Category: Advice


Avoid the Bad Payers

 

Female

The first rule about debts is to try and avoid customers who don’t pay what they owe you. If the amount is going to be large, get a deposit first, get a credit report, or both.

When you get a bad payer:

  • Get onto the customer quickly.
  • Follow up on a planned basis and minimise the time between each follow-up.
  • When ringing the customer, get a commitment of how much will be paid and when.
  • When following up by phone, write notes of the commitment made and preferably the actual words used by the customer.
  • If you still have trouble collecting the debt, confront the customer with each of the promises and what was said.
  • If you still can’t get paid, warn the customer you are going to take debt recovery action. If this does not produce results, carry out the threat promptly.
  • If you're dealing with a company, the threat of winding it up can be very effective for those who are first in.

That's why it pays to act quickly. You don't want to be last in line when the money runs out.

The second rule is to avoid having your business dominated by one firm. If you possibly can, diversify your customer base as quickly as you can.

What if the company is too big to be concerned about your threats? There is little you can do other than reread rule 2. If the bad-paying corporate is only a small customer, some people load their bills to them to allow for bad payment practices.

Changes to Use of Money Interest

Previously Use of Money Interest charges from IRD were back dated to the date of your first instalment of provisional tax. This could sometimes prove to be a bit of a problem for clients where income went up unexpectedly through the year – for example if the milk pay-out increased in the later part of the season, you could end up with a use of money interest bill even though you paid the required amount of provisional tax on each due date. 

Piggy

For the financial year we are in now (2018) this is no longer the case. For normal provisional tax payers, interest will only be imposed from the date of your third instalment of provisional tax – and then only if the total amount of tax you pay is over $60,000. This is a really sensible change which makes managing your tax a lot simpler.

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IRD are currently reviewing the laws around tax deductibility of farmhouse expenses. Since the 1960s, farmers and orchardists have been able to deduct 25% of farmhouse expenses without  needing to provide evidence of their business use. They have also been able to deduct 100% of rates bills and interest costs on loans.

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Kiwifruit Contractor Payments

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Over the last few months there have been a number of clients that have received letters from IRD in relation to payments made to labour only contractors in the kiwifruit industry. This is mainly in relation to summer and winter pruning. Generally these letters have come about because IRD are investigating a particular contractor that is possibly not doing things correctly in relation to withholding tax.

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Targeting the Cash Economy

Inland Revenue’s crackdown on ‘cashies’ continues with their focus on undeclared cash in the construction and hospitality sectors. Last year, the Auckland region saw the most activity. Inland Revenue are now widening their reach. They’ve been trying to change attitudes among tradies and subcontracting businesses and their efforts seem to be getting results.

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Minimum Wage Heads Up

Minimum Wage Heads Up

After the government increased the minimum wage rates earlier this year, it made a further amendment to the Minimum Wage Order, issuing a new fortnightly rate.  The fortnightly rate is $1,140 for adult employees and $912 for starting-out workers and trainees.

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Office Energy Boosters

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Is there a dead spot in your day?  It’s probably a good time to look at boosting your energy.  Lack of energy is a motivation crusher for you and those around you.  It’s unhealthy too - it leads to bad posture which in turn can cause workplace injuries.  And of course lack of energy shows up in your office output or, rather, lack of output.

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Reduce the Cost of Paying Taxes Late

Reduce the Cost of Paying Taxes Late

Anyone who has been hit hard by Inland Revenue (IRD) late payment penalties and use of money interest (UOMI) for unpaid or underpaid tax knows how crippling this can be.

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Scheme swapping across the ditch

Scheme swapping across the ditch

The Australian government recently announced that they have made changes to legislation that will allow New Zealanders to transfer their retirement savings from KiwiSaver into a compatible Australian scheme and vice versa.

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Change to online tax returns

Change to online tax returns

The IRD have made changes to the way you file your GST returns.

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