Issue 4 - Spring Edition
Welcome to the 2010 Spring edition of Jarvis Accounting Solutions newsletter.
Happenings at Jarvis Advanced Accounting
As we head into spring Rajeev is getting ready for some warmer weather and the opportunity to play some cricket again.
I have taken the opportunity to arrange my Mother's first overseas trip, which she is very excited about and necessitated the obtaining of a passport. As part of this trip, I will be accompanying her as we head to Europe to visit the birth place of her father and take in some of the major sites Europe has to offer.
This means, I will be away from the office from Monday 13 September until Monday 11 October. However, I can still be contacted by email if you urgently need help. Otherwise, please feel free to contact Rajeev, who will still be in the office or wait until I am back
In my last newsletter, I continued the current series and spoke of the importance that as a business owner you need cash in your bank account. I advised there are three areas to assess and we assessed Accounts Receivable also called Debtors (Customers you sold goods to).
In this edition we will look at the second area, Inventory also called Stock of Goods on Hand. Main problem here is, purchasing stock costs money and having too much stock ties your hard earned cash up until you are able to sell the stock or incorporate into a product for sale.
What are the common problems?
- No system in place to identify when need product, so buy too early.
- Stock piling to take advantage of good purchase price.
- No system in place to identify goods the market no longer buys.
What can we do to rectify this?
- Implement a stock system so only order products when needed.
- Review actual cost of buying goods. That bulk buy could cost you in the long run, with additional storage costs, interest on overdraft and need to reduce selling price.
- Consistently review how long it takes to sell stock, with view to discontinuing stock lines that sit.
- Review terms and conditions of suppliers, can you return the goods if you cannot sell them? Any costs for returning goods? What are the payment terms?
What we need to ensure happens is the cash you have spent on purchasing goods is turned quickly into sales and then into cash in your bank. Inventory has a habit of tying up hard earned cash.
We live only once;
- So don't spend all your time at work.
- Take time out to spend with your family and friends.
- Enjoy pursuing your passions.
As you will be aware by now, on 1 October 2010 the GST Rates changes to 15%.
What you need to do;
- If you have an accounting system, ensure this will be up to date and compliant with new GST Rate. In summary, if you have;
a. Xero, you do not need to do anything.
b. MYOB Support Plan, they will contact you shortly and provide upgrade.
c. MYOB Product but no support plan you need to upgrade.
As we have only just received notification of the upgrades, pricing and I am shortly away on holiday I have arranged with Gavin at Business Support Services NZ Limited to help provide you with upgrading. Please call him on 0800 888 003, mention you are my client and he will take care of you and ensure you are upgraded.
d. If you have any other software, I recommend you either
i. Talk to your software provider about what you need to do, or
ii. Think about whether it is time to change your accounting software, to a product like Xero. If interested please contact Gavin at Business Support Services on 0800 888 003.
- Make sure you invoice Customers for goods or services provided on or before 30 September 2010 by 11 October 2010. Please ensure invoice dated 30 September and these will be at the old GST rate of 12.5%.
- If we prepare your GST Return or you prepare it manually, make sure you have a complete list of
a. Unpaid invoices issued to Customers, as at 30 September 2010. This is for invoices dated on or before 30 September 2010.
b. Unpaid invoices received from suppliers, as at 30 September 2010. This is for invoices dated on or before 30 September 2010.
- From 1 October, start charging GST at 15% on all invoices issued.
So previously to work out GST you either
- Divided GST exclusive amount by 8.
- Divided GST inclusive amount by 9.
Now you will have to
- Multiply GST exclusive figure by 15%.
- Multiply GST inclusive figure by 3 and divide by 23.
Please contact Rajeev or myself if you have any questions or would like to discuss your situation.
For all you property traders, note that from 1 April 2011 it is proposed that sale of land and/or buildings between GST registered parties will now be zero rated for GST purposes.
What's changed for tax?
- Not only has the GST rate changed but the Government has reduced the personal tax rates.
Here is a summary of the new tax rates:
Income 0 - $14,000 10.5%
Income $14,001 - $48,000 17.5%
Income $48,001 - $70,000 30%
Income Over $70,001 33%
Trusts 33% no change
- The PIE rate of tax has also reduced. Relevant, if you have term investments with the bank or investments with financial advisers. Please call me if want to know more as we may be able to reduce the amount of tax you are paying.
- From 1 April 2011 you will no longer be able to depreciate buildings with a useful life of 50 years or more.
changes on the horizon, are related to LAQC, loss attributing
qualifying companies. If you have one then please contact me if
a. Currently making a profit as you should consider revoking LAQC status.
b. Using for your rental properties and with change in depreciation of building likely to make a profit.
As I said, if you have an urgent enquiry you can email me and I will respond, internet access permitting. Otherwise contact Rajeev or if it can wait I will attend to your query on my return in October.