Sometimes it's Better to Receive than Give...

‘Tis the season to be jolly …. and sometimes that can take the form of providing some “goodwill” to your staff or clients.

And the taxman, who probably isn’t used to customers expressing their appreciation in a tangible form, wants to share in your generosity by insisting that you give them part of what you spend.  They do this by charging FBT or restricting the tax deduction you can claim to 50% of the cost, because the taxman doesn’t like it when you give something that might provide a bit of pleasure to the receiver.

Fortunately the taxman only expects you to share the cost of a few types of goodies with them.

You are not penalised by giving a favoured client a bunch of flowers, movie tickets, calendars, a cuddly toy, or tickets to a concert or rugby game; - that is, so long as the tickets don’t have them sitting away from the hoi polloi and in the comfort of a corporate box, marquee, tent, or similar exclusive area.

A good example is tickets to rugby world cup games.  If you gave a client tickets for seats that are available to the general public the cost will be fully tax deductible.

But if you hosted a client in a corporate box or gave tickets with access to a corporate box, or invited them to enjoy your hospitality in a marquee set up at the game venue, the costs (including food and drinks) will only be 50% tax deductible.

If you provide food or drink by taking a client out to a restaurant or bar, at a social gathering or business lunch, shouting your staff drinks in or away from the office, or paying for the staff Christmas party, the costs will only be 50% tax deductible.

If you give your staff food or drink and they can choose when to enjoy your generosity, the cost will be fully tax deductible but will fall within the FBT regime.  But if the value of the food or drink (and other free or discounted goods and services) is less than $300 per employee for the quarter (and the total for all employees for the 12 months is not more than $22,500) no FBT will be payable on the gift.

But if you give a client a bottle of wine or a box of chocolates as a token of appreciation for their custom during the year, we say the cost will be fully tax deductible.  In our view the 50% limitation doesn’t apply as the mere giving of the gift does not have any entertainment or social aspect to it.  We are aware that many businesses treat such gifts as only 50% tax deductible, but the IRD has confirmed in their December 2011 “Business Tax Update” that the cost of such gifts is fully tax deductible.

From our friend Gavin Stewart at NSA tax

www.astillhawke.co.nz

Who’s Out There for the Small Business?

When you get out and start networking, business starts pulsing.

We all know what happens when you stay locked in your office – you stop talking, you start worrying and that’s usually bad for business!

On the other hand, constantly meeting new people and talking about your businesses or about business issues has the exact opposite effect. You swap ideas, you share information, you form alliances, you learn about others, you give and receive referrals, and your business grows. It’s motivating and a highly effective way to do business.

It also pays to be up with the play on what’s happening in your local business environment, or your industry group.

So where do you find these groups? Well, you might network with business acquaintances or professional colleagues on an informal basis, but now, more and more formal groups are starting up.

Some, such as the BNI networking group, meet weekly and, to prevent competition, only allow one type of profession into each chapter, although a large town may have several chapters. BNI groups are located throughout the country.

Local chambers of commerce run frequent networking events such as ‘After 5’ evenings, networking breakfasts, women’s events or larger conferences.

There’s also the home business website catering for the rapidly growing number of home-based businesses.

You may have a specific networking group attached to your specialist industry. Look into everything and find out what suits best. And remember, good networking is not all about you – it’s about meeting and helping others.

Try these websites:

www.nzchambers.co.nz – for information on local chambers of commerce

www.ema.co.nz – the employers and manufacturers association

www.bni.co.nz – for information on local BNI groups around the country

www.homebizbuzz.co.nz – for loads of information for the home-based business

www.herbusinessmagazine.com – Her Business magazine which gives information on local groups.

www.astillhawke.co.nz - local Auckland Accountants                                                                              28

Hang On to Those Great Team Members

Recruiting new team members is time-consuming and expensive. And even then, you don’t always get it right and often have to go through the process again.

Yes, recruitment is necessary but wouldn’t it be better to put more resources into holding onto your current staff?

Let’s look then at what keeps great team members in their job. Obviously people do want to be rewarded for their excellent work, but surveys show money is definitely not the only thing driving them. Employees also need responsibilities, independence, job satisfaction through interesting work, security, promotion, growth, good working conditions and a workplace culture based on open communication.

Some of the ways you could achieve this include:

§  Get all the team involved in decision making and establish one-on-one meetings; be an effective listener

§  Keep the team informed with the big picture as well as the work-in progress

§  Don’t micro-manage – give team members their independence

§  Always try to hire internally first

§  Take performance appraisals seriously and be open and candid in your evaluations

§  Look at career development opportunities with staff and encourage all employees to improve their skills and take on new responsibilities

§  Develop flexible human resource policies on matters such as:

ú   Parental leave

ú   Working time arrangements

ú   Sharing of jobs

§  Treat all ideas, suggestions, issues and problems with utmost importance and action your promises

If an employee does resign, conduct an exit interview to obtain feedback. If there’s a problem somewhere, you need to be able to fix it before losing any further good staff

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Leading The Team – With Energy

 Born or made, leaders stand out from the crowd.

Actually, leaders are ordinary people. First and foremost, a leader’s job is to lead a team, and that means being part of the team – someone who can sit down at the tea table and have a chat just as well as the rest of us.

Leaders have additional attributes though – maybe flamboyant, possibly unassuming. But what every leader needs is drive and plenty of positive energy.

Many leaders are extroverts who are highly motivated and thrive on work and the desire to keep progressing. Others though may be quietly confident, yet decisive and determined. Either way, they are energetic, they live and breathe the business vision, and encourage others to do the same.

Challenges are Opportunities

Successful leaders also have a highly positive attitude to business. They know that businesses face challenges every day. The key is to view those challenges as opportunities to learn and grow, rather than as yet another ordeal to wade through.

Being in business is about facing challenges and the positive leader will thrive on finding a way around them.

Jack Welch knows about challenges. He spent 40 years at General Electric and led the company to success time and time again as CEO. In his book Winning, he shares very candidly what he’s learnt about leadership over the years.

 

Candidly Speaking

Candour, in fact, is one of the most important qualities of any leader, he says. It’s about being open and honest with your team about what you think and what’s happening, and encouraging others to do the same. If it’s happening from the top, candour will permeate the entire business and keep ideas bubbling.

“Lack of candour,” on the other hand “blocks smart ideas, fast action, and good people contributing all the stuff they’ve got. It’s a killer,” 1 he says.

Welch also looks for other attributes in leaders including:

§  Edge – the courage to make tough decisions

§  Execution – the ability to get the job done

§  Passion – about work and life generally

§  Authenticity – being true to yourself, real

	1 Winning, by Jack Welch, Harper Collins Publishers, 2005.

 

 www.astillhawke.co.nz

Take Stock with Annual Legal Check-Up

Ignorance is no excuse when it comes to breaching the law. But keeping up with law changes and how they affect your business can be onerous.

To keep abreast of recent legislation and to make sure you stay on track, it’s a good idea to plan an annual legal check-up with your solicitor.

Review Your Business Operations

Regular check-ups give you the opportunity to review all aspects of your business operations. Numerous laws influence your business and the implications of recent court cases and changes in the law may require you to make adjustments in some areas.

Don’t get caught out through your own lack of awareness. Legislation is always evolving – employment law, for example, has seen big changes in New Zealand recently – and the world of commerce is dynamic, especially as telecommunications technology and the global village we now live in effect faster and better ways of doing things.

Internet businesses, for instance, and those offering trading on-line must keep track of laws relating to e-commerce. Copyright laws also become extremely important here.

All business owners need to be fully conversant with commerce laws, including restrictive trade practices, fair trading and consumer protection.

Staff and the Workplace

If you employ staff, changes to employment law will directly affect you, including amendments to the Holidays Act  and the introduction of the KiwiSaver scheme under the KiwiSaver Act 2006. Health and Safety legislation, which was amended in 2002, is hugely important for all employers.

Businesses involved in parallel importing need to be up-to-date on copyright laws, specifically the amendments to the Copyright Act in 1998 and 2003 relating to the parallel importing of copyright goods.

Environmental and resource management law will be extremely important to other businesses.

These are just some of the laws which could affect your business. Most companies will be influenced by many more. Stay on track with legal issues by keeping in regular touch with your solicitor. 

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