Empower Your Business

Accounting is Just the Beginning

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Protecting your business name

If, like many business owners, you’ve put a lot of thought and effort into your business name it makes sense to try and protect it from being copied, whether inadvertently (by someone who had never heard of you) or deliberately, by another, especially if you’ve linked this to a great domain name.

Unfortunately, it’s not easy to protect your business name in New Zealand as unlike elsewhere in the world, there is no register of Business Names. Yes they have introduced Business Numbers in New Zealand, but that won’t help. Here are the options: Read More

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Accounts and Tax Returns

At A+BAC we make life easier for you.

Accounts and Tax Returns.
Making it easy for you by getting it right on time, every time. No fuss or drama and more advice for your hard-earned money.  Contact us today: www.abac.co.nz or 0800 ASK NICK

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Is your activity a business or hobby?

hobby or business, accountants Hastings

Albert makes (and sells) wooden toys from his home. He is running a business. Jill also makes (and sells) wooden toys from her home – but she does it as a hobby. This article explains the approach used by Inland Revenue (and the courts) when they are deciding if an activity is a business or a hobby.

It’s important to be able to tell the difference. If you’re running a business, your income is taxable and your business expenses are deductible. But if it’s a hobby, you don’t pay tax on your income and your expenses are not deductible. The “business or hobby” issue can be complex. This article gives you general information only. Each case must be decided on the facts, so if you have any questions about your own situation, please contact your tax advisor or Inland Revenue.

WHAT IS A BUSINESS?
The law says that a business: “includes any profession, trade, manufacture, or undertaking carried on for pecuniary profit…”

The courts have held that a person is probably running a business if:

  1. The activity is carried out in an organised and coherent way, and
  2. The person is intending to make a profit.

Note that “intending to make a profit” doesn’t mean you must make a profit – an activity can make a loss and still be a business – but the intention must be there. Establishing intention involves considering the person’s words and conduct.

Read more to find out what a hobby is, and how this can affect you.

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Bolster your bottom line

For new businesses in that critical early period, cashflow is a vital part of staying afloat to establish and grow the business. Established businesses also know the importance of cashflow to help you keep everything running while you grow the business. If you can’t reach your targets for income, reining in your costs can help give you a little extra head room to manage cashflow while you’re planning your next move.

Cost control can contribute to business success or failure but it can be hard to get a handle on it as your business costs can work on a number of levels. It can be a challenge to pinpoint hidden costs or where your established ways of doing things cost you more money than they should.

It’s more than just keeping an eye on outgoings (though that’s important). It’s about looking at each aspect of your business and all your business systems (or the gaps where there should be business systems) to see if poor practice is driving costs up unnecessarily.

It can be helpful to break it down a little. You can look at it in terms of cost centres such as power or office supplies. Or you can look at what those costs do for your business. It can help to analyse costs in terms of cost of sale and overheads (see the article on this page).

Every dollar you can pull back from your costs can go straight onto your bottom line.

Get in touch and chat to us if you’d like to review your costs and your systems to keep costs under control. Whether your sales are booming or busting, you want to make sure that while you’re focused on revenue, your costs aren’t ballooning and you’re still delivering on your bottom line.

Email nick@abac.co.nz or phone 0800 ASK NICK

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How can I run my business more efficiently?

A+ BAC Business efficienciesIf you’re going to risk your future and personal prosperity in a business, it makes sense to run the business as efficiently as possible. This will reduce stress, give you more opportunity for leisure, boost profits and increase the value of your business.

1. Plan in advance

Business surprises are usually expensive, so advanced planning is very important in maintaining efficiency. What production capacity will you need? Do you have enough employees or contractors, or too many? Will you run out of cash? Is your sales pipeline running dry? What preventative maintenance do you need to organise for your plant and equipment? Have you ordered sufficient stock or run out of warehouse space? If you aren’t detail oriented, find a mentor or colleague who can help you focus on planning.

 2. Maintain consistency

Being consistent with how you do things in your business is an important way of increasing efficiency. If everybody does everything the same way each and every time, it will save time (and therefore money), cut down on potential rework in the event of things going wrong and ensure your customers and clients receive a quality offering every time.

Read full article with additional tips here

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6 things you need to do before you buy a business

Buy a business A+BAC

It’s fairly easy to buy a business but much harder to sell one, so before you take the plunge and lock yourself into a potentially bankrupting financial commitment, there are a number of things you need to do to ensure you’re on the right track.

1. Ask yourself some soul-searching questions

This is key. Are you really the right person to own and run a business? Are you dedicated, a hard worker, committed, a leader, passionate, self-sufficient and multi-skilled? What about your experience? Have you worked in that line of business before? Do you know how to market yourself and your business? Can you sell, juggle your finances and manage staff? You have to be a jack-of-all-trades to survive in business, and it’s a hard training ground.

Read all the 6 things you need to do before buying a business here

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7 Reasons to Trade as a Limited Company

7 reasons to trade as a limited companyIt costs a few hundred dollars to form a limited company but despite that, many thousands of Kiwi’s continue to start businesses as sole traders or even worse, partnerships. In more than 30 years of looking after small businesses I’ve seen so many unfortunate and unnecessary situations and countless examples continue to crop up, so here are a few I’ve seen in the last year or so.

 1.    Outstanding GST. It’s a fact that the IRD in NZ are rubbish at collecting tax, so much so that many business owners use the IRD as a source of finance. Take a new client of mine in Hawkes Bay, a husband and wife partnership who now owe $85,000 in GST. Their business is failing but guess what – as a partnership they are fully liable personally for ALL the GST. If they were a limited company they could have walked away. Bankruptcy and ruin beckon……………

 2.    Accounts Receivable. Another husband and wife partnership client has received a demand for $175,000 from the liquidator of one of their former customers, who says they have to repay the money they legitimately received for sales made. Ridiculous maybe, but as a partnership they are fully liable and needless to say, they haven’t got $175,000 sitting around!

 3.    Legal Claim. Another client, a sole trader, was on the receiving end of a totally unexpected claim of $260,000, and guess what, his insurance company refused to pay up! Bye-bye house!

 4.   Partner’s Debt’s. Another client was in a two-man partnership. His business partner ran up debts willy-nilly and then cleared off. Guess who had to pick up the tab for the partner’s debts?

And it’s not just debt or financial ruin that makes a limited company so valuable:

 5.    SelfEmployed Status. We are very lucky in NZ. You can trade as a limited company yet still retain your self-employed status so it’s crazy not to take advantage of this.

 6.    Tax. Both sole traders and partnerships are pretty useless for income-splitting to minimise tax. A company, on the other hand, is far more flexible.

 7.    Ease of Ownership Transfer. It’s so much easier to transfer wealth or assets when you have a limited company. No legal fees or tax issues to worry about!

Business is risky, so why take any more risk than you need to? If you need help with your business contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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8 Free Marketing Strategies

Still_for_Marketing_Vid_post

10 Minutes of your time to get 8 Free Marketing Strategies you can implement now.

What Marketing Strategies do you currently use?

What other Free Marketing Tools would you recommend?

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Ask an Accountant – Top Tips for Starting a Cafe

Top_tips_Cafe

Welcome to the second episode of Ask an Accountant. This is your chance to get direct answers to your accountancy, business & tax questions from business and tax expert Nick Roberts who founded the Accountancy + Business Advice Centre

This week’s question asks for tips on starting a cafe….
Press play to see the response

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Direct Marketing – An Essential Tool for Small Business

Small business is about identifying and servicing niche markets. If you know what your niche market is you have a fantastic marketing opportunity already at your doorstep – as long as you know how to reach it.

Knowing where the market is and how to reach it should all be written in your marketing plan. This is where you include all the information about the market in which you operate – what you’re selling, where you’re selling it and for how much, who else is selling it, who wants to buy it and who your specific target audience is.

Your marketing plan should also include how you are going to tell people about your products or services. The way you choose to market your business could easily determine how successful you become.

Marketing target

Advertising versus direct marketing

Where general advertising builds awareness and creates a positive image for a new product, direct marketing asks straight up for the order. It’s about going straight to your target group, often with a personalised letter, and giving them a direct opportunity to buy.

Direct Marketing is not advertising. It is selling to existing and potential identifiable customers and its result is measurable.

The whole concept of direct marketing is that it is direct communication to a particular target: either a current customer, former customer or someone who you believe fits the characteristics of your current customers. General marketing, on the other hand, is not addressed to any particular customer.

But for direct marketing to be successful, the business must have a database. This is where you collect as much information as possible about your customers – their demographics (contact details, age, occupation), how often they buy, what they buy, how much they spend and so on.

When planning your direct marketing campaign, decide which type of customers you want to approach. Whether it’s your top customers, or particular customers you think will genuinely be interested in the product you are promoting, the database should be able to tell you which customers to target.

Direct marketing, which can also use email, telemarketing or personal visit as a means of delivering the message, is a very powerful tool for small businesses because they can:

  • concentrate and dominate niche markets
  • generate additional sales from existing customers and new customers
  • generate sales leads from groups of persons who are very similar to existing customers

Test your product or service

Before embarking on your campaign make sure you are completely satisfied with the product or service you are selling to your customers. The last thing you want is for these customers – especially your top customers – to go somewhere else because of a faulty product you tried to sell directly to them.

Decide on a theme to be emphasised – keep it simple and focused; don’t fall into the trap of cramming too much information into the letter. Highlight one important aspect of the product, for example, price, quality, uniqueness, and use this as the theme throughout the letter.

You’ve got to keep the person reading from the opening paragraph to the order form.  Once a reader loses interest, it is likely the business will lose a customer.

As the responses from direct marketing are measurable, you can experiment with mail-outs on different themes sent to different groups of customers and analyse which strategy works best.

Next Steps – Plan Your Direct Marketing Campaign

  • Set-up a customer database – All direct marketing campaigns need the support of an up-to-date customer database
  • Determine your ‘top’ customers – The most successful direct marketing campaigns are likely to be targeted at your top 20% of customers who generate 80% of the business
  • Know your customers – Target other segments of your database depending on what you are offering for sale, as specific products or services will be attractive to some customers and not others
  • Plan your campaign thoroughly and test the product or service being offered
  • Maintain a theme throughout the letter. Keep the message simple, brief and focused
  • Make an offer they can’t refuse. Remember the ‘what’s in this for me?’ question
  • Contact New Zealand Post for information on mail-out discounts and for a record of the number of business and private households in each postcode throughout New Zealand
  • Measure the results of the direct marketing campaign. Think about trying something different next time and compare results

Tips on Effective Mail-outs

There is less chance of people reading your literature if it screams out to them:

                   THIS IS JUST ADVERTISING MAIL!

To overcome this:

  • Put your direct marketing letter into a plain envelope with an actual stamp and a hand written, or laser printed, name and address – not a label
  • Be absolutely correct with spelling of names and addresses as errors can really infuriate people
  • Use testimonials wherever possible in the letter
  • A photograph might be useful – make sure it includes people
  • Don’t approach too often as this will annoy customers
  • Freephone numbers can make it easier for your customers to contact you
  • Follow up phone calls – various surveys indicate following up phone calls can significantly improve the overall response rate

If you need help with your marketing contact Nick on 0800 ASK NICK or email nick@abac.co.nz.