February 2023

Keep up-to-date with us and what's happening in the business world

 

- Cyclone Gabrielle: We're Here to Help and Support You

- Create A Business Plan - Here's How

- Reminder: Minimum Wage To Rise In Line With Inflation From April 1

- Xero Tip of the Month - Bring Old Report Layouts Over To New Custom Reports

- Question of the Month: Nominees and the Bright-Line Test

- IRD Upcoming Tax Payment Dates

 

CYCLONE GABRIELLE: WE'RE HERE TO HELP AND SUPPORT YOU

Along with the rest of the country, our hearts have been heavy this past week thinking of everyone affected by the cyclone & flooding. As the focus moves to recovery across the affected regions, it is important that we look out for each other during this exceptionally difficult time.

All Accounted For would like all of our clients that have been impacted to know that we're here for you, offering our help, support and guidance in any way we possibly can.

 

Whether you require additional assistance with the financials, insurance or just a supportive chat with our friendly team, we're here for you every step of the way, so please don't hesitate to reach out to us on 04-970-1182 or email us at: admin@aafl.nz

 

 

‘Fail to plan, plan to fail’, as the saying goes. If you're going to create an effective, successful and profitable business, you need to create a solid strategic plan.

 

Your business plan is the route map that defines your goals, explains your strategy and gives real direction to the everyday running of the company.

 

So what should you include in your plan? Here are 5 Key elements to include in your business plan for 2023.

 

To create a truly robust and meaningful plan:

  • Outline your vision – explain WHY you’re in business and how you intend to add value for customers. For example ‘We promote a healthy lifestyle through organic produce’.

  • Set out your goals – outline your personal goals as a founder, and your wider strategic goals for the business. Then explain how these key goals are aligned. If your aim is to exit in 10 years, build this into your long-term plan.

  • Define your funding and budget – to start trading, you need finance, so outline the investment that’s needed and how you’ll access that funding. Then break down this initial investment pot into clear budgets for each operational area.

  • Forecast sales and cashflow – define the profit number you need, then calculate the volume of sales needed to deliver that income – and give a clear breakdown of the cash inflows and outflows needed to achieve positive cashflow.

  • Set your timelines for success – set key milestones and give the business some concrete deadlines for meeting the goals, sales and revenues that you’ve projected.

Talk to us about creating a watertight business plan:

 

Contact Ben Duflou or Sarah Toner today via advice@aafl.nz. We’ll help you define your purpose as a business, and systematically set out how you’ll achieve your aims, giving you the best possible blueprint for success.

 

REMINDER: MINIMUM WAGE TO RISE IN LINE WITH INFLATION FROM APRIL 1

A reminder that the minimum wage will go up from April 1 2023, to $22.70 - a 7% increase from $21.20. The Starting-Out and Training minimum wage rates will be maintained at 80% of the adult minimum wage.

 

It's important to get your ducks in a row before this changes comes into effect. This includes:

  • Advising your minimum wage team members of the increase
  • Checking your payroll systems and processes
  • Updating your employment agreements if relevant
  • Updating your business budget.
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Costs are increasing

 

Even if you don’t employ one of the 175,000 Kiwis who earn minimum wage, this may impact your business. Wages rise steadily over time, and employees who missed out on a pay rise this year will probably expect one next, if your business has been thriving.

 

In addition to the rising cost of labour, inflation is forecast to put upward pressure on everyday items. That will likely increase your general running costs and the price of materials. Petrol prices are up, for instance, and supply chain issues have driven up the cost of many imported products.

 

Time to review your pricing

 

Is it time to put your prices up? Ideally, your business should increase costs by a tiny amount each year, rather than by a big jump every five years, for instance. Small increases help prevent price shocks for customers, and keep your business in line with the rest of the market.

 

Can you also cut costs?

 

If you don’t think increasing your prices is an option, or you still need to make more of a change, you may need to cut back your spending. We look at your business line by line, so we can help you identify areas where you might be able to trim the fat.

 

Need to review your pricing? Our team are here for you; we have a number of pricing tools available for clients to utilise. Get in touch, we are here to help.

 

XERO TIP OF THE MONTH - BRING OLD REPORT LAYOUTS OVER TO NEW CUSTOM REPORTS

 

As you may be aware, Xero has had two versions of reports for some time — the older version and Xero's ‘new’ reports. Xero's new reports are built on the latest technology and have some great features that will help you get quick access to answers and streamline your financial analysis.

 

Because Xero is retiring the older versions of their reports, you will no longer be able to use them as of 31 July 2023. However, you can use Xero's layout importer tool to bring across the layout of an old Balance Sheet, Budget Variance, or Profit and Loss report to Xero's new custom reports.

 

To access the layout importer tool from an old report:

 

From an old report, use the tool to move the row structure into a new report. The tool applies a preset date and comparison periods:

  • The Balance Sheet initially compares the current and previous two years. 
  • The Profit and Loss report compares the current and previous three months. 
  • The Budget Variance report compares actual amounts vs the overall budget for the current month and year to date.

To do this:

  1. In the Accounting menu, select Reports.
  2. Use the search field in the top right corner to find and open the old version of the Balance Sheet, Budget Variance or Profit and Loss report.
  3. In the banner message at the top of the report, click Bring standard and saved layouts. You might need to click Learn about changing to open the banner message first. 
  4. Select an available layout, then click Next. You can select an old report layout you’ve saved or the standard version of the old report if you prefer that layout.
  5. Give the layout a new name or keep the same name, then click Save.

Once you’ve imported the old layout, you can edit it in the new report. Use the settings at the top of the report to change the dates and comparison periods.

 

To access the layout importer tool from a new report:

 

From a new report, use the tool to bring across the old report’s row structure. The imported rows won’t overwrite the settings or columns you’ve already set up in the new report. To do this:

  1. In the Accounting menu, select Reports.
  2. Find and open the new version of the Balance Sheet, Budget Variance or Profit and Loss report. You can use the search field in the top right corner.
  3. In the Tips and tricks panel on the right of the screen, click Select layout. You might need to click Tips and tricks in the top right corner to open the panel first.
  4. Select an available layout, then click Next. You can select an old report layout you’ve saved or the standard version of the old report if you prefer that layout.
  5. Give the layout a new name or keep the same name, then click Save.

To Update layout differences on the new report: You can make further edits if there are differences between the layout of the new report and old report. Once you’re happy with the new report, save it as a custom report to keep the layout. 

 

Report settings: The layout importer tool can't import specific settings such as report date, comparison periods, accrual or cash basis options, and alternative budget. However, you can update your settings on the new Balance Sheet, Budget Variance or Profit and Loss report. 

 

Reorder accounts: In old reports, some accounts are ordered in a specific way, rather than alphabetically or by account code. In new reports, accounts are ordered alphabetically by default. To reorder them by account code:

  1. Click More, then select Account codes.
  2. Click Update.
  3. You can also drag and drop accounts into a different order:
  4. On the new report, click Edit layout.
  5. Select an account or account group, then drag and drop it into the correct order.
  6. Click Update layout to apply your changes. 

Check formulas: In old reports, Xero automatically hides a formula if there are no accounts in the section between the previous and next formula, i.e. it hides the formula if it has no impact on the report result. In new reports, formulas show regardless of the data in a section. This means the new Balance Sheet, Budget Variance or Profit and Loss reports might contain extra rows when compared to the old layout. To remove the extra rows on the new reports, edit the formulas. You need to delete the extra formula, then adjust the formulas below so they don’t reference the deleted formula.

 

Need help? Our team is available to support you through this transition. We can create custom reports for your business and teach you how to do this yourself. Contact us today on 04-970-1182.

Xero - Bring old report layouts over to new custom reports
 

QUESTION OF THE MONTH:

 

QUESTION:

 

An individual signed a sale and purchase agreement for $100,000 to purchase residential land on 19 September 2017 as nominee for their father.

The father settled the property purchase on 17 November 2017 at which time the title was registered in his name.

The father signed a sale and purchase agreement for $950,000 to sell the property on 12 November 2019. The sale of the property settled on 6 December 2019.

Inland Revenue have said that the sale of the property was within the 2-year bright-line period because the bright-line period commenced on 17 November 2017.

Based on the commentary at para [54] of Inland Revenue’s QB 17/02, “Income Tax – Date of acquisition of land, and start date for 2-year bright-line test”, we were of the view that the bright-line period commenced on 19 September 2017 when the individual entered the sale and purchase agreement.

When does the bright-line test start in this situation: at the date the sale agreement was signed or on settlement?

 

ANSWER:

 

In a nominee situation where the named purchaser is acting on another person’s behalf, the other person is treated as having done what the named purchaser did (in this case, entered into the sale and purchase agreement), and therefore holding the resulting rights. The person acting on their behalf (the nominee) is ignored for income tax purposes. See s YB 21 of the Income Tax Act 2007.

Applying this, when the individual entered the agreement on behalf of the father, that person was a nominee and is ignored for the effect of the transaction. The father will be treated as having acquired an interest in the land at the time the nominee first had an estate or interest in the land. Generally, in a standard land purchase, this will be when there is a binding contract between the vendor and the nominee to purchase the land.

However, for the purposes of the bright-line test, the date that the sale and purchase agreement was signed is not relevant. The bright-line acquisition date is (generally speaking) the date on which transfer of the land to a purchasing taxpayer was registered under the land transfer system. See s CB 6A(3).

Because the title was registered in the father’s name, the bright-line period commenced on 17 November 2017.

The bright-line date (ie the date of disposal for the purposes of the bright-line test) is the date that the person enters into an agreement for the disposal of the land. The father entered into the agreement to sell the land on 12 November 2019. This is within 2 years of the bright-line acquisition date, so the sale is subject to tax.

 

IRD UPCOMING TAX PAYMENT DATES 

 
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