Empower Your Business

Accounting is Just the Beginning


Simple Business Systems

I’ve said this before (and no doubt I’ll say it again) but I’m always surprised at the lack of simple systems utilised in owner-managed businesses. Using the word “systems” can be off-putting because people immediately think it’s going to be too complex, too costly or too time consuming but a system can be very, very simple. For example, it could be a referral system whereby: Read More


6 Ways to Reduce the Cost of Running Your Business


While prospects for SMEs may be looking better, many cash-strapped business owners still need to be cautious and look for ways to reduce the costs of running their businesses. Here are a few ideas:

1. Analyze your premises.

Do you really need to be in the CBD? Could you work out of town from a cheaper (maybe industrial) area or from home? Perhaps you could encourage staff to work from home or hire contractors responsible for their own work space. Technologies such as the cloud, Dropbox or Skype mean it’s never been easier to keep in contact with remote team members.

Can you cut down on inventory so you can downsize your premises?  Rather than renting premises, can you buy a house in the right zone and use this instead? This way, you would be investing for yourself rather than helping someone else with their retirement plans.


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.


8 Free Marketing Strategies


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?


Simple Steps to Reduce Your Accountancy Fees

What accounting systems do you use now?

Any tips you would add?


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:


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.


Don’t Be Blasé About Tax Debt

T&C's are perceived as some of the most boring part of businessWhen it comes to paying bills, we often tend to be blasé and put our financial responsibilities into the too hard basket.  Ignoring debt is the easy option at the time but eventually things catch up with you.  When it comes to paying tax, it is even more important to stay on top of your obligations to avoid potential tax debt.

So what happens if I do get behind?  You should try to avoid getting to this point, but it is likely the IRD will contact you if you miss your payments.

In most scenarios, tax debt will result in the following charges:

  • late filing penalties and interest
  • late payment penalties
  • non-payment penalties

If you do receive a letter from the IRD, it pays to act quickly.  There may be a variety of payback options available to you. If you want to know more, let Nick know and he can work with you to get back in the black.

Tax due in April and again in May…  A bridge too far?

Many taxpayers get a terminal tax bill due 7 April 2015.  Then IRD insist you pay again on 7 May 2015 for provisional tax.  This could well be a bridge too far’ and your Cashflow just can’t take it.

We at the A + BAC have found a very easy and risk free funding option which is only for provisional tax and the IRD have approved it.  It is called Tax Finance.

By using Tax Finance (see Table below), you decide when you want to pay your tax (maximum delay of 10 months for 7 May).  The tax intermediary arranges your payment into their tax pool which is a special account with the IRD.  All you have to do is pay the interest cost upfront. Then there’s nothing to pay until your selected maturity date.  You can even use this as a form of instalment such as arranging tax finance for 6 months and then paying 1/6th to Guardian Trust tax pool each month.  You won’t get any late payment penalties or IRD interest.

Tax finance for 7 May 2015
The finance rates are subject to change
3 Months 6 Months 10 Months
Provisional Tax Amount $5,000 $5,000 $5,000
Provisional Tax Due Date 7 May 2014 7 May 2014 7 May 2014
Maturity Payment Date 22 Aug 2014 22 Nov 2014 24 Mar 2014
You pay only $120 $198 $315
Payment of interest due by 3 May 20145
Provisional Tax Amount $10,000 $10,000 $10,000
Provisional Tax Due Date 7 May 2014 7 May 2014 7 May 2014
Maturity Payment Date 22 Aug 2014 22 Nov 2014 24 Mar 2014
You pay only $240 $396 $630
Payment of interest due by 3 May 2015

nick@abac.co.nz or on 0800 ASK NICK are the best ways to contact Nick to see how Tax Pooling can help you.


7 Tips To Organize Your Small Business Finances

organize_financeBeing organised with your finances is a sure path to success and profitability in business, so here are 7 tips to help you get there:

1. Maintain Adequate Working Capital

One of the problems I see time and time again in business is the lack of adequate working capital. Even a small business can soak up money like a sponge when buying equipment, investing in inventory or funding work-in-progress or Accounts Receivable. If you lack the necessary cash yourself to plough into your business, there are only two other ways to get it: external borrowings or by leaving profits in the business to build up cash reserves, which means keeping your drawings to a manageable level. Don’t struggle on month after month — get your working capital sorted now!

See Full Story Here


Cloud Accounting – MYOB v Xero

Boxing GlovesNow that MYOB have released a new and much quicker version of their AccountRight Live which is much cheaper than Xero the battle between MYOB and Xero is hotting up!

I asked A + BAC’s Samantha, an experienced Xero user, to review the new MYOB cloud software and compare the two. The views expressed are Samantha’s alone and do not necessarily represent or reflect the views of the Accountancy + Business Advice Centre


Xero has a cleaner, less cluttered screen than MYOB which appears blurry, dated and is difficult on the eyes after a period of time – particularly when working on a laptop.

The Xero desktop can easily be customised to promote greater ease of use and to suit the client’s needs.

Ease of Use

Navigation within Xero for users new to accounting software is much easier as all core functions are easily identified on the desktop.  Navigation in Xero is consistent with Google and internet navigation.  For instance, by selecting the “back” option to return to previous screens and the ability to open multiple “tabs”.  Overall, this makes navigation much easier, particularly where the user is familiar with the internet.

However, if a user is already familiar with the MYOB layout, they are both straight forward to navigate, though the “internet” type of navigation is not available with MYOB.

For simple daily transactions, for instance bank statement coding, entering and emailing invoices/ purchase orders and sending statements Xero is much quicker, entry is more straightforward and overall easier to use.

For more complex tasks such as applying bank rules (coding rules) receipting payments to existing accounts and matching invoices, MYOB is easier to set up and use, however Xero has greater functionality and flexibility and works more effectively.

Under payments, prepayments and overpayments are a little more hassle to complete in Xero than in MYOB.


MYOB has far superior reporting options, flexibility and ease of use.  Transferring to Excel is simple and well formatted. With Excel transfers, complex analysis reporting is accessible, with some limitations.

Xero reports are satisfactory for all basic and common reporting requirements.  It is, however, difficult to gain more complex analysis reporting.


MYOB has a consistent, across the board pricing which is affordable and probably better value with the basic software at $21 per month. Xero’s pricing is dependent on number of transactions.  The starter package has similar pricing to MYOB live at $25 per month; however at this level is only be relevant to a small number of businesses.  The Standard and Premium packages are $50 & $65 per month.


Essentially, MYOB is a more basic version of Xero with one distinct advantage in being able to work offline as well as online and more in-depth reporting options are available.  Another core advantage with MYOB is the ability to complete desktop back up’s of your data files, which means data can be retained by the owner and if necessary, can allow the user to restore from a previous backup if data is corrupted or totally screwed up, by say, an inexperienced user.

Xero’s has enhanced features, greater flexibility and can be more fully customised to suit the user’s needs. Xero is probably more “modern” with iPhone and iPad apps and a number of add on’s available to purchase.  If set up correctly by and experienced Xero user, with a number of well written bank rules Xero is probably easier to use with greater accuracy for small to mid-sized businesses in which accounts are managed by a user with limited accounting software experience.


MYOB and Xero both offer reliable accounting software solutions which can be matched to different users according to needs.

MYOB is an effective solution for a business with very basic accounting needs, where the volume of transactions exceeds Xero’s starter package criteria.

For a larger organisation, with an experienced office administrator MYOB Premier or Xero’s Premium package will be equally suitable.  In this instance, MYOB Premier may be a more cost effective solution, particularly if you have inventory (which Xero doesn’t do) unless of course, you’re wed to the Cloud as MYOB Premier is not up there yet!

For a small to mid-sized organisation, that can utilise the enhanced features of Xero, Xero is probably a better match, particularly if an office administrator is not completing the processing.  To gain maximum benefit from Xero it is important that set up of the accounts, general ledger, comparatives and bank rules is completed by an experienced Xero user.

What to do Next

Don’t get carried away by fashion or public relations hype. Seek expert advice from an experienced accountant who can advise you on what’s going to suit you and be best for your business. At the Accountancy + Business Advice Centre we are experts on accounting software so contact us on nick@abac.co.nz.


Reviewing Your Business Progress

When was the last time you checked performance against your business plan?

The business plan needs to be under continual review to make sure you are successfully implementing each planned stage. It won’t be any use to you unless you use it.

By writing a business plan you’ve taken the time to plan in detail what your business goals and objectives are – it’s a living, working document, not something to be filed away and then dusted off for review in a couple of years’ time.

This concentrated thinking, discussion and debate is the key to the formulation of a workable and achievable business plan. And as long as actual performance is monitored against it, the plan should significantly assist in the long-term survival of the business.

Ideally you should review performance on a regular monthly basis, or at the very least on a quarterly basis. Ask the fundamental questions:

  • Where are we?
  • Are we heading in the right direction?
  • Will we achieve the goals and objectives of our business plan?
  • Should we review pricing structures?
  • What has been the effect of the consumer price index increase?
  • What has been the effect of price rises in our particular business?
  • Should we raise our prices?
  • Should the gross profit percentage be higher?
  • Have we got empathy with customers?

On an annual basis you need to compare actual financial performance to the budgets and cash flow forecast. Ask:

  • How did we perform?
  • What went wrong?
  • Have we learnt from the mistakes?
  • Did we exceed budget expectations anywhere? Why?
  • Can we capitalise on these improvements?

A valuable assessment is to compare your business figures to industry statistics (ask your accountant about obtaining this information).

You’ll also want to know: What is the general business climate in your area? Is it conducive to your type of business? Should you be expanding, drawing back or diversifying? What is the status of your investment in stock?

Don’t forget that the business review should also include an appraisal of what has been happening within your team. You need to look at:

  • Recruitment
  • Training and development
  • Meetings
  • Employment agreements
  • Wage/salary reviews

Use your business plan as a day-by-day, week-by-week, month-by-month reference point to compare where your business is against what you planned it to be. If there are any deviations, immediately investigate them and try to take corrective action.

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