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In This Issue
· April News
. Workflow
- Companies Office
- IRD - Easy Money
· Behaviour Never Lies
- Tax Dates.
- Tax Facts
- IRD Website
Strategic Review
There is so much tax law changing consistently that every 2 - 3 years every client should ask for a strategic review. The best time to do this is after we have prepared your annual accounts - but at any time that life has changed for you and you are wondering if your business structures or investments are still right for you. Call and we will set up an hour's meeting to review your existing structures.
ACC Problems
We are getting calls daily and we have employed a new staff member to assist in this vital area. Please contact us if you want help to check the invoice you receive is correct - or you want us to investigate ways to lower your premium.
Cashflow Difficulties.
The IRD now allow you to arrange your own instalment arrangements directly over the online service launched this week. A three day turnaround is promised - amazing since we as agents are only promised 15 working day turnaround!
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April Tipbits
Terminal Tax was due 7 April 2010
3rd Instalment Provisional Tax due 7 May 2010
Any questions about the above tax liabilities please do not hesitate to call Rhonda on 835 4222 or Nadine on 818 1688 or the accountant who did your work last year.
Annual Work
Our priority to complete annual work is set out below: If for some reason you need your work done earlier in the year than you did last year please contact margaret@taxandtrust.co.nz to discuss the possibilities - it is a busy time for us and our accountancy staff have already been allocated work partly based upon what they did last year to keep them busy until the end of June.
Our work priorities:
1) Urgent work - especially related to existing clients IRD, or banking deadlines.
2) Clients that receive quarterly and half yearly results through us.
3) Clients who are in credit with us through existing payment plans and those who pay 50% deposit towards their annual work when they drop off their annual work.
4) Clients who we do GST work for and who are up to date with their fees.
5) Clients who bring in their work by the date we request.
6) Other clients wanting their work done more quickly due to non urgent reasons.
We regret to inform that clients who have not fully paid for their 2009 work cannot have their 2010 work started until the previous years work fees plus any interest that is due is paid in full.
We are in the process of sending out online questionnaires - please complete it when it comes and send it back to us - we will then arrange a time for you to bring in your records and meet the accountant who will be preparing your tax return.
Companies Office Statistics:
More companies started up last year than those that closed is this what you were expecting?
Companies in NZ at 30/06/08 506,300
New Incorporations 47,897
Deregistered/Struck off 34,362
Companies as at 30/06/09 519,835
Business is about Numbers
Either the numbers work or they don't. No mission statement can cover a negative balance sheet for very long and negative cash flow is like blood draining out of a patient - sooner or later the patient dies.
It makes sense to not panic when sales or margins decline. Few businesses call in a liquidator after a couple of months of bad trading. Rather, it makes sense to trade on in expectation of improved numbers, and maybe make some changes to the business to help it trade through.
Directors who mistake a terminal decline for a temporary cyclical movement can however land themselves in trouble. Reading the signs is not easy and as your professional advisors we are here to help you interpret your numbers. Looking for and accepting professional financial advice earlier rather than later may help you avoid the label of reckless trading while insolvent if trouble does later hit you hard.
We do ask all clients to consider the following article though if are currently or in the future weighing up whether or not you can afford to pay your tax on due date.
Taken from book by Waterstone Insolvency written in NZ last year.
Inland Revenue - Easy Money?
Unlike all other creditors the IR cannot refuse to supply. If a firm does not pay the IR, nothing happens (in a hurry anyway.) Indeed, Cashflow is immediately improved if an IR cheque is held back.
Even more accommodating the IR do not phone every two days to ask for their money. The IR is a silent creditor their demands for payment can sit unopened in a directors top drawer for months even years.
The IR do not require a business plan, or an equity stake in the business, there is not even a request for a personal guarantee, they do of course charge interest and penalties but depending upon the tax it can be less than rates charged by banks for unsecured debt.
The IR therefore is the easiest source of credit for struggling New Zealand businesses. The IR may be large, slow and unresponsive but like a giant suddenly waking up the IR are responsible for 70% of court appointed liquidations.
The problem with borrowing from the IR is that it is just too easy. It can hide fundamental problems and allow a failing business to trade on longer than it should.
If you are thinking of borrowing from the IR please ask yourself the following three questions:
1) Are you comfortable breaking the law?
While not likely to end up in prison it is illegal to not pay tax - you gain an unfair economic advantage compared with competitors who do pay their tax on time and this is why the IR will eventually act and call in liquidators to stop the trading.
2) Is the cash flow drop really temporary?
The one person a business should never lie to is themselves - can the business really pay this tax debt back? Really? Are you sure?
3) What would happen if you stopped trading now?
If you are thinking about not paying the IR also please think about closing your business. Assuming you have exhausted all other credit and capital options - if borrowing from the IR helps you trade for a few more months but you continue making losses - you and your creditors will be worse off.
Many business people I meet can quickly and confidently list half a dozen things that if taken may have saved or improved their business. If your business is in trouble you must take action and put changes in place, it is your business and it's success or failure ultimately depends upon you.
Behaviour Never Lies
Who you really are is defined by your behaviour not by what you say.
Spoken words may explain but behaviour is what defines what is the truth. Your behaviour tells me all about you:
Claim you are professional and prepared but show up late and unprepared and your behaviour shouts you aren't professional.
Say that you love someone but then have unloving actions and your behaviour shouts you have hollow words and emptiness follows.
Say you believe in health - then dine on junk food and alcohol your body will expose you as a fraud.
Tell your children something and do yourself the thing you tell them not to do - your children will model the hypocrisy.
Have a mission statement that promotes the customer satisfaction as supremely important and then approach your work and relationships within it with apathy and mediocrity and your customers will soon look at you and your company as a complete joke.
Have a great April by doing yourself what you say you will do - avoid rash promises this month. Honour your commitments and your word, model yourself the behaviour you expect from others and then request the same excellence from those you work with.
Kind Regards
Michelle Thompson
Director
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