The National Government tabled its 9th consecutive budget today and, unsurprisingly, there was very little in the way of tax incentives, initiatives or regime changes. The continual evolution of tax changes and regularity of tax Bills means that in recent times there have been very few tax surprises come budget day. The key tax change this year, included in the Family Incomes Package, is the increase in income tax thresholds for individual taxpayers. Given these changes only apply from 1 April 2018, you will need to vote National to lock them in… As you can see from the table below, the threshold changes apply to low and middle income earners. For those earning $22,000 per annum this equates to a…

If your business supplies goods to customers on credit, your terms of trade should include clauses relating to the PPSR.  If your terms have PPSR provisions but you have not been registering those interests on the PPSR, you should start.  Once you are granted a security interest, you can (and should) register that interest on the PPSR as soon as possible.  Registering your security interests on the PPSR is easy.  It only takes a few minutes and the registration process can be completed online.  The fee for registering your financing statement on the PPSR is $20.00.  Your financing statement lasts five years but it can be renewed, if you still need it when it comes up for renewal. The main benefit…

Quality, well trained, experienced, and reliable employees are invaluable to your business.  Problems with staffing can quickly cause much larger issues for your business.  Losing key staff members can hurt the business – they take vital skills and knowledge (and potentially customers) with them.  A customer’s bad experience can lead to a poor reputation, especially if that customer airs his/her complaints on social media.  A fraudulent or dishonest employee can easily cause you losses amounting to tens of thousands of dollars and several sleepless nights. The good news is that there are things you do to ensure your team is happy, productive, and providing the best experience for your customers:  - Make outstanding customer service one of your business’ core…

We have seen first-hand how natural disasters can negatively impact retail businesses.  The 2011 Christchurch earthquake destroyed several buildings in the city’s CBD.  The November 2016 Kaikoura earthquakes impacted several retail businesses in the North and South Islands.  In a matter of minutes, many businesses lost use of their premises and many retailers lost a significant amount of stock.  Some retail businesses in Christchurch were unable to operate for months after the earthquakes while others never recovered.  Some of those affected by the Kaikoura earthquakes are facing the same issues.  While having a disaster recovery plan in place before you need it won’t prevent disasters from occurring, it could save your business by providing you with a well thought out…

In the modern world, retail businesses are part of our everyday lives and cater to our every need and want.  For this reason, owning a retail company may appear to be a guaranteed way to make money.  The reality for most retailers though is that they are surviving on ever-tightening margins because of competition and increasing overheads.  Retail is a cash hungry business so poor cash flow can put your business in serious financial trouble.  Because stock ties up your capital, inventory problems and cash flow issues usually go hand in hand.  To remain profitable, you need to continually turn over stock so that you have working capital available to pay your bills. While you need well-stocked shelves and warehouses…

For many people interested in entering the retail sector, a franchise may seem like a good option.  You have the advantage of buying into a well-known brand with established national marketing campaigns, marketing strategies, and business plans.  Investing in a franchise seems like a safe bet for a viable business.  These benefits come at a price.  For franchisees who are not aware of or don’t understand the extent of the ongoing franchise costs they are agreeing to when they sign up to the franchise, these ongoing costs can get lead to serious financial trouble. Ongoing Franchise Costs That Can Really Add Up Royalty payments:  Most franchisors require royalty payments for use of the franchisor’s brand name and intellectual property. Marketing costs: …

In this global, brand driven world, name recognition is influential in driving a business’ success.  In many cases, brand recognition can make or break a business.  The franchise model offers the advantage of a known brand together with systems and processes that have helped many business owners build successful businesses. Of course, you need to do your homework before you commit to buying into a franchise (we have written blogs on due diligence, leaving the franchise, and ongoing financial obligations for franchisees).  You also need to consider whether being a franchisee is the right move for you.  People often jump into a franchise without making a careful assessment of how becoming a franchisee will affect their lifestyle.  If you don’t honestly assess whether…

In most cases, a business doesn’t go from being profitable to being insolvent overnight.  If you’re busy with the day-to-day running of the business, you might miss the early warning signs that you’re heading for financial trouble.  If you’re seeing the early warning signs of financial trouble, you need to take action.  Ignoring your problems and hoping they’ll go away won’t work because these issues don’t normally fix themselves.  We see a lot of businesses that stop paying the IRD when things start getting tight, in the hope of gaining some breathing room.  Unfortunately, while the IRD is not usually your most vocal creditor, the penalties that the IRD can add to your debt are significant and, if you do…

Struggling businesses generally show signs of struggling before they fail. The earlier you pick up on warning signs that your company is or may be heading for financial trouble, the more options you have for remedying these issues with a view to saving your business. It can be confronting but it’s important that you look at your business critically to determine whether your business need some attention or help. We have set out below some of the questions we often ask our clients about their businesses to determine whether they’re in trouble and, if they are, how much trouble they’re in.   Early Warning Signs Signs of Financial Trouble Signs of Insolvency IRD Are you behind with your tax payments to…

When considering any business venture, you need to plan for all eventualities.  Once you’ve got the business up and running, you may find you’re not happy so you might want to sell up and move on.  Alternatively, if your circumstances change, you may need to terminate the franchise agreement before the end of the term.  Either way, you will need to understand all of the termination related clauses in the franchise agreement (another important reason to get legal advice before signing the franchise agreement). The franchise agreement should set out: when you can terminate the franchise agreement how to terminate the franchise agreement the termination notice period any restrictions on terminating the franchise agreement before the end of the contract…

Some potential business owners believe that buying into a franchise offers a degree of security.  For some, it does.  For others, it doesn’t.  At McDonald Vague, we have seen our share of clients who have bought into a franchise believing they had a fool proof plan for success but have ended up in trouble.  In many instances, the reason they’re in trouble is because they didn’t do their homework before signing up to be a franchisee. If you’re considering buying into a franchise, it’s important that you look into every aspect of the business.  After all, you’re buying into the brand and the franchisor’s ethos and you’re agreeing to follow the franchisor’s model.  If there is a misalignment in values,…

Is your business struggling under a mountain of accumulating debts? Are you constantly juggling money between accounts in order to pay creditors? Are you days away from defaulting on a debt? Accumulating too much debt has been the downfall of many businesses, but it does not have to be the case. If your business is struggling with bad debt and poor cash flow, there are several options open to you before you have to consider insolvency. Creditors compromise You may be able to reach an understanding with your creditors and negotiate better terms for your debt. If you show your creditors that you are taking steps to settle the debt – such as enlisting the help of a professional advisor…