it be easily recovered?

3: Is The Business Profitable?

A business needs to make a profit, no matter how much you love what you do. Not just scraping by or covering costs, but a genuine profit that makes it worth your while to invest your blood, sweat and tears. If the business is not currently profitable, is there a way that you can easily turn it around? If not, it is better to walk away now.

4: Are The Conditions Right For Success?

Does the business fill a gap in the market, have local or national importance, or serve a very specific need? Any company needs to have the potential for success. So, the location needs to be right, the products or services need to be on point, and there has to be a need for it in the market.

5: What Is The Outlook For The Future?

Does the business have potential to grow and develop? If not, are the current conditions sustainable and will they satisfy your interest levels and your income needs? If the future looks uncertain or grim, then maybe consider a different business instead.

What Next?

If the answers to those five questions don’t make you run away in fear, then it is time to dig deeper into what’s on offer in the sale. These are the things you should check before proceeding further:

1: Financial Statements & Sales Records

Have an accountant look over the financial statements for the business. Here at Accountants Plus, we are experts in reading the story of how the business has been operating and if it is a profitable investment for you. We can also help you analyse the sales records to see which products or services are the most popular and profitable. This information, plus investigating peaks and troughs throughout the year, will allow us to give you an accurate cash flow forecast.

2: Inventory and Asset Lists

Understand exactly what your money is buying you. Getting saddled with thousands of obsolete stock items is not something you want. You will want to know what assets you are receiving and how old they are. Ensure you have the right assets to keep the business running, but be mindful of ageing assets. They could mean a significant cash outlay to update them in the not too distant future.

3: Legal Documents

Request copies of any legal documents like lease agreements, insurance policies, employment contracts, license agreements, and any other legally binding documents. Have a clear picture of existing obligations and how long they remain in place for.

4: Location and Demographic

Is the business well placed for foot traffic and walk-in sales? Has the surrounding suburb undergone any changes that could negatively impact on the business? Also, consider your potential for digitising, or going online if that has not been done already.

5: Existing Staff

It can be both a curse and a blessing to take on existing staff. They will allow the business to tick over seamlessly while you find your feet but can be resistant to change. Find out about the personalities involved and consider how that will impact your ability to take over the business.

There are a lot of things to consider when buying a business. One of the most important things is to follow your gut instinct. Deep down if you feel like it isn’t the right fit for you, then walk away now. If your instincts say yes, then get in touch with us here at Accountants Plus. We can help you to discover if that business you are eyeing up will be a sound financial investment.

Top tips when starting a business

7 Top Tips For Success When Starting A Business

Starting a business is both scary and exciting. You know you have a great idea, but it takes more than just an idea to be a success. There are a lot of things to consider when starting a business. Some you might not have thought of initially. So, to give your startup the best chance for success, we have put together our top 7 tips for success. Here they are…

1: Choose The Right Business For You

This might sound silly, but you should choose the right kind of business for you. You don’t want to be learning new skills at the same time as learning how to run a business. Choose something that you are passionate about and that you are familiar with. Minimise the amount of learning you have to do. If you can be confident in what you do, then the other aspects will fall into place.

2: Know Your Starting Position

Before you do anything, educate yourself on where you are at. Know your personal situation:

  • How much time do you have to invest in this project?
  • Will you have help and support?
  • Is your family flexible?
  • Is it going to be your side hustle or a full-time career move?
  • How much money can you invest or risk?

3: Do Your Research

One of the key factors for success is knowing if there is a demand for your business. Do people really want what you are trying to sell them? Or, if there are already three cake making businesses in your town, is there need for another? Research the market and see if there are any gaps that you might fill and how you can stand out from your competitors.

4: Make A Plan

If you are serious about getting started, then you need to have a concrete business plan. Especially if you are going to require financial backing. Your plan does not need to be elaborate or fancy, but it needs to set out what your business goals are and how you will achieve them. It is a document that will evolve as your business does when you learn more about your target market and how best to serve them.

5: Test The Waters

Once you know your position and have done your homework, don’t sit on your idea. The only way you will find out if you can make it a success is to test it. Don’t get stuck in the procrastination trap as you may never get out of it. Instead, start small and see which aspects work well. Then you can build on the successful parts and ditch the unsuccessful elements.

6: Understand The Business Side

While your decision might initially have been to earn some money from doing what you love, there will always be a business aspect to consider. Even if you are only testing the waters, we would recommend you do these things

  • Have a separate bank account for your business transactions, don’t confuse them with your personal spending
  • Implement a way to track your revenue and expenses
  • Regardless of how much you earn, put money aside for tax every month
  • Consider registering for GST if you think you might make $60,000 in your first year, or if you want to take advantage of set-up expenditure
  • Get a financial expert on board to ensure you are doing things right (yes, that does mean an Accountant or a Bookkeeper)

If you are unsure of any of these aspects, then feel free to get in touch with us here at Accountants Plus. We are more than happy to provide guidance for setting your business up correctly.

7: Keep Learning

It doesn’t matter how long you have been in business for; there will still be things to learn. Be open to this and take every opportunity available to you. Learn from other businesspeople and even consider a mentor. Upskill yourself where you can with courses and information packets. Be prepared to learn within your business too. Look at the things that work and build on them. Examine the things that don’t work and ask yourself why that is.

Most importantly, understand when something is beyond your learning capacity or not worth your time. When first starting a business you will do a lot of DIY, but specific areas are too time-consuming, or too risky to handle yourself. Your finances are one of those areas. Always outsource the task or call in an expert if you are not sure you are doing something right!

The Financial Implications Of Business Expansion

It is exciting when your business begins to grow as surely that means you are successful. But where to from here? If you are planning to expand your business then there are some considerations to take into account, both practical and financial. Business expansion is something that you need to plan for and ensure that your brand is ready to handle it. Let’s look at how you can do that.

Why Expand?

Your business can grow in one of two ways. You can do it organically by simply building on your current offerings, selling more products, or approaching new clients. The other way is rapidly by investing money in a big move. Regardless of how you choose to do it, expansion means making a conscious decision.

So why are you making that decision? Is it to get a better market share, to increase your profits, to service a new kind of customer, or some other reason. Business expansion can achieve any of those things and also give your business more financial viability – larger businesses are usually viewed as more credible than their smaller counterparts by banks and investors.

Not only do you gain credibility, but you also gain security. With a wider offering you have more options. That means if one aspect or product is not performing as well as expected, then you have others to fall back on. You could also have a better exit strategy by having a larger, more stable business that is attractive to buyers.

So, how do you go about expanding?

Decide What Business Expansion Means For You

There are plenty of ways that your business can expand. You can simply do more of what you are doing now – increase your production, employ more consultants, or open a new location. You might choose to invest in another complementary business, create a new product line, move to the online space, or open a bricks and mortar store.

All of these ideas are great if your business is ready for it. But with any investment there is a risk. You need to ensure that you make the right investment at the right time.

Make A Plan

Any kind of growth exposes your business to a certain level of risk. That is why it is important to have a plan in place for how you are going to expand, the steps you are going to take and what time frame you are going to complete everything within.

Before you begin your plan for expansion, you need to have a clear picture of where your business sits currently. Know your numbers inside and out so that you are aware of how much money you have to work with. Once you know your position, you can start to form a plan for how you will move from your current state, to the future state you want to achieve.

The best way to do this is to set yourself some goals and targets. Break those larger goals into smaller chunks. Ensure those chunks have a very specific action that will add to your overall progress. They also need to be measurable and time bound so that you can track your progress.

Financial Forecasting

One of the biggest aspects of your plan should be financial forecasting. Really dig into what sort of profit this business expansion is going to produce and what costs are going to be involved. It is highly likely that your costs are going to be higher, so you need to make sure that you will be able to cover them.

Consider what your daily and monthly cash flow will look like and if you have a buffer in case of emergency. Examine what higher staff numbers would do to your cash flow and if you would need more revenue to cover these costs. Don’t forget to factor in any large purchases or expenditure while expanding.

The bottom line is that your business needs to remain profitable the whole time. We would highly recommend getting in touch with your accountant to check that your figures are realistic and that you have covered everything that you should. If you need assistance with analysing your numbers then here at Accountants Plus, we are experts in business expansion. We can give plenty of advice on the best way forward for your brand and make sure your business stays profitable throughout the process. Get in touch to book a free advisory call now.

Cover Your Bases

Larger businesses have more components, so tend to be more complicated than smaller businesses. Watch out for these common pitfalls…

  • Cashflow – Unless you have a planned fund for your expansion, you may need to borrow money to finance your plans. Be cautious that you can keep up with your expenditure and loan repayments.
  • Quality Control – Increased production can sometimes lead to a drop in quality. Keep your customers happy by being strict with your quality control.
  • Loss of Control – When your business grows, you will probably need to embrace the art of delegation. It can be hard to let go and ensure all tasks are still completed to a high standard.
  • Increased Resources – Larger businesses need more equipment, more staff and more resources. There will be an element of management and budget needed to control them.
  • Too Fast – Expansion can put pressure on your team, your resources and your finances. Going too fast can mean that your progress will not be sustainable.

Expanding your business can be exciting, but it also needs a lot of careful consideration. Make sure you do your homework before diving into a business expansion.

Ice cream in winter Accountants Plus

Surviving The Quiet Periods Of A Seasonal Business

It’s great to be in business for yourself, right? You can set your own hours, take holidays whenever you like, and work with an unprecedented level of freedom and flexibility that is second to none. Of course, it’s not always sunshine and roses; with pros, come cons. A potential downside to working for yourself can be cash flow issues during those loooooong quiet periods. If your business tends to boom seasonally, don’t stress! There are ways you can ensure you have money for the whole year. All it takes is a bit of planning.

Here are some tips to ensure you keep you head above the water, and your bank balance above the red line, during quiet periods.

Set A Budget

The FIRST thing you should do is to create a budget and a cash flow forecast. When you know your numbers, you know where you stand. To create a budget, record all of your incomings and outgoings so you can see at any given time what is leftover. Also, put together a forecast document, which details the guaranteed income you know is coming in, as well as adding a section for your predicted income.

You will then be able to see if the earnings you make (or predict to make, based on your research and history) during your high season will cover you for the quieter periods of the year. If your findings indicate that you will be quiet and low on cash, you can work towards filling the quiet period with other things.

Consider Your Staffing

If you cannot handle the workload during your high season then you will want to employ staff to help you out. But before you undertake this process, explore the employment options. Will you have enough work for this person to do all year round? Or is it better to employ someone on a fixed term contract, or even a casual contractor.

Don’t invest in a full-time wage if you don’t need full time help all year round. You may even consider outsourcing certain aspects of your business. During your busy period you want to maximise your earnings and focus on the work that brings in the revenue. So, you don’t necessarily want to be wasting time crunching numbers. Outsourcing certain business admin tasks to an accountant (like us) or a virtual assistant will free up your time so you have more hours to spend on your core business.

Get Prepared

If you know that your business booms at a certain time of the year, then be ready to hit the ground running when that time comes. Complete all of your busy work in your quiet periods to ensure you can efficiently handle the influx of work.

That means tidying your office, having your stock on hand organised and ready to sell, having your filing up to date, having robust systems in place, having your staff on deck (and fully trained), and having your marketing nailed. Don’t waste your time where you could be making money doing these things. Complete them well ahead of the rush period so you can capitalise on this profitable time.

Offer A Complementary Product or Service

You will always have your core business, but you may consider offering a complementary product or service during your off season. For example, if you run a business that sells ice-cream in summertime, you might decide to serve hot chocolate and coffee in winter. It may still be considered a quiet period, but you will have some money coming in.

Do Your Marketing Early

Set your marketing campaigns to run just before your busy period. Then your target market will be informed of your product or service and be ready to buy. You won’t have any downtime, as they will be on your doorstep ready to go when the season starts.

We also suggest remaining in touch with your customers during your quiet time. Just because they aren’t buying from you now does not mean they won’t do so again when your high season kicks off. Use the down time to maintain a good relationship with them and to keep your business fresh in their minds.

Offer Off-Peak Bonuses

Give your customers an incentive to buy from you during the quiet times. Offer discount coupons, or a free gift with purchase that can only be used during your offseason. You could also offer early bird discounts for those that want to pre-book. Just be mindful that the deals you offer don’t cut into your profits too much. There is a fine line between quality and quantity.

Collaborate

Not all businesses are your competitors; some can be your allies. Teaming up with another complementary business can be good for both of you. Just make sure that their busy period does not conflict with yours. Try and align yourself with a brand that is busy when you are quiet, and quiet when you are busy. That way you can boost each other up.

It can be as easy as offering vouchers or referrals to each other during quiet periods or stocking some of each other’s products and taking a commission. You could also offer consulting services to other businesses in your industry to help them up skill.

Just because your business is booming one minute and is quiet the next does not mean you should be out of pocket. As you can see, there are lots of ways to combat the slumps of a seasonal business. If you need help putting together a plan for getting through those quiet periods, then don’t hesitate to get in touch with us here at Accountants Plus. We have plenty of expert knowledge around finance and budgeting, and can provide informed business advice to get you on your way to a more balanced and profitable year.

Business Goals for a New Year

Setting Financial Business Goals For A New Year

Another year is coming to a close, and a new one is about to start. Yep, you guessed it. Time to set some goals. But what does that mean? When you set goals, do you ever track your progress? Or do you simply rely on blind luck to help you succeed?

If you are going to the trouble of setting a financial business goal, you want to do it properly. Let’s face it; there is no point setting a goal if there is no hope of achieving it, or if it won’t benefit your business in the long run. So let’s explore how you can set the right kind of business goal that will push your financial growth forward.

What Is a Financial Business Goal?

It is essential to understand what this kind of goal is before you try and set it. A financial business goal is more than just a sales target. It is a goal that you set with your business purpose in mind and should ultimately progress your business down the path to financial success.

Because finances are a big part of making or breaking your business, you need to consider them when goal setting. But they should not be your only focus. Here is what we advise you to consider…

Money, Money, Money

It is nice to have money flowing into your bank account. It allows your business to keep operating in the way that you want it to and it pays the bills. But it should not be all about the money.

If you only think about financial gain, then your business purpose will fall by the wayside. You will lose the things that make your business special and those personal touches that draw your clients in. Don’t let the cash blind you and transform your business into something it isn’t.

It can be exciting to see your business grow, but not if you need to sell your soul to get there. All financial goals should be made with your purpose and vision in mind to prevent you from growing faster than you can handle, and also to prevent you from tarnishing your brand. It can be really hard to pull your business back from a negative space that is only concerned with profit.

Set goals that drive growth, but remain true to the reason you started your business and support the clients you serve. Then the money will follow.

Map Out Actionable Goals

Saying that this year you want your business to double the previous year’s revenue is a great goal to have. But how are you going to achieve it? Just because you want it to happen doesn’t mean that it will.

You need to set smaller goals that will help you achieve your larger goals. Have some substance behind the plan to double your revenue, and it becomes an achievable goal. Forecast your numbers and work out what you need to do to get there. Do you need to focus on your biggest profit makers, attract more leads, convert more clients, or review your rates?

Once you understand what you need to do, assess your resources. Do you need more staff members, more stock to sell, or better systems and processes?

When you have a plan for how you will double your revenue, then it is time to break that down into manageable monthly tasks. You will then need to track your progress as time goes. Keep yourself accountable and don’t let your monthly tasks slip.

People always have the best intentions when they first set a goal. But when things get hard, or they are overwhelmed, the goals tend to slide. Focus and constant progress are the key to turning those goals into reality.

Choose The Right Business Goals

Setting financial business goals is definitely important. But they should be set alongside other goals that support your finances and your business as a whole. Consider:

  • Branding: Your business will need visibility and the right image to land your ideal clients.
  • Customer Service: Great customer service encourages trust and repeat business from your clients. It also gives an opportunity for your happy clients to leave positive reviews and pass on referrals.
  • Your Team: Your business will not be able to grow to new levels without the support of your team. Allowing your team to develop with training, support and growth opportunities will show them you value their contributions and encourage their loyalty.

Your business goals should provide you with the opportunity for growth year after year. You don’t need to conquer Everest immediately. Keeping your annual goals realistic and manageable will allow steady growth and success. If you manage this growth correctly, then you will see the financial benefits.

Business Cash Flow

Business Cash Flow Tips For When Your Money Seems To Disappear

Does your business bank account feel like a bit of a black hole? Money seems to go in there, but it never ends up in your pocket. It just seems to disappear without warning. If you had one of those years, it is time to have a bit of a look at your finances and business cash flow. Turn that black hole into a well-oiled profit-generating machine.

I know, sometimes that is easier said than done. So, let’s have a look at how you can review your finances and see where the money is leaking out.

Where Did My Money Go?

Often you choose to start a business because you love what you do. But it is a bit of a shock when you discover that running a business is more than being able to make money from your passion. There is a lot to understand when it comes to business cash flow and finances. It can seem like your money just disappears, but we promise you that it is going somewhere.

These are the key things to keep an eye on…

Stay On Top of Things

With finances, it is essential to stay on top of what is happening on a day to day basis. If you bury your head in the sand and leave things for too long, then you don’t have a clear picture of what is happening in your business. How will you know what money you have to spend if you don’t know what your commitments are?

Keep Accurate Records

You can do this by hiring a bookkeeper, tasking it to your accountant, or by using a great online software. Record your daily transactions so that you can keep a handle on your income and your expenses.

Keep The Business Cash Flow Rolling In

Cashflow is really important in small business, and the best way to keep on top of your cash flow is to send your invoices out on a regular basis. Don’t wait to send them all out at the end of the month. Invoice your work as soon as you can. If you are time poor, then get assistance from a bookkeeper, virtual assistant or team member.

Chase Your Debts

It is one thing to send out your invoices, but you also need to ensure that the money comes in for them. Don’t let the debt age too much; otherwise, your business cash flow will suffer. Try to stay on top of your outstanding invoices.

Sometimes a business will genuinely have forgotten about or misplaced your invoice, so a simple reminder can get the money in the door. In other cases, you might need to take more drastic action and request the assistance of a debt collector.

Know Your Costs

It is really important to know where your money is going. Keep track of all your costs and review them regularly. Are there areas that you can save money, do things more efficiently, or cut costs?

Forecast

Do you have any big expenses coming up? Forecasting for them will ensure that there aren’t any scary surprises. Try to set money aside for these expenses so that you don’t have to magic up hundreds or thousands of dollars when the time comes!

Call In The Experts

If you don’t have a good understanding of the ins and outs of your finances then you should really call on the help of an expert. Speak with your accountant as they will be able to do an in depth analysis of your profit and loss, and your financial statements.

They will be able to notice any holes in your processes, address any negative trends, and generally examine what is working and what isn’t. Your accountant can also help keep you on track with your tax and GST obligations, ensuring you only pay what you need to and don’t receive any penalties.

Now You Are In The Know

Once you have a clear picture of your finances, you will know exactly where your money is going and what you have left to spend. It will become apparent that there isn’t a naughty little elf stealing your money! Once you know what is happening to it, you can make a budget and a plan to use your funds wisely. That way you can ensure your costs are covered, and there is enough leftover to pay yourself!

Please don’t hesitate to get in touch with us here at Accountants Plus if you need some help understanding your business cash flow, or if those funds really do seem like they are disappearing without reason. We have a range of services available to help you manage your finances effectively.

XMAS EXPENSES – TAX DEDUCTION GUIDE

Xmas Expenses – Tax Deduction Guide

Santa is coming and so are those Xmas time business expenses. Begs the question – What about the tax? Can you deduct all of it? Some of it? Ooooh – maybe none of it? Well, you have come to the right place to find out!

Keep the HO HO HO from becoming an OH NO with our handy tax deduction guide filled with tips to make your money work for you this festive season.

STAFF XMAS PARTY/ ENTERTAINMENT

Yes! You can claim your end of year celebrations as business expenses. However, you may not be able to claim all of the costs, and they may also be subject to fringe benefit tax (FBT). FBT is a tax paid on benefits that workers receive as a result of their employment. Party expenses you can claim 50% of can include: Venue hire, food and drink, entertainment, or accommodation.

A general guide of 50% deductible expenses:

  • Corporate boxes
  • Tickets to events
  • Hiring marquees and tents
  • Holiday homes and timeshare apartments (although you can claim a deduction of 100% if using the accommodation is secondary to the business activities or employment duties. Contact us if you need help working this out)
  • Hiring yachts, launches, or other recreational boats
  • Food and drink consumed by staff (both onsite and offsite)

For a more comprehensive list, check out Inland Revenue’s business entertainment rules by following this link.

GIFTS

Yes! You can generally claim between 50-100% of the cost of staff presents, but you may need to pay FBT on such gifts. Keep in mind that there are thresholds, so you may avoid FBT if you only provide ‘minimal’ fringe benefits. For example, food and drinks and a local venue might be exempt because your team can’t choose when and where to enjoy that particular benefit.

Some 100% deductible gifts include:

  • Calendars
  • Books and gift vouchers (iTunes, store vouchers etc.)
  • Tickets to an event or movie
  • General presents (flowers, knick-knacks, clothing etc.)

Some 50% deductible gifts include:

  • Alcohol (beer, wine, champagne etc.)
  • Ham, biscuits, gourmet food hampers
  • Meal vouchers
  • Chocolate

Remember, the current tax exemption figures are $300 per employee per quarter and $22,500 maximum employer exemption per annum. If you exceed the exemptions you will need to pay Fringe Benefit Tax on the total value of the benefits. To double check your tax obligations for gifts, you can consult the IRD’s detailed information about FBT and the Fringe Benefits Guide here.

CHARITY

‘Tis the season of giving, so if your business is looking to get amongst the community with charitable deeds this Xmas; donating gifts, food, or some form of entertainment – you can deduct 100% of the cost!

OTHER

  • Freebies/ giveaways promoting your business are 100% deductible
  • Entertainment you provide to a publication for review of your business is 100% deductible
  • Overseas entertainment is 100% deductible – Whoop! Take us to Mexico!
  • Vehicle use – Is your employee planning to use a business vehicle for a private trip over the silly season? This will most likely be perceived as a fringe benefit, so will be subject to FBT charges.

The IRD guides are very clear and provide great examples of what is and is not tax deductible, and when you need to be paying FBT, so we recommend making use of them this season.

We are always happy to field your festive tax questions. In fact, we dare you to come up with one we can’t answer!