The new Accounting for Income method (AIM ) has not fired as it requires a lot more work

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The  new Accounting for Income method (AIM ) has not fired as it requires a lot more work.

Are Small/ Medium businesses prepared to pay for the extra compliance cost?

While the Online accounting software like MYOB,  Reckon and Xero require accountants to do extra work – do they have the time?

Until the accounting software is more automated then IRD may have wasted money.

For clients wanting to pay their tax  over a longer period and save on penalties and reduced interest,  contact Naked Accounting or Accounts Online and Save money and time.

To read more click on the link

https://www.stuff.co.nz/business/industries/103165153/inland-revenue-reopens-doors-after-four-days-behind-shutters

Accounts Online Accounting tips

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lightbulbsunDo you have a contingency plan? It is important to have a contingency measure in place just in case something happens to the key player(s) of the business.  Has your business got a contingency plan in the event of sickness or death?
Home office expenses: Tip – pay your home office expenses which include rates, insurance , electricity , phone , internet, repairs out of your business account. We can teach the software to do the business and private split.  This will save you having to revisit this at year end.

Acounting/Taxation service: SUM-it Accounts Ltd provides an accounting service for individuals, businesses , charities, and clubs.  If you are interested in finding out more please contact us. Also, if you know of any businesses or individuals that want a change or are struggling please put us in touch.

Tax Management Intermediary: Struggling to pay your taxes on time – tight on cashflow?  This service is excellent and saves businesses and individuals money as the IRD’s interest rates a lot higher.

Inland Revenue: The inland revenue are reviewing property transactions, cash economy and hospitality. It is important that you  bank your cash daily, or at least weekly,  and try and avoid paying expenses out of the cash or till.  This creates more work as you need to account for the dollars to your till tapes.For hospitality businesses are you reconciling to your till tapes daily?

Off the accounting topic, onto interior design 

Here is a Wellington Interior Designer’s Tip for arranging spaces…

Her advice is to keep it simple and clutter-free.  Get the bones right before you even think about filling it up with furniture, art , rugs etc.  If the bones are not right you will never feel comfortable in a room – there will always be something missing.

Taking Money Out of Companies

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  nz dollarsIt sounds simple.

You own the shares in your Company; you have cash in the bank so you assume you can simply withdraw the cash and spend it how you wish.

Because your company is considered to be a separate legal entity (person) any money it generates is technically not the shareholders even if you are an only shareholder.

By taking more money out of the business than the profits allocated to you by the company, affects your current account causing it to become overdrawn and this create a problem with the IRD.
In simple terms a shareholders current account is an overdraft or loan account, to or from the company. So when the current account becomes overdrawn it is the same as at the bank, you have to start paying interest. Of course, if you have some surplus cash you can pay back the company to reduce the loan, that money is called Funds Introduced.

Where a shareholder is also an employee, the overdrawn current account is a fringe benefit and subject to the FBT rules. Fringe Benefit Tax kicks in when the interest rate being charged against an overdrawn current account, is less than the prescribed rate of interest, which is currently 6.70 % pa.

Where the is not an employee of the company, any uncharged interest at the prescribed rate on the overdrawn current account balance is treated as a paid dividend and taxable to the shareholder.
In both cases above, so long as the Company charges interest at least at the prescribed rate this removes the need for FBT to be paid or for a deemed dividend to be declared. However charging this interest to the shareholders current account creates additional taxable income for the Company and causes the current account to become further overdrawn.
There are a number of options available but the advantages and disadvantages need to be carefully considered and take into consideration the different tax rates between individual tax rates and the company rate of 28%. Whereas individual rates vary between 10.5% through to 33%.
The difficultly with overdrawn current accounts is that often the physical funds have been taken from the Company, and there is insufficient cash available to meet any tax arising from the interest charges.
It is recommended you seek professional advice before withdrawing large sums of money from your Company.
Provided for the benefit of clients of SUM-it Accounts Ltd.

Overseas Company changes

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companies officeWith effect from 1 May 2015 it will be necessary for any new company, on registration, to have a director who lives in New Zealand or a director who is a director of a company in Australia.

Directors will also have to provide their place and date of birth.

Companies that are owned by companies will need to disclose the name of the holding company, its country of registration, registration/code number and registered office. Existing companies have until 29 October 2015 to comply with the above requirements.

Save on your Accounting Fees

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Would you like a reduction in your accounting fees this year?

 

Save on fees

Last year the government announced simplified reporting for small/medium businesses. The Inland Revenue identified that there is potential for a staggering 90 million dollars to be saved!

  • Would you like a slice of that? 
  • And when was the last time you were offered a reduction in your accounting fees? Probably never!

If your accountant has not already informed you, then you are probably wondering what this is all about.

Your Skills + Our Expertise = Success

Over the past 15 years Accounts Online have been educating businesses like yours to simplify the way they look after their businesses and prepare them for the day when they might need to sell.

Our Gift for You

Because many of our clients have now reached a higher level of competency, this has created for us extra capacity to take on more select clients who are keen to learn. If you have ever thought being more independent and more in control of your business would be great to achieve this year; then please make contact as spaces are limited. We will ensure you have access to a team of specialists that may include your accountant, but you will make that decision.
Simply contact us with the subject line: Save Me Fees and provide us with your contact details, along with a few details why you think you would like to change and enjoy Accounting Freedom.
If you are comfortable where you are at, maybe you know someone special you would like to pass this onto. We would be happy to hear from them as well.

Thank you for taking the time to read this as we think it is important that you need to know about these changes.

Tax Management – Resolve your holiday cash crisis

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Tax ManagementFree up working capital by paying your provisional tax when it suits you.
The period just after Holidays can be tough for many businesses.

In fact, more than half of those who responded to an Employers and Manufacturers Association poll said they experienced cashflow constraints between January and March every year.

There are several reasons why.
• Holiday Pay demands prior to the holidays
• Closing down over the holidays reduces cash flow
• The period following the holidays is traditionally slow
• GST and Provisional tax falls due 15th January, straight after holidays

On that final note, the Inland Revenue (IRD) is quick to reinforce that if you do not pay your taxes on time you will feel the repercussions in your back pocket. This will include charging late payment penalties of up to 20% pa and use of money interest (UOMI) of 8.4%.

Fortunately, Tax Management NZ (TMNZ) has an IRD-approved solution that allows businesses to resolve holiday cashflow issues. This solution is called Tax FINANCE (TF). TF lets you pay provisional tax when it suits you – without incurring late payment penalties and UOMI.

It is cheaper than many other traditional forms of finance – rates start from below 6% – and this extra funding does not affect existing lines of credit.

For instance, it costs just $145 to defer a $5,000 provisional tax payment for six months.

Approval is guaranteed, and no credit check or security is required.

Here is an example how TF (Tax FINANCE) works

1. You decide you need to delay payment of your provisional tax of $5,000 for 6 months
2. You pay TMNZ a one-off, tax-deductible finance fee of $145
3. TMNZ then pays the $5,000 into an IRD account held by the Guardian Trust (GT).
4. Six months later, you pay TMNZ the $5,000 provisional tax. Any IRD late payment penalties and interest will be reversed when transfers are complete.

How simple is that?

Please contact Accounts Online to find out more.