How does an accountant save you money?

SME Financial Accountants

Want to cut unnecessary costs, optimise the most profitable parts of the business, and increase your overall return on investment? Let’s talk about how we can work together to support your ongoing business profitability.

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Scaling up sustainably: Grow your team without overcommitting

Scaling up your business

Growing your small business into a team enterprise can be daunting. The amount of work coming in will tend to surge and retreat, leaving you alternately overworked and underworked – you don’t want to commit to an employee when you’re not certain of your workflow.

How can you manage workflow surges and get the help you need, without overcommitting to staff costs?

Start with on-demand assistance

The first step might be to outsource some of the jobs you least like doing, or during your busiest periods. That might mean using a local freelancer or finding an offshore service to take over your social media, for instance, or your invoicing. Those services can be an affordable way to get on-demand help when you need it, giving you the ability to drop that cost at any time if your workflow drops away.

Can you take on an apprentice?

An apprentice can be an extremely cost-effective way to get an extra pair of hands. A wide range of trades can participate in apprenticeship schemes, including construction, engineering, beauty, farming, tourism and sports. Apprenticeships are currently free for apprentices and subsidised for employers by the Apprenticeship Boost. You’ll need to train them and pay them at least the minimum wage.

For those who aren’t in a trade, an intern could be an option to help over the summer or uni holidays.

Contractors and part-timers

Using contractors and part-timers also gives you some flexibility when it comes to growing your workforce. Contractors are usually more expensive, because they need to pay their own employment costs of ACC, holiday pay, sick pay and so on. The advantage of contractors is that you can pay for the expertise you need, when you need it.

Part-time employees are more of a commitment, but you can build in some seasonal or work-based flexibility on their hours – and they’re less expensive than contractors.

Once you are successfully managing contractors or part-timers, you’ll have a better understanding of when you can make that jump to a full-time employee.

Managing the team as you grow

When you’re responsible for a team, particularly when they’re working on diverse projects for a range of clients, you’ll need a way to manage them effectively. SME is partnered with simPRO project management software, which is designed in New Zealand to meet the needs of local businesses, and lets you do your invoicing, quotes, field management and project management all in one place.

If you need some advice about sustainably building your team, we’re here to help. Get in touch and we can run the numbers, consider the pros and cons, and give you the information you need to make the best decisions for your business.

New tax rule you should consider when buying or selling a small business in 2021

Small Business Accountants

Are you thinking of buying or selling your business? A new tax rule comes into effect on 1 July 2021 that will have an impact on the way you negotiate.

The new rule is designed to create more certainty in purchase price allocation, which is the way the purchase price is divided up between the various types of assets.

Currently, buyers and sellers have been avoiding an agreed allocation, then often allocating different prices to the same asset in their tax returns. This tends to mean underpaid tax, so Inland Revenue (IR) has introduced new legislation to prevent mismatched allocations.

Under these new rules, the buyer and seller of a business should agree on the asset price allocation and then both follow it in their tax returns. If they can’t agree, the seller can set the allocation and notify IR (who can agree or or dispute it). If the seller misses the three month deadline to do this, then the buyer has their chance to set the allocation.

You can read more about the new rules here.

This should now be part of your negotiations

For all sales after 1 July, you should now be negotiating purchase price allocations along with everything else during the sales process. An agreed allocation will be much more straightforward if you can achieve it.

The new rules are quite complex and detailed and it is possible that they will increase compliance costs. If you’re in the process of buying or selling, or are soon to be, you may want to consider the timing. SME Financial is here to guide you through your decision-making-process.

As IR says: “It’s best to talk early with a tax professional to make sure you get the details of your sale right from the start,” so do get in touch with us immediately if you’re considering buying or selling a business.