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Take advantage of government contribution to your KiwiSaver

To help you add savings into your KiwiSaver account, the Government will make an annual contribution of up to $521 to all contributing members over the age of 18. Over a KiwiSaver member’s working life, the government contribution could be worth as much as $36,000.

Check your eligibility:
The Government contribution stops when a member reaches the age of eligibility for NZ Super or has been a member for 5 years. If you’re an employee who earns at least $34,762 a year (before tax) and you contribute the minimum 3% into KiwiSaver, then your contributions will be at least $1043, the amount required to receive the full payment from the government. In this case, the full amount of $521 will automatically be paid into your account by late July or August.

See if you’ve contributed the correct amount:
Contractors, freelancers, part-time workers or those who earn less than $34,762 a year, will need to check how much has been contributed to their KiwiSaver account in the past year. There is still time to top your account to receive the full government contribution if you find that you come up short.

Top-up your KiwiSaver by mid-June:
The official deadline to top-up your KiwiSaver account is 30 June. However, many providers will prefer members to have a minimum amount of $1043 in their account by mid-June in order to process the government contribution efficiently. You could consider making arrangements to top-up your account either by automatic payments or a lump sum, as the government will match each dollar with 50 cents.

Posted on 20 May '19 by , under super. No Comments.

Choosing the right business location

When setting up your business, choosing a location can be a critical factor in its success. Each organisation has varying requirements, so it is necessary to consider your needs and priorities when deciding on a business premises that will best suit you.

Know your business:
The types of premises will depend on your business. Businesses that offer professional services may consider choosing long or short-term leasing options that will allow you to conduct customer and business meetings from a central location. If you run a retail or hospitality organisation it will involve deciding on the best location to sell your products while also being accessible to customers. For those that involve manufacturing, wholesaling or selling over the internet, then selecting a business location will not impact on attracting customers.

Identify customers:
Identifying who your customers are and how you can best meet their needs can also assist in choosing a location. Researching relevant information, such as where they live and work, and how far they will potentially travel to buy your products or services, can help you decide on a location that is practical for existing customers and attractive to new ones.

Assess the location:
Consider the external elements that can affect your business. Look at the traffic in the area and work out how it can support or hinder you and what services are in the area in which you choose to locate. You may consider asking other local business in your desired location for some advice on the best providers for services such as gas or electricity, water, phone and internet.

Posted on 20 May '19 by , under business. No Comments.

Common mistakes to avoid when launching a business

Starting a new business is an exciting time for many entrepreneurs. However, there are 5 common mistakes many new business owners make. By being aware of these mistakes that may occur when starting a business, you will increase your chances of success and remove the risk of your new venture turning into a failure.

Being unprepared:
Organisation is key when it comes to running a small business. While it may be tedious, implementing a solid plan for your business will benefit your time management and goal setting by mapping out exactly how much time and money it will take you to grow your business.

Avoiding new technology:
While new technology may seem intimidating and require more time initially to learn and understand, an unwillingness to adapt to new technologies may hurt your business down the track.

Failure to delegate:
Effective delegation can be a great way to build and grow your business. It can free up your time for business activities that may require your unique expertise, and help to build a strong team that can work together for collective success.

Ignoring market research:
Test your products and services before you start your business, to identify what target market you are trying to reach and how they may respond to your marketing activities.

Running out of capital:
You should plan in advance to ensure that you will have enough money to live on while your business is in its startup phase, as well as budgeting for the amount of capital you will require for the business to survive and grow.

Posted on 10 May '19 by , under business. No Comments.

Consolidating your debt

Debt consolidation loans are a financial solution that may be suitable when you have multiple debts at once and are struggling to manage them all.

Debt consolidation is the process of bringing together all of your current outstanding debts into one single repayment. This is typically done by taking out a new personal loan to repay your existing debts and then paying this new loan back over a set term. While they may seem like an appealing idea, there are a number of potential negatives to consider as well as the benefits.

Pros:

  • Consolidating your debt into one single loan to repay can be easier to track and manage.
  • Those taking out a debt consolidation loan may benefit from a lower interest rate compared to what they are currently paying. This means that over time, you can expect to save money.

Cons:

  • Without being mindful of your finances, the lower regular payments as a result of consolidating your debt may lead to you spending more overall. This creates the potential to accrue more debt and pay more in the long term.
  • Failing to keep up to date with regular loan payments could end up affecting your credit score and put you in further financial hardship.

Before deciding to apply for a personal loan to consolidate your debt, take the time to consider all of the potential advantages and risks that are involved. Factor in your own circumstances and look for a loan that offers an interest rate and terms that will work for you. For more information, you may consider seeking professional financial advice.

Posted on 10 May '19 by , under money. No Comments.

Calculating your provisional tax

For business owners or those who are self-employed, your income tax is paid in several instalments instead of a lump sum at the end of the year. This is referred to as provisional tax.

Provisional tax must be paid for individuals who owed more than $2,500 of tax at the end of the year for their previous return. It is then payable in the following year after the individual tax return has been completed. The income that provisional taxpayers often earn includes self-employed income, rental income, overseas income, or income earned as a contractor or from a partnership.

Provisional tax payments are based on your business profits during a certain payment period. There are a number of ways to work out provisional tax. These include:

Standard option:
Calculated by either last year’s residual income tax + 5%, or your residual income from two years ago + 10%, the standard method is useful if your income is steady or will increase over the next year.

Estimation option:
When you know that your income will decrease over the next year, the estimation method is used. Add up all the taxable income that you expect to receive in the next year, then work out the tax on this amount and deduct any PAYE and other income tax credits you would be entitled to.

Using each of these methods to calculate provisional tax is followed by filing your return and commence making provisional payments through myIR.

Posted on 10 May '19 by , under tax. No Comments.

Handling negative feedback

Customer complaints are an inevitable part of running a business. How you handle negative feedback can help or hinder retaining existing customers. Complaints can be a great learning tool for businesses looking to improve their services, products, customer satisfaction and overall competitive edge.

Poorly handled complaints can see customers withdraw their business and encourage others to do so. When businesses take the time to listen and genuinely fix an issue, customers see value in the services they provide. Here are four tips to deal with complaints effectively:

Actively listen:
When an issue is presented, apologise promptly for the matter and don’t blame others. Be sure to thank the customer for raising the complaint and listen intently, asking questions and repeating back what they have said can help to demonstrate this.

Focus on solutions:
Discussing different options for working through the issue with the customer can help as it shows commitment to fixing their problem. Clarify what their desired outcome is and negotiate solutions that meet both parties needs.

Have a dedicated staff member:
Assigning one staff member to manage complaints and responses can help processes to be thorough and consistent. By having a customer service role, with the appropriate training and skills to manage complaints, you also protect the business and the rest of the team who may not be as well equipped to handle negative feedback.

Posted on 6 May '19 by , under business. No Comments.

Accounting during every stage of business

Professional help with accounting and financial decisions is useful at every stage of business. Accountants can assist with a variety of tasks during different periods of operation within your business to improve strategies for long term stability. Having a dedicated accountant gives you more freedom to concentrate on running other aspects of the company.

Starting out:
There are many elements that need to be considered when first starting a business. Having an accountant on board can help you make big decisions and direct your focus to areas you want to establish first. Determining the best business structure for your situation and assisting with the financial analysis in your business plans are some of the first steps an accountant can advise you on.

Day to day:
Once you have an established business, an accountant can assist with the maintenance of strategies implemented when first starting out. It can be simpler tasks such as explaining your financial statements or overseeing company payroll and payment processes, to bigger elements of business like closing out your books, creating financial reports at the end of the year, compiling and then submitting taxes and all necessary paperwork to the ATO. Having this support can ensure accurate accounts and let you focus on more day to day tasks.

Posted on 29 April '19 by , under business. No Comments.

Ensuring your invoices are paid on time

Having a healthy supply of cash is vital for the survival of small businesses, as it is required to operate and enables you to pay workers, rent and other expenses. Unpaid invoices can lead to poor cash flow, a significant reason small businesses fail.

Late invoice payments can add to the strain of being restricted by limited resources. As a business owner, you should take the necessary steps to ensure prompt invoice payments and reduce your stress.

Structure:
A structured collection process when it comes to chasing payments can provide a strong foundation to minimising losses as your business grows and can release thousands of dollars into your cash flow as a result of faster payments. By embedding certain practices into your day-to-day operations, the time dedicated to invoicing and chasing late payments is more efficient and effective.

Prompt invoicing:
Fast and correct invoicing is a great way to encourage faster payment. The earlier that you send your invoice will mean the client can make payments as soon as possible. Contacting clients after sending your bill allows issues to be addressed quickly. Checking if they have received your invoice and are happy with the services that have been provided is a good way to improve customer relationships.

Posted on 29 April '19 by , under money. No Comments.

The pro’s and con’s of using someone else’s money

Borrowing money to invest, also known as ‘gearing’, can be a risky business. While it can increase your returns when markets rise, losses can be extreme when markets fall. It is important to understand the risks involved when deciding whether borrowing to invest is right for you.

Benefits:
The main benefits of borrowing to invest are:

  • It gives you more money to invest.
  • If you are on a high marginal tax rate then there may be tax benefits as you are usually allowed a tax deduction for interest payments on the loan.

Risks:
Some major risks of borrowing to invest are:

  • The income that you receive from the investment may be lower than expected.
  • Interest rates on the loan could rise.
  • Income risk in circumstances where your income may stop, such as illness or redundancy.

It is vital to understand and have a plan in place to manage these risks. As borrowing to invest is a high-risk investment strategy best suited to experienced investors, you should seek further professional financial advice to make sure that this is a viable option for you.

Posted on 1 April '19 by , under money. No Comments.

Cashless business

Advancements in technology continue to digitise our world, including financially. In recent years, more businesses and events are turning to cashless systems. Whilst cash still remains popular in businesses dealing in small purchases, such as cafes, if you run a business that handles larger transactions, changing to a cashless system could benefit you in many ways.

Managing your money through electronic payments helps you keep track of income and expenditure. If you use a digital system, you have extensive logs of where money came from or is going to, how much you have currently and what you are expected to receive or pay. To receive the best security and effectiveness with electronic payments, you could consider investing in technology that transfers money instantly whilst also tracking payments.

Running a cashless business also protects you from theft. Holding large amounts of cash can make you a target, with the time and expenses dedicated to ensuring your cash is secure being better used on more effective financial management systems. Whilst online methods come with their own risks, there are systems you can implement to protect you such as two-factor authentication, third-party data protection and cyber liability insurance packages.

Cashless business models are also time-saving. By cutting out cash handling, you can save time with your client interactions as well as cutting out end of day counts and lengthy trips to the bank to make deposits and changes. Whilst cashless systems are not right for everyone, if this is a viable option for your business you should consider consulting your accountant. If you decide to make the switch, give clients a grace period to be introduced to the new system and explain how it could benefit them.

Posted on 25 March '19 by , under business. No Comments.