Business culture, and how it affects profits

frontpageDid you know that company culture has long been linked to company performance? While a strong culture doesn’t guarantee business results, it does provide a foundation for them. Conversely, a poor culture can actually damage your business.

In this issue, we focus on some aspects of business culture that could play a part in the success of your business. Enjoy!

Business culture tied to business performance

While it’s easy to think of business culture as a bit soft compared with, say, achieving sales, in fact it’s anything but. A 2014 study reported that public companies named in a “Best Places to Work” list in 2009 outperformed the S&P 500 by 115 percent in the following five years.

The Glassdoor study suggests that a culture that engages and motivates employees helps the bottom line. But the reverse isn’t true: A company’s success isn’t enough to produce a positive culture, and companies that succeed without a positive culture are likely to see performance decline.

So if your business is performing well, great. But if it’s doing so at the expense of employee satisfaction and happiness, chances are that your current success is unsustainable – especially in economically tougher times.

So how do you address that? Read on for four things you could look at. (more…)

New Zealand a digital standout, but is your business?

New Zealand is a “standout nation” according to the latest Digital Evolution Index, released by Tufts University in Boston in July.

The report, by the university’s The Fletcher School, identifies New Zealand as among the digital elites, having high levels of digital development and a fast rate of digital evolution.

Has your business contributed to this result? (more…)

GST made easy

Do you hate it when GST return time rolls around? If so, you’re in good company. For many business owners, the pain isn’t so much having to hand money over to IRD, but having to prepare and file a return.

But that pain is easy to avoid. (more…)

New Zealand trust law to be overhauled

Parliamentary plastic surgery is in store for the Trustee Act, to make trust law easier to access and understand.

On 1 August, Justice Minister Amy Adams introduced the Trusts Bill to Parliament. This will be the first significant change since the introduction of the Trustee Act 1956. (more…)

Government ponders taxation error correction solutions

diaryRevenue Minister Judith Collins recently said that correcting simple tax errors and sending that information to Inland Revenue was still largely manual and may be costing business.

Here’s some good news. Inland Revenue proposes integrating PAYE into normal business activity. For example, by allowing employers to use payroll software to make corrections to returns.


Business Health check

Things to do this month

  • If you don’t have an office intranet, you can set one up to encourage your staff to make suggestions and give feedback. It will also facilitate project work, and can store useful templates, like leave application forms. It can be as basic as a shared Google Drive folder. Or you can get as detailed as a custom-designed system on SharePoint.


Tax is payable on rental income . . . mostly

If you receive income, you must pay tax. So if you have rental income, you have to pay tax on it, right?

Maybe, maybe not – if you get rent from boarders or homestays. (more…)

Must I pay tax on holiday home income? That depends

If you rent out your holiday home sometimes, you may have to pay tax on that income.

The IRD says you have a “mixed-use” holiday home if, during the tax year, you use it for:

  • Private use, and
  • Income-earning use, and
  • It’s unoccupied for 62 days or more.


Boats and aircraft may generate a tax liability

Sometimes boats and aircraft are used for private and commercial purposes. In such cases, the income from their use may be liable for tax. (more…)

Airbnb usually a tax case on its own

If you use Airbnb to provide short-term accommodation in your house in which you also live, the IRD’s “mixed-use asset (holiday home)” rules don’t apply and guests are not classed as boarders. Except when you list a whole house which is vacant for 62 days each year, mixed-use asset rules do apply and calculations differ from those for homes where the hosts also live. (more…)

Tenants must be informed of insulation status

It’s been compulsory since 1 July last year for any new tenancy agreement to include an Insulation Statement. That means landlords must record if rentals have insulation, where it is, the type of insulation and its condition. That allows tenants or potential tenants to make more informed decisions about renting. (more…)

Creditors get more protection from indebted businesses

A threshold for reportable tax debt is now in effect, giving creditors greater protection from businesses owing debts of more than $150,000. (more…)

Business Health Check

Things to do this month:

  • Are your records for rental income and expenses together for us to do your tax? One way of doing that is to get your hands on a good Rental Questionnaire template. Contact us if you would like one. Some rental situations can be complex, so talk to us if you’re unsure.


Keep cash crowned as king

If you want to succeed in business, understand that Cash is King. Your business can’t survive without cash.


Cashflow is not profit – and vice versa

The purpose of a business is to make money, and that means you have to know the difference between profit and cashflow. (more…)

Fairer tax rules affect cashflow

A tax bill passed in May made changes that affect cashflow.


IRD AIMs to please – next year

A key principle of the tax system is taxpayers should pay tax as income is earned. That doesn’t work well for businesses with seasonal or volatile incomes, and is why the Government announced, early this year, a new method for paying provisional tax. (more…)

Several ways taxpayers can get caught out

Taxpayers who earn income from various sources may get caught short if they don’t plan ahead. This could come about in various ways:

  • Airbnb
  • Overseas investment
  • Shares in an overseas company


Contractors get more tax choice

The way contractors pay tax changed on 1 April, giving greater choice, and making it easier to get tax right.


R&D tax credit changes can boost cashflow

Changed Research and development (R&D) tax credit rules, which came into effect at the start of the 2016 income year, can help business cashflow.


Business health check

Get a clear cashflow picture before third quarter.

Cashflow forecasting is important because if your business runs out of cash it won’t be able to operate. You now have one clear month before the third quarter to get the best possible clarity around cashflow.


Communication important in managing debtors


Like any relationship, timely communication between creditors and debtors goes a long way to avoiding trouble. One of those tools for small businesses is the financial web.

The financial web describes the growing electronic connectivity between small business, accountants and financial Institutions, particularly when coupled with Cloud computing.


Give your business a medical


The end of June marked the quarter point for this financial year, making it a good time for a business health check.

Comparing your past three months to the same period in previous years can show if your business has been growing, and most accounting programmes will easily produce year-to-date reports.

When you identify changes and opportunities, look at the challenges you had, and work out your profit for the year, you’ll be better able to make decisions about staffing or stock levels, and have a clearer idea of how much tax to put aside.


Case studies: Debt management frees up six-figure sums

Two case studies show what a huge difference proper debt management can make to a business.


Do large businesses really call the shots?

Large companies are ‘killing’ New Zealand’s small businesses by making them wait too long for payments.

The need for a policy or terms of trade is crucial when it comes to smaller business working with larger companies. For example, New Zealand’s largest firm, Fonterra, changed its payment terms for contractors and suppliers last year, so now it can take a small business between 60 and 90 days to get paid.


You can now use PAYE for employee share schemes

Since 1 April this year, new tax rules have applied to share purchase benefits provided by an employer to an employee.

In this case, a benefit occurs when the amount the employee pays for the shares is less than market value. IRD then sees this as employment income.


Ideas wanted about employee share schemes for start-ups


The Government is trying to figure out a fairer tax regime for employee share schemes in start-up businesses.

An officials’ issues paper released on 30 May, ‘Taxation of employee share schemes: start-up companies’, outlines possible deferral rules for start-up companies in this position. The paper expands on a proposal raised last year.


Do you run a business from home? Then this affects you

The tax deductibility rules around running a business from home changed on 1 April this year.

Under the new rules, the premises for a home business have to be a separately identifiable part of the house, which is used mainly for business. This does not mean it has to be an actual, closed off room.


The right way to collect debt

Before you follow up on debt, you want to be sure you supplied the right goods and services, in the right quantities, to the agreed standard, for the agreed price and within the agreed timeframe.


Slow payers cost you real money

StockSnap_E5RETXVN70R_150spi_croppedYou know you have to get your debtors to pay, but do you understand the true impact of slow payers? Without a realistic picture of the direct and indirect costs of slow payment, your debt management practices may hurt your business.