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1. Talk to your accountant before year end
Start thinking about tax now. It is best to start planning for tax early. If you are unsure about your particular circumstances, talk to your accountant. They will be able to give you specific advice for your situation. They know what you can claim and what you can’t. And best of all, any fees you pay them are deductible too.

2. Stay on top of your record keeping
At the end of your financial year, make sure that all of your bank reconciliations are up-to-date. Send out all of your sales invoices promptly and make sure your have processed all of your bills to pay.

3. Claiming Expenses
Remember that any expenses you want to claim need to be supported by invoices or receipts. Taking photos and scanning your financial papers throughout the year will save a lot of time. It also makes it easier for your accountant so they don’t need to keep going back to you for receipts etc. And remember, it is a requirement to keep business financial records for seven (7) years so going paperless allows for easier storage. Another tip is to get an external hard drive to back up this information.
It is important to know what expenses you can claim against your taxes, and what you can’t claim. For instance, office supplies like printing and stationery costs are usually 100% claimable, but you can only claim a proportion of your home office costs. Your accountant is always the first person you should ask about this. They are experts about this stuff.
If you use your car for business, you can claim some of the costs. You can claim a proportion of repairs and maintenance, fuel, registration, insurance and depreciation. Keeping a logbook can be helpful, especially if you use the car a lot for business. If you think more than 25% of your travel is for business, you need to substantiate this with a logbook.
If you travel less than 5000 kms per year, you can claim mileage based on your actual travel. Of course, you need to keep a record of the distances travelled and the purpose of the trips. The Inland Revenue publishes an approved mileage rate each year.
It is also possible to claim for depreciation of assets. Purchases over $500 (like a laptop or tablet) that have a useful life of more than one year must be capitalised, not expensed. The capital cost is then written off over the assets useful life. This is called depreciation. The Inland Revenue publishes a comprehensive list of the depreciation rates that apply to different assets.

4. Review Fixed Assets, Inventory and Receivables
Review your list of fixed assets before balance date. Sell any surplus or unused assets that can be sold. Other surplus assets should be written off, along with any assets that have been thrown out or lost.
Review your inventory before balance date for out-of-date or obsolete items. Dispose of any unusable inventory before balance date. Any obsolete inventory can be written off to save you tax.
Review your overdue receivables before the end of your financial year and write-off any bad debts. Be proactive with your invoicing and use a system to get that cash coming in quicker. An online system is a faster and easier method to send out invoices and track them. It also greatly reduces the amount of paperwork and administration time required.

5. Plan Your Expenditure
To reduce your taxable income, purchase any upcoming expenses, like postage or printer ink, before 31 March in order to claim them as early as possible. Prepayments such as insurance can be claimed in full, as long as the total prepaid is less than $12,000.

6. File on Time
Avoid late payment penalties by filing your tax returns on time. If you prepare your own tax return, and your balance date is between 1 October and 31 March, the due date of filing your income tax return is 7 July. If your accountant prepares your tax return, talk to them about when you should give them your records.

7. Accounting Software
Use cloud based accounting software to stay on top of your financial position. The ‘cloud’ is a platform to make data and software accessible online anytime, anywhere, from any device. It’s scalable, cost-effective and easy to use. For small business owners this allows the ability to stay connected to their data and to work remotely.
If you use cloud based accounting software it is easy to share information with your accountant. They see the same data as you and you can both work on your data at the same time. This helps your accountant to help you. You can resolve problems as soon as they happen, rather than leaving them until the end of the financial year.

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Flexible working arrangements

Up till now flexible working arrangements have only been available to caregivers who have been employed at their place of work for six months or more. From March, all employees will have the right to request flexible working arrangements from their first day on the job. There’s no longer a limit on the number of requests an employee can make in a year. When employers receive requests for flexible work arrangements, they must respond within one month, rather than three as before. The response must be in writing and, if a refusal, it must explain why.

Rest and meal breaks

Previously, provisions for rest and meal breaks were quite strict. They now seek to balance the importance of rest and breaks for employees with what is practical for the business. Essentially, employees are entitled to breaks and, if it’s not possible for the employer to ensure breaks for employees, the employer must offer reasonable compensation. Employees and employers can’t contract out of the right to rest and meal breaks though under some circumstances an employer might be exempt from giving breaks or may restrict breaks when the restrictions are reasonable. Key to the new provisions is that employers and employees agree on whatever arrangements are put in place and that arrangements are reasonable. If you are considering varying the arrangements around rest and meal breaks for your employees, touch base with your employment advisor to discuss your approach. As with other employment matters it is important to follow fair process and document any agreements made with employees so that, if required, you can show you have acted fairly and reasonably.

Continuity of employment

The changes to continuity of employment relate specifically to employees in situations where an employer is restructuring or selling a cleaning or catering business and employees are transferring to the new employer. A 2012 review found businesses have difficulty implementing the provisions in practical terms. The changes include set timeframes for employees to elect to move to a new employer; the outgoing employer’s obligation to provide the new employer with detailed information on employees and their entitlements; a way for the outgoing and incoming employers to share responsibility for employee entitlements if they can’t agree on it; protection for employers from unjustified increases in employment costs; and provision for SMEs to be exempt.

Good faith provisions and confidential information

Where the employer proposes to take a decision which will or is likely to affect that employee’s continued employment adversely, changes to the good faith provisions set out what confidential information an employer has to give an employee. The employer must give the employee confidential information where it relates to them but does not have to provide confidential information on anyone else if doing so would involve an unwarranted disclosure of their affairs. Nor are employers required to give confidential information that legally must stay confidential, or where there is a good reason to keep the information confidential (for example, to protect the business’ commercial position). Where allegations are made against an employee, the employee should still know the identity of their accuser and the nature of allegations made against them unless there is good reason to keep this information confidential.

Collective bargaining

The new collective bargaining framework includes provision that collective bargaining does not have to be concluded, though employers will not be able to end bargaining or refuse to enter into a collective agreement just because they object in principle to collective bargaining or collective agreements. A party to collective bargaining can apply to the Employment Relations Authority for a determination as to whether bargaining has concluded.

Employers will be able to opt out of multi-employer bargaining from the start. New employees who are non-union members are no longer covered by terms and conditions of a collective agreement for the first 30 days of their employment. Employers may respond to partial strikes by imposing proportionate pay reductions and unions must provide advanced written notice of any proposed strikes and lockouts.

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For years, businesses have struggled with the storage and processing of receipts and invoices. From storing them in shoeboxes, and the boring data entry required to process them, its been time consuming and difficult. Now with Receipt Bank, you can get rid of all those annoying bits of paper, and have them processed quickly and easily into Xero for you!

Simply take a photo of receipts using Receipt Bank app. Receipt Bank will extract all the key details
and send that to Xero for you. We will also store the image, so if your accountant or the tax man need a copy you don’t need to go hunting for a copy.

You can throw away that pesky piece of paper. No more data entry, no more paper, job done!

Contact us for more details!

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Generally there are five ways to work out a marketing budget for the year. Remember that these are marketing budgets, not advertising budgets. Marketing covers everything you do in your business that creates awareness, including such activities as advertising, brochures, competitions, free tastings, demonstrations, trade shows, travel, personal selling, direct mail, sponsorships, etc.

1. No idea at all method

Some businesses don’t have any budgets, and just advertise either when they feel that sales have slipped and they need extra business, or when they get duped into advertising by some advertising salesperson (“Buy now and we will give you 50% extra free!”). Ever wondered why they offer you the freebies? Usually because it’s such a dumb time to advertise that all their regular clients are holding back and the sales rep is desperate.

I see many businesses that are just too busy during certain times of the year to think of advertising, and if they did, it would be a waste as they would not be able to handle the work anyway. Suddenly, however, sales fall (perhaps due to seasonality) and then the business starts advertising. However, this could be a waste of money as often you’re advertising at the wrong time, or advertising to get instant sales, which is unlikely to happen. So the problem is that the advertising money is spent during slow times (this hurts), and that it is spent to fix a problem instead of to create new opportunities.

2. Whatever you can afford method

Here you just spend spare cash (yes, spare cash may exist!) on advertising. So the advertising is dependent on cash flow. During the good times you advertise more, during the bad times you cut the advertising. The danger here is that if business falls, and you cut advertising, then the situation is likely to spiral out of control. How can you climb out of the situation when there is no money for marketing?

3. The percentage of sales method

This is a popular method. Typically, you work out at the start of the year what percentage of sales you want to spend on advertising. For example, if sales last year were $200,000 and you decided to spend 5% of sales on advertising, then you’d have a budget of $10,000 ($200,000 x 5%).

The problem with this method is you may not actually need $10,000 worth of advertising to achieve your sales target. What if you can only do so much? If $4,000 spent on marketing creates enough work for you to be flat out, then the other $6,000 is just being wasted. And what percentage should you use? I’ve learned that 3 – 6% of sales is an average, but the figure obviously depends on what industry you are in. For example, here are some advertising-to-sales percentages researched in the USA for marketing budgets:

• Couriers 2.1%
• Rental car companies 2.9%
• Computers 5.1%
• Games and toys 18.4%
• Cafes 5.6%
• Hotels/motels 3.8%
• Sporting goods 5.0%

So what percentage you use all depends on your activity. If you are a retailer, then you will spend more on advertising than a manufacturer who concentrates on personal selling to suppliers.

4. The ‘whatever the competition are doing’ method

This is the cheat’s way. Find out what the competition is doing and then spend a similar amount on similar promotions. This approach has an obvious problem: what if the competition has been using method number one—the ‘no idea’ method? For example, a well-known retailer went into receivership after spending large amounts of money on TV and radio advertising. Now if you had copied that business, you might have found yourself down the gurgler as well.

Never think that the competition or the larger businesses know what they are doing, as often they do not. I know of many large companies that spend thousands of dollars on wasted promotions. Just watch TV adverts every night to spot the ads that really represent a waste of money. Then again, copying the competition is basically a poor strategy anyway. You should always strive to be one jump ahead of the opposition.

5. The objective and task method

Now this is the one I recommend—I had to like one of them! At the start of the year select the targets you’ll be aiming at over the next 12 months. Work out what you want from each of these targets (such as 100 new customers, or each existing customer to spend another $100, or an increase in the average sale, or whatever). Then specifically state what you want to do to achieve this, estimating how much it will cost (common sense will give you guidelines, for example, a small business will not be spending $100,000 on TV advertising).

Complete this exercise for each of your targets, then add up all the costs, and this will be your marketing budget for the year. Points to note include:

• Always have a cash reserve for marketing, so you can take advantage of any opportunities that may arise during the year. Remember, not only can you not predict what may happen (for example, some action by your competitors), but the whole point of being in a small business is having the flexibility to adapt to market forces.
• Your objectives must be specific, so that when you’ve reached them, you can choose to stop any further marketing expenditure if you wish to remove any wastage. Of course, you could continue and look for more growth. The point is, you—not someone else—make that conscious decision to spend your whole budget.
• Conduct a break-even analysis. For example, if you’re spending $1,000 to get 50 new customers to spend on average $50, then sales will be $2,500. Will $2,500 in sales generate enough profit to cover the $1,000 spent on marketing?
• You may have a number of methods that you have used in the past, which you know work. Fine, just include them in your plan.
• You may have to spend a certain amount of money just to keep your existing customers and maintain market share. Fine, but again make sure this is in your plan, and you review the effectiveness of what you’ve always done.

Remember to monitor results

Finally, always have a method of monitoring if your marketing is working or not—otherwise you’ll fall into the ‘no idea’ category that far too many small business owners belong to. You can’t refine and improve your marketing spend unless you measure the results

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Referrals
A referral program encourages your current customers to send their friends to your site,
and to earn rewards for their efforts. It’s a great way to generate low-cost advertising:
your customers send visitors and earn a small percentage of every sale (or another
reward), then those new customers refer their friends, who refer their friends, and so on!
Before long, you can have an army of loyal customers actively promoting your business –
with every new referral, you exponentially increase the chance of getting more
customers. And all for the price of a small commission on each sale or some other loyalty
reward.

Joint advertising
A joint advertising campaign works like any joint venture: you find a related business and
you share the cost of the project. At the same time, you share target audiences,
increasing the number of interested people who see your mutual ad campaign.
Good examples of this kind of advertising build on complementary industries. For
instance, if you run a home aquarium cleaning service, you could work with a local pet
shop. Together, you could offer a discount on your cleaning services, provided the
customer buys their equipment (and fish) from the associated pet shop. Both businesses
benefit: you get access to the pet shop’s clientele, and they get a chance at more sales to
people who would love an aquarium, but don’t like the idea of doing their own
maintenance.

Note that joint advertising is rarely an equal proposition: one party almost always pays
more than the other, as they stand to gain more from the advertising or bring less to the
combined project. Be flexible and ready to compromise.

Most relevant advertising medium
Choosing the most relevant advertising channel is absolutely critical in decreasing your
advertising costs. You’ll have to do thorough demographical research, or invest a little
money in trial-and-error learning to figure out the best medium for your business.
For example, television and radio offer a massive return on investment for some
companies, but if your business targets young adults who spend the majority of their time
online, they may be a bad choice. You would almost certainly be better off investing in
online advertising, or a social media marketing campaign.

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