While we encourage giving your valued clients gifts to say thank you, congratulate them on an achievement, or whatever the reason for celebration may be, there are certain rules in regards to deducting these gifts as a business expense that we want you to be aware of.
The rules around deducting client gifts can have a few grey areas, so remember that only certain client gifts can be fully deducted. The tricky part is when you are gifting food or drink – if you provide or consume the gift away from your business premise, the gift is only 50% deductible. However if you provide or consume the food or drink at or from your business premise, the gift is 100% deductible.
Any gifts outside food and drink, e.g homewares, are 100% deductible whether you provide them on or off your business premise. The IRD have given a real world example to help understand the rules around this, which we’ll put below to help you understand the rules a little more. If you have any questions or concerns about gifting, get in touch with your Sidekick Accountant and they’ll happily help you out.
Bob is a real estate agent. Each time he arranges the sale of a house, Bob delivers a bottle of champagne to the owner. He also sends a gift basket by courier to the purchaser. The gift basket contains a bottle of wine, some cheese and various household items such as tea towels and soaps.
Bob will only be able to deduct 50% of the cost of the bottle of champagne. This is because he is providing entertainment in the form of drink and doing so off his business premises.
For the gift basket, Bob can deduct the full cost of the tea towels and soap, because an appropriate apportionment should be made for items that are not food and drink. However, he can only deduct 50% of the cost of the wine and cheese (or, if the cost is not separately identifiable, an amount appropriately apportioned as the cost of the wine and cheese).
By djca. Posted in Sales and Marketing, Small Business, Small Business Advice, Solutions.
By djca. Posted in Business Growth, Cloud Software, Small Business, Small Business Advice.
Silk Estate – Marquee Weddings by Toni May is an Ashburton based company who have gown to fill the need of providing beautiful marquees and wedding services. We’ll let Toni fill you in on more about what they do. Tell us a little bit about yourself and Silk Estate. Silk Estate is a marquee hire business specializing in weddings but also catering for other events. We pride ourselves on making marquee weddings the most enjoyable process for the families involved. Our passion for your special day is reflected in all the details we take care of for you. Through the process of assisting families with their weddings we have identified areas that families really appreciate support with now offer wedding day set up, bar service for the day, and event planning services. Our wedding day dressing service means we arrive at the crack of dawn (or before), arrange your tables, place linen, set cutlery, crockery, glassware, place your centrepieces, named guest cards and table numbers/names. Style the supper table, fill and heat hot water urns, check power, and run heaters if required. Really all those little jobs that just need doing. We ask our brides to visit our showroom to do a mock table setting (with photos taken) to ensure every detail is carried out to our brides wishes. Our bar service starts before your ceremony and continues through to the wee hours finishing with a refresh of your marquee ready to go for the next day event. We bring the ice, stock take and monitor your alcohol and offer table service through your wedding breakfast. Recycling of bottles and rubbish removal can all be part of your package. We are a firm believer that you have enough to do without worrying about these details. Why did you choose to get into this industry? Silk Estate – marquee weddings derived from our canvas fabrication business Peter May Ltd. Peter started making smaller branded marquees for A & P Shows and a few of our farming clients started to request larger marquees for their daughter’s wedding on the family farm. At first we thought we would supply marquees and hire the other products but quickly discovered the quality and availability of doing this would be a problem, so took a huge step and invested in quality, chairs, tables, linen, cutlery, crockery, glassware, lighting, dance floors, stages, luxury restroom, heaters, furniture, chiller trailers etc. What’s your favourite part about the job? My favourite part of the job would have to be seeing the long awaited day come to fruition. For it all to go well and everyone to have a lovely time in outstanding surroundings and the huge smile on the brides face with usually relief and relaxation smiles on that of the families. What is one piece of advice for other small business owners? Can you share any lessons learnt from business struggles or challenges that you’ve overcome? Right from the start of our business we identified that the correct software and support would be crucial. We trialled various software packages for our hire product and found a great product that was an ‘add on’ to Xero. Before Xero we had been using the same software for twenty years, but knew for the last five years that it was not giving us the information we really needed. Now Xero and the add on software is such a powerful tool and really easy to use. What I have learned so far is to persevere. In business there are so many challenges to work through. Having good support is great. I like to have an outsider’s viewpoint to challenge us – to make us realize what we are capable of. Someone to set that bar a little higher than you would have set it yourself and then the satisfaction of achieving that goal. DJCA have been a great source of this prompting. We hope that with Sidekick on board taking care of your accounts, you have found more time to do the things you really enjoy. So what is it that you love to do with your spare time? Spare time for us at Silk Estate is spending time at our family bach. This is an off season activity. I must say most of our time is work related, but I really don’t worry too much about work life balance as when you really love what you do and are passionate about it, then it doesn’t feel too much like work. As we are in this for the long term, I believe in being able to stay fit, well and happy even on the most busy of days. Spare time for me would be the morning gym session and the lovely early morning runs I enjoy. Do you have any new products announcements or favourite recommendations that you’d like to share? Silk Estate is a forward looking company, interested in current trends and ideas in the wedding industry. Our stock is new and fresh and we take great pride in delivering this standard to our clients. Last season we bought in the wooden cross back chair which have proven to be so popular. This season we have added 2 very exciting items too, copper cutlery and a cut glass tumbler. These have also proven to be very popular for the coming season. You can get in touch with the team at Silk Estate on Facebook, Instagram, or their website.
By djca. Posted in Cloud Software, Small Business, Small Business Advice.
If you live in Christchurch or Queenstown and you haven’t tried Pedro’s House of Lamb, you’re missing out! We had a chat with the Pedro’s team to learn a little more about how they’ve come to be so successful. Tell us about Pedro’s House of Lamb, how did you get started? We launched Pedro’s House Of Lamb at the end of 2012. We had run a restaurant in Christchurch successfully for 30 years until the earthquakes. The new situation meant we had to think differently about the business and adapt. Which is how Pedro’s House of Lamb evolved – we took a product that was well loved in our restaurants and found a way to offer that when the city was short on premises. Where can people find you guys? You can find us at 17B Papanui Road in Christchurch and at 48 Gorge Road Queenstown. What is one piece of advice for business owners? Can you share any lessons learnt from business struggles or challenges that you’ve overcome? We did something in the food industry that was a little bit unusual. We offered just one dish –roasted lamb with a side of potatoes. People often asked us to extend the menu or whether we’d start providing accompanying dishes. But we’ve stuck with our original business plan and that’s proven to be successful. By keeping it simple we’ve been able to produce a quality product, keep operating expenses lean and predictable. Our experience has taught us to: Trust your instincts. Know your market. Stick with what you’re good at. What accounting system (if any) were you using before moving to Xero? How did that compare to Xero? Prior to moving to Sidekick we operated a traditional accounting system – paper, paper and more paper. Moving to Xero has allowed us to streamline our accounting and provided more day to day visability. Why did you choose our Sidekick service for your business? We approached DJCA about Sidekick on the recommendation of our digital marketing agency, Empire9. After finding out more we saw that the sidekick offer would compliment our business and simplify our businesses finances. Find out more about Pedro’s and how you can order from your local store here.
By djca. Posted in Small Business, Small Business Advice, Solutions.
The new financial year has kicked off with a hiss and a roar and we’re well underway with helping our clients process their end of year accounts. To make sure this financial year starts smoothly for you, we have a few tips to share. As always, any questions you can get in touch with the Sidekick team here. Review Your Receivables Now is the best time of year to review the accuracy of your receivables. We recommend to take a thorough look through your aged receivables to see if any are bad debts, or there are any other inaccuracies. TIP: To write off a debtor as a bad debts expense, you must determine that there is no reasonable likelihood that the debt will be paid. A clear indication of a bad debt is if a debtor has become bankrupt or has gone into liquidation. In other words, you should only write off a bad debt if you have no hope of receiving the money. If you use Xero, you can review your Aged Receivables Ledger by clicking “Reports”, then “Aged Receivables”. Stock-take If you hold stock, try to set aside some time as soon as you have the time to do a stock-take. It’s in your best interest to do this as soon as you can so you can work with accurate margins and data going forwards. Donations Donations to an approved charity are deductible, so if you’ve made a charitable donation this year, be sure to let your accountant know. Fixed Assets You can claim a deduction on the purchase of fixed assets that cost $500 or less (excl gst). Now is also a good time to look through your fixed assets and ensure all assets are currently in use in the business. You can review your fixed assets in Xero by clicking Reports > All Reports > Depreciation Schedule. A deduction can be made for the book value of assets if they are no longer in use. Legal Fees Legal fees of less than $10,000 (excl GST) can be deducted as revenue expenditure. If your total legal fees are over $10,000 (excl GST) they may be recognised as capital expenditure, and therefore not deductible for tax purposes. Employee Related Provisions A deduction can be made for employee related provisions (such as holiday pay or long-service leave) as long as they are paid within 63 days of your balance date. For example if you have a standard balance date (31 March), payment needs to have been made by June 2nd for the amount to be deductible. Reconcile Be sure to keep reconciling your bank accounts in Xero. Did you know you can reconcile easily on your phone? For a step by step guide click here for Apple and here for Android.
By djca. Posted in Small Business Advice, Solutions, Tax Advice.
New Property Tax Rules & New 2 Year Bright-line TestEffective 1st October 2015, the following rules are coming into play in New Zealand. Get in touch with us if you would like to know more. Transferors and transferees must, for the transfer of land: • Provide IRD number (including non-resident persons), and • Their “Tax Identification Number (TIN) if resident in overseas jurisdiction, and • Must provide this at the time of transfer of land – This “Tax Statement” goes to LINZ as part of transfer documentation (they send to IRD) Exemption from the new rules applies to persons who are: • Not an “offshore person” and • Transferors selling their main home, or • Transferees buying with intention for their main home The Main Home Exemption • Exemption only applies to residential land • Not available where residence is on a commercial farm (economic business test) • Not available if used mainly for investment purposes nor if mainly as business premises • Exemption can only be applied once – won’t apply to other homes (eg. holiday home) Exemption is not available where: • Person is an “offshore person” • The property is to be, or was, owned by a trust (and estates) • Exemption used twice or more in last 2 years before current transaction Trusts • The main home exemption can’t be used • All trusts will be required to provide IRD number • And foreign TIN and NZ bank account if offshore person Regular Sale of Main Home • If home sold 3rd time within last 2 years IRD number required • Government aim is to catch person’s with regular pattern of selling family home • Gives IRD information to target these persons and determine whether taxable
New 2 Year Bright-line testA disposal of residential property within 2 years of acquisition will be taxable unless an exception applies. Date of Acquisition • Current rules: the date of acquisition is generally the date the S & P was entered in to • IRD state this date could be difficult to find and may not have access to S & P • Therefore bright-line acquisition date = date title registered which will show on land online Disposal Date • Date the contract is entered into • For gifts and other similar distributions where no sale contract – Disposal date will be normal rules = depends on documentation • Subdivided land: lots acquisition date same as original undivided land • Different dates for acquired and disposed make the 2 year period a tighter squeeze Transitional Rule • New rules only apply to a S&P entered into after 1/10/15 • Example – Shania Twang enters in a S& P on 2/6/15 – 1/11/15 title registered for purchase – 1/12/15 Contract to Sell • Not caught by the new rules due transitional provision Definition of Land • Any estate or interest in land • Option to acquire land, estate or interest in land • Therefore includes freehold and leasehold Main Home Exception Proposed Rules • Bright-line test will not apply to main home • Will only apply to one property at a time – different from current rules • Proposed rule: the land has a dwelling on it; the dwelling is occupied mainly as a residence by the owner; and the dwelling is the main home of the owner. • Can be owned by a trust so long as beneficiaries occupy • Must be occupied mainly as a residence • Based on actual use rather than intention • Where several residences, main home = property with most connection
By djca. Posted in Business Growth, Small Business Advice, Solutions.
There is only one thing that we love almost as much as Xero at djca and that is great food and drink. And boy do we count ourselves lucky to have Costas Taverna as one of our clients! Straight from the guys at Costas, here is a bit about how they came to be so darned popular in Christchurch.
Tell us a little bit about Costas Taverna…Costas Taverna is a place to celebrate the simple joys in life… family, friends, conversation and great food. We will always do our very best to ensure you receive great value, fast, efficient, friendly service, and outstanding food sourced from the best and freshest local and imported ingredients. We believe that eating great food, in good company is one of life’s greatest pleasures, so we want you to sit back, relax and celebrate the moment!
Where do you operate?Costas Taverna is now operating on Cranford Street 478 shop 3 in Christchurch. We are open 7 days from 5pm till late.
Why did you choose to get into that industry?In 1904, in a small village near the bank meadows of the river Evros, Greece, the Lakakis family developed a passion for cooking. Not with the advanced cooking methods used today; but it was honest. It was the best food the Village Kiani had ever tasted. Food is something that we have been incredibly passionate about for many decades. We have literally poured our hearts into every detail within our restaurant. Watching our guests enjoying our hospitality is absolutely priceless for us, that is why we are in the restaurant business.
What is one piece of advice for business owners in your industry? Can you share any lessons learnt from business struggles or challenges that you’ve overcome?Control your numbers using a food and beverage costing calculator and good stock control. The use of Xero to form an accurate budget will do wonders for you.
What accounting system (if any) were you using before moving to Xero? How did that compare to Xero?We didn’t have one. We used to use Microsoft Office Excel and we worked closely with our accountant who managed it for us.
We hope that with Sidekick on board taking care of your accounts, you have found more time to do the things you really enjoy. So what is it that you love to do with your spare time?We love to take mini holidays to relax and unwind.
Do you have any deals or specials that you’d like to share?October is coming up with some exciting promotions at Costas Taverna. Monday is 2 for 1 Souvlaki Platters (Regular), Wednesday 2 for 1 Cocktails or Coolers all night and Sunday kids eat free from 5 pm to 6:30pm. You can find our promotions and deals on our Facebook Page: www.facebook.com/CostasTaverna and on our Website www.CostasTaverna.co.nz