Topical Fact Sheets

ACC Cover Plus Extra offers significant advantages over the standard ACC Cover Plus option

The environment in which we work is constantly changing, and running a business is becoming more and more challenging. Quite simply, planning significantly increases your chances of success. If you don't have a business plan, now is a good time to plan for and think about the future of your business. Businesses do not plan to fail, however, many businesses fail because the owners have failed to think how their business will survive beyond the next month, focusing more on getting by on a day-to-day basis.

Business structures - which one should I use?

Deciding the most appropriate structure for your business can be difficult. Each type of business entity has its own unique advantages and disadvantages. The following outlines some of these and can help when deciding which structure best suits your needs.

Buying Tax Payments

Tax pooling is a service offered by Tax Management New Zealand Limited (TMNZ) which effectively allows them to sell overpayments of provisional tax to taxpayers who have underpaid.

Chattels Depreciation - Residential Properties

Following a media announcement by the IRD around proposed changes to the depreciation regime, an "Interpretation Statement" was subsequently released. Find out about the resulting changes.

Conflicts of interest for company directors

A company director must not allow personal interests to conflict with duties to the company. The director is liable to account to the company for any profit derived from breach of this duty, even if the company sustains no loss and even if the director has acted honestly.

Employment - Holidays Act 2003

Employees have certain rights to holidays and leave. Most of these entitlements are covered by the Holidays Act 2003, which came into force on 1 April 2004. The Act also tells you how and when employees must be paid when they take their leave. It's important to understand your responsibilities and your employees' rights' under the Act.

GST- Things to watch out for

GST is charged by GST-registered persons on the supply of goods and services in the course of a taxable activity.

How to improve your cash position

It can be easy to focus all of your energy on making your business profitable. While making profit is important, even more important is ensuring your business has a positive cashflow. Many profitable or asset-rich business can fail simply because they run out of cash. Realise the importance of cash for your business and how you can improve it.

Income tax - Allowable deductions overview

Net income (or net loss) is calculated by deducting annual allowable deductions from the total amount of gross income for an income year. Annual allowable deductions are the sum of all amounts of allowable deductions incurred in an income year. Only business expenditure will be an allowable deduction.

Income tax - Depreciation

Depreciation is allowed as a deductible expense for tax because assets decline in value and wear out as they are used.

Income tax - Motor vehicle expenses

The deductibility of motor vehicle expenses is given special treatment by the IRD reflecting the widespread use of the motor vehicle as a business asset and the ease with which usage can be switched between business and private purposes.

Income tax - Repairs and maintenance

Repairs and maintenance can represent a substantial expense within a business and therefore can have a huge impact on the tax you have to pay. For this reason, Inland Revenue has a strict policy on repairs and maintenance clearly explaining what is considered repairs and maintenance and deductible and what is considered capital expenditure.

Investments - What are my options?

There are many different types of investment. Some are riskier than other and hence carry the potential for greater returns. The type of investment that is best for you will depend upon your investment goals and your investor profile (see factsheet: Investments - what to look for?). Here we examine the main types of investment options and how they compare.

Investments - What to look for

Investment means different things to different people. To some, it is capital growth - building wealth over a number of years. Others have a shorter time horizon or are looking for regular income and/or a higher return on their money. When choosing an investment you need to ask a lot of questions, understand some basic principles of investment, and work out what type of investment suits your goals.

Partnerships

Partnership involves two or more partners carrying on a business in common with a view to a profit. If these criteria are met then you are operating as a partnership and different legal rules apply than for a sole trader or a company. The Partnership Act sets out much of the law about partnerships, although it may be overridden on particular matters by the terms of a formal partnership agreement.

Property - Purchases and investments

New Zealand does not have a capital gains tax and capital profits are generally tax-free. However, in certain circumstances land transactions will be taxable. Any land transaction requires that the particular circumstance be considered individually, as minor variations in the facts can have result in different tax outcomes.

Trusts and trading trusts

Accountants are not generally involved in the actual drafting of Trust Deeds, but it is appropriate that we offer some advice.

Understanding your financial statements

Financial statements are important tools which disclose how your business is performing, they are no good if left to gather dust. They provide insights beyond calculating how much tax you may have to pay. To help you understand your financial statements, we have included an overview of the components which make them up.

Why you need a budget

While budgets are time consuming to prepare, a well thought out budget can greatly improve the performance of your business and help identify problems and opportunities early on. Budgets are simply forecasts of the future, designed to plan and control money coming and going from your business.

Wills and estate planning

As accountants, we are not generally involved in the actual drafting of wills, but it is appropriate that we offer some advice on why and how they should be drawn up.