Keep up-to-date with us and what's happening in the business world |
|
|
- 6 Powerful Reasons To Watch Your Financial Reports - Important Notices - Xero Tip of the Month: Xero’s New Navigation Refresh Coming Soon! - Audit Shield Insurance - Protect Yourself from a Tax Audit
- Welcome to the Team: Breanna & Rachelle - Tax Question of the Month: What Happens to GST on Assets You Bought Before Registering?
- IRD Upcoming Tax Payment Dates |
|
|
Making time to look over your financial reports each month is an important task for any business owner. If you are not taking time to do this, either because you’re too busy, or perhaps you don’t really understand what you’re looking at and it doesn’t make sense to you, then here are 6 reasons we recommend you should start to. But before we get our 6 reasons, let’s talk very quickly about which reports to look at. At a bare minimum, and depending on the complexity of your business, you should be looking at the following:
The Statement of Financial Performance - also known as the Profit and Loss report (P&L) or the Income Statement – tells you, as the name suggests, how your business is performing over a period of time, such as a month or a financial year. In broad terms it shows the revenue that your business has generated, less the expenses for that same period. In other words, it shows how profitable your business is. The Statement of Financial Position - also known as the Balance Sheet shows the value of the business’s Assets, Liabilities and Equity. -
Assets include things like money in bank accounts, Plant and Equipment, Accounts Receivable balances
- Liabilities include things like Bank loans and credit cards, Accounts Payable, and Hire Purchase balances
-
Equity is the difference between your Assets and your Liabilities and includes Retained Earnings and Owner Funds Introduced
Accounts Receivable Ageing report (Aged Receivables) - this shows how much money is still owed to the business as at a certain date in time, and is usually segmented as to how overdue they are, or sometimes by how far past the invoice date they are. Generally, you will have Current, 30, 60 and 90 days columns. Accounts Payable Ageing Report (Aged Payables) - this report shows who the business owes money to as at a certain date in time and, like the Accounts Receivable Ageing report, is usually segmented by overdue period.
So why bother? -
Understand your business better - by looking at your Profit and Loss report monthly you will get a good picture of how your business is performing month by month and it gives you a better understanding of what makes up your profit. It can be helpful to compare periods, or to look at a month by month P&L, so you can clearly see on one page the revenue and expenses month by month. This also helps identify trends in your data and many also help to highlight anomalies in coding/categorising or unusual expenses or earnings.
-
Accurate information for lending purposes – If you are applying for a loan or an overdraft, the bank or financial institution will look closely at both your Profit and Loss report and the Balance Sheet as a lot can be learned about a business by looking at these reports together. If you are unsure what some of your balances are in your accounts, get in touch and we can explain them further.
-
Get paid quicker and reduce bad debts – by looking at your Accounts Receivable Aged Summary each month you can follow up with overdue accounts promptly which often results in getting paid quicker. The longer an overdue amount is left unpaid the higher the risk of it not being paid at all, so it is important to keep on top of this.
-
Better relationships with your suppliers – Assuming you are entering your supplier bills into your accounting software (recommended for most businesses to get an accurate profitability figure) your Aged Payables report will alert you to any unpaid or overdue amounts. Supplier relationships are an important aspect of your business and paying on time is crucial to maintaining those relationships.
-
Better cashflow – having an accurate understanding of how much money the business is owed, and how much money the business owes, can help with cashflow planning to ensure that there is enough money when needed. Additionally, understanding the trends of your business, its profitability drivers, its expenses, etc., can help to plan sales and marketing campaigns so that the revenue keeps coming in.
-
Better business decision making – Your financial reports tell the story of your business and it’s important that you understand the story that they are telling you. The better you understand what’s going on in your business the stronger position you will be in to make better business decisions that affect the profitability of your business and its financial viability.
If you would like to know which reports are relevant to your business, and you want to better understand what’s going on in your business, give us a call on 04 970 1182 so we can make a time to go through them with you. Your business success is important to us and we are here to help you. |
|
|
Reminder - Have Your Contact Details Changed?
If you've recently updated your phone number, postal address, or would prefer to use a different email for communication, please let us know. Keeping your contact details current helps us stay connected and ensures you receive important updates without delay.
To update your information, simply email us at admin@aafl.nz or call us on 04 970 1182. |
|
|
XERO TIP OF THE MONTH: XERO’S NEW NAVIGATION REFRESH COMING SOON! |
As you may be aware, Xero has been working hard on a refreshed navigation and homepage (formerly known as the dashboard) to deliver a faster, cleaner, and more intuitive experience. The first stage - featuring the brand-new navigation - is set to launch sometime this month (September)! Here are the main updates you’ll spot in the new layout: - Dedicated Sales and Purchases sections - no more digging around, everything you need is right where you’d expect it.
-
Reports made simple - key insights are now just one click away, helping you stay on top of your numbers faster.
- Streamlined settings - settings are now visible across all menus, plus there’s a centralised page to keep everything organised.
-
Smarter right-hand panel - this new hub gives you instant access to JAX (Xero’s new AI business companion), search, help, notifications, and apps - wherever you are in Xero.
This revamped system helps you find what you’re looking for faster, move smoothly between tasks, and get even more value from your Xero subscription.
The refreshed homepage (previously the dashboard) will launch later this year, bringing customisable widgets to give you quicker, more personalised business insights. We’ll keep you updated on when these changes go live.
As Xero Platinum Partners, we’re already up to speed with the new navigation and ready to help you make the most of it. Whether you want a quick run-through, some training for your team, or simply reassurance that everything is where it should be - we’ve got you covered. If you need a hand, give us a call on 04 970 1182. |
|
|
AUDIT SHIELD INSURANCE - PROTECT YOURSELF FROM A TAX AUDIT |
Have you got your Audit Shield policy sorted this year? Get the piece of mind with tax audit insurance for your business.
Audit Shield is a solution that provides clients with cost-effective protection and assistance against the substantial cost that may be incurred should the Inland Revenue or other NZ government revenue authorities conduct a random audit, investigation or review of lodged returns. |
| | |
While we highly recommend Audit Shield to our clients, we understand that every client and their business needs are different. Whether or not you choose to opt-in for Audit Shield will depend on your specific circumstance and appetite for risk.
If you are unsure whether Audit Shield is right for you and your business or have any queries, you can give the AAF team a call to discuss further. To accept or decline this offer, please let us know by sending us an email at: admin@aafl.nz. |
WELCOME TO THE TEAM: BREANNA & RACHELLE |
|
|
Originally from Invercargill, Breanna relocated to Wellington over three years ago to pursue new career opportunities after completing a Bachelor of Commerce (Accounting and Finance) and a Master’s in Finance from the University of Otago.
She brings 2.5 years of hands-on experience from a Chartered Accountants firm, where she developed a strong foundation in financial reporting and business advisory services. Breanna is passionate about professional development and is currently working towards becoming a fully qualified Chartered Accountant, while also pursuing the CFA designation.
Now joining us as a Business Services Accountant, Breanna is excited to support clients with comprehensive financial and accounting services tailored to their business needs. Outside of work, you’ll likely find her with a good book, planning her next travel adventure, or out for a walk with her dog, Lola - who loves nothing more than a day at the beach. |
| Meet Rachelle, a Wellington local who runs on coffee, and a perfectly organised calendar. Rachelle recently joined our team, stepping into the receptionist role previously held by Lisa Ruthven, who has now moved into the positions of Office Manager and Personal Assistant to Director, Ben Duflou. As the first point of contact for our clients, Rachelle is dedicated to creating a positive and welcoming experience for every visitor and caller. With a strong background in administrative support and customer service, she plays a key role in keeping our office running smoothly and efficiently. Known for her warm demeanour, attention to detail, and can-do attitude, Rachelle is passionate about fostering a supportive environment and is always ready to help with a smile.
Outside of work, she enjoys socialising with family and friends, spending time outdoors, biking, and staying active whenever she can. |
|
|
TAX QUESTION OF THE MONTH: |
QUESTION:
In April 2025, Company A Ltd bought a truck for $80,000 from a related company, Company B Ltd. Both businesses are New Zealand companies with a March year-end, and at the time of the purchase neither was registered for GST. Company B had originally purchased the truck for $100,000 in 2023 from an unrelated seller. Since April, Company A has used the truck entirely for business purposes and intends to keep doing so. In June 2025, Company A registered for GST after forecasting its turnover would exceed $60,000. This raises three key GST questions: - Can GST be claimed on the truck?
- If so, what value should be used?
-
When is the GST claimable?
|
ANSWER:
1. Yes, GST can be claimed. When a business registers for GST after buying goods second-hand (and then uses them for business), the law allows the business to claim GST on those goods - even though they were purchased before registration.
2. The claim is based on $80,000.
Because the truck was bought from an associated company (a related party), the GST claim must be worked out using the lower of: - the price originally paid by the seller to a non-related party ($100,000), or
-
the price Company A actually paid ($80,000).
The lower figure is $80,000, so that’s the value used to calculate the GST claim.
3. The timing of the claim. The GST claim is included in the first GST return after Company A’s registration. In this case, that would be the return covering the period ending on the next balance date after June 2025. Worked Example - The GST Claim: - Purchase price used for GST purposes: $80,000
- GST fraction in NZ: 3/23
Calculation: $80,000 × (3 ÷ 23) = $10,435 (rounded)
Company A can claim $10,435 as an input tax credit in its first GST return after registration. Why This Matters For many small and medium businesses, registering for GST can unlock valuable tax credits on assets they already use in their business. In this case, claiming $10,435 of GST provides a welcome cashflow boost - helping reduce costs and freeing up funds for other business needs. References: Goods and Services Tax Act 1985 ss 3A, 21, 21B, 21FB |
|
|
IRD UPCOMING TAX PAYMENT DATES |
|
|
|
