SEASON'S GREETINGS!

This is our last newsletter for the 2017 year. We have enjoyed putting together our newsletters and blog posts for you this year, and we hope you have found them informative and interesting.

The team at Ean Brown Partners wish you and your family a very happy festive season. Take care of yourselves and each other, and enjoy some well-deserved family time over the holiday break. We look forward to seeing you all again in 2018.

A reminder that our Whangarei and Dargaville offices will be closed from 3pm and 1pm respectively on Thursday 21 December 2017, and we re-open at 8.30am on Monday 15 January 2018. For any urgent enquires during our closedown period please contact 0274-723-875.

Review your books

Make sure your records are accurate and up to date, to get an indication of your overall cashflow position.

Prepare a budget

Figure out what you are going to need to cover overheads while on break, especially if it's going to be several weeks before you start earning again.

Complete jobs early

Prioritise work that can be finished quickly so you can bill clients and have money in your bank account before Christmas.

Review debtors ledger

See if those who owe you money can pay early (sweeten the deal by offering a slight discount). Chase outstanding invoices.

Review creditors

If cashflow is tight, contact your creditors to explain your situation and see if it's possible to defer payments.

Consider tax pooling

Tax pooling allows you choice on how and when you pay provisional tax. This wipes late payment penalties, and the interest charged is lower than Inland Revenue's.

PRESENTS and PARTIES

Deductibility of business expenses

Are you planning a Christmas event for your clients? Is gift-giving on your to-do list?

Take a minute to refresh yourself on what is deductible as a business related expense.

Presents

Are you thinking of gifts for clients, business associates or team members?

If gifts consist of food or drink, you can only claim 50% of the expense as a tax deduction. If gift baskets or hampers contain some food or drink and some other goodies, the food or drink items are 50% deductible but the other gift items are 100% deductible.

Note that when you claim the tax deduction, you need to apportion the expense between the 100% deductible items and the 50% deductible items. Let us know the details.

Parties

The basics: an expense is business-related if you spend the money to help your business earn income. Business-related expenses are generally fully deductible. If the expense does not help your business earn gross income, it is a private expense, not claimable as a deduction. Purely promotional events put your brand out there and are a marketing expense for the business. But entertainment events such as Christmas parties inhabit a grey area sometimes.

You will need to make a GST adjustment for any entertainment expenses which are 50% deductible. This will be required when your income tax return is filed. We can help you with this.

Are you planning a promotional event open to the general public? Sponsoring the local Santa parade? The event will be 100% deductible as a business expense. However, if the event is not open to the public, but by invitation to customers, business associates or team members, you can only deduct 50% of the costs. Are you planning an event for charity? A Christmas party at the local hospital? Serving Christmas dinner at the local homeless shelter? Entertainment supplied for charity is 100% deductible.

Are you celebrating a spectacular year and taking your team to Rarotonga for a weekend? Entertainment enjoyed outside New Zealand is 100% deductible. However, if your team contributes to costs (for airfares or anything else), make a note to reduce your expense claim by the amount of the contribution.

BUSINESS HEALTH CHECK

Things to do this month:

  Check your cashflow and tax position, using the tips in this newsletter.

  Get together with your team to make sure you cover everything needed if your business is closing over Christmas. Review your worksite and equipment for safety and security. Back up your client and financial data on all IT systems, and run any anti-virus updates.

  Let clients and suppliers know your closedown details or limited opening hours. Consider whether your office or website needs signage giving a contact number if the office will be unattended. Keep it general as you don't want to flag an opportunity for thieves.

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