Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Kicking Off The Financial Year Right

New Zealand’s construction boom means contractors are busier than ever, but throw in the demands of tax time, and running a small business in the construction sector quickly becomes a juggling act, says Fergus job management software founder Dan Pollard.

While the end of the financial year can add to your workload, it is also an opportunity to get a detailed picture of your business and put healthy financial habits in place that will save you from repeating mistakes in the future.

These tips can help you avoid the most common tax time mistakes.

Make invoicing a daily habit

The new financial year is a chance to examine your overall cash collection and invoicing process and identify where you can make improvements. Running a trades business, it is crucial to ensure that invoicing is completed on a daily basis rather than attempting to tackle days, weeks or even months of receipts and invoices at one time.

If you can’t set aside a small amount of time every day (or every other day) to raise and follow up on invoices then consider delegating or outsourcing the task to someone else or automating it. Having up-to-date info will give you a better picture of your overall financial position, and allow you to write off bad debts early to avoid paying tax on revenue that won’t ever arrive.

Spreading these tasks across the entire year might feel like you’re adding more work to your day-to-day running of your business, but with the right systems and processes in place this approach will ultimately save you time, money and headaches. So ask yourself, what can you do so your business can invoice every day? Do your systems and processes support you in achieving this?

This daily habit will make the rest of the financial logistics, such as GST organisation and holiday and PAYE planning, much easier to stay on top of.

Get ahead of GST

When it comes to GST, the role for businesses is simply to collect it and pass the GST on to the government. However, for small business owners with tight cash flow, it’s easy to see that money as their own. Unintentionally spending GST payments on other business expenses can quickly add up, placing a significant liability on your books.

To avoid being caught short, put money aside weekly in a separate bank account to cover GST costs. Fortunately, GST is fairly consistent and you can easily calculate how much money you need to allocate by looking at the GST you paid last year and working out a weekly average. Filing your GST returns every two months also helps keep you on top of your GST requirements and keeps paperwork up to date.

Plan for PAYE

There can be serious consequences for incorrectly calculating pay-as-you-earn (PAYE) tax and employee holiday pay. This money is considered part of an employee’s wage and if not paid correctly, it’s classified as theft.

Seek professional advice and work with an accountant to make sure you are meeting your obligations. In practical terms, a good way to stay on top of PAYE and holiday obligations is to put the necessary funds away each pay cycle, similar to the ‘GST-only’ account. Reliable online platforms can also help you manage your payroll obligations on auto-pilot.

A financial fresh start

This period is a great opportunity to reflect on how your small business performed in the year just gone and identify what changes can be made to make tax time simpler in the year to follow.

A fresh start to financial management can also reveal business opportunities. Once you have a clear, up-to-date picture of your numbers, then you can take note of where your business is performing well and where it is not. Look for patterns in jobs that generated good profit returns and use what you learn to decide what work you take on in the future.

Tax management for small businesses can become complex, particularly in busy periods when tasks like bookkeeping are replaced on the to-do list by the day-to-day of running your business. But taking time at the beginning of this financial year to put in place the smart financial process and tools will lead to less paperwork and more time working in your business.

Plumber turned tech entrepreneur, Dan Pollard launched Fergus in 2014. Having done the hard yards as a plumber for over 20 years, Dan was determined to come up with an easier way to manage the end-to-end operations of his trades business. Dan has a passion for helping tradies realise their own true potential and is a wealth of knowledge when it comes to what it takes to run a successful trades business.

© Scoop Media

Business Headlines | Sci-Tech Headlines


Stats NZ: Consents For New Homes At All-Time High

A record 41,028 new homes have been consented in the year ended March 2021, Stats NZ said today. The previous record for the annual number of new homes consented was 40,025 in the year ended February 1974. “Within 10 years the number of new homes ... More>>

Stats NZ: Unemployment Declines As Underutilisation Rises

The seasonally adjusted unemployment rate decreased to 4.7 percent in the March 2021 quarter, continuing to fall from its recent peak of 5.2 percent in the September 2020 quarter but remaining high compared with recent years, Stats NZ said today. ... More>>


Digitl: The Story Behind Vodafone’s FibreX Court Ruling

Vodafone’s FibreX service was in the news this week. What is the story behind the Fair Trading Act court case? More>>

Reserve Bank: Concerned About New Zealand's Rising House Prices

New Zealand house prices have risen significantly in the past 12 months. This has raised concerns at the Reserve Bank of New Zealand – Te Putea Matua about the risk this poses to financial stability. Central banks responded swiftly to the global ... More>>

Westpac: Announces Strong Financial Result

Westpac New Zealand (Westpac NZ) [i] says a strong half-year financial result has been driven by better than expected economic conditions. Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on ... More>>

MYOB: SME Confidence In Economic Performance Still Cautious

New insights from the annual MYOB Business Monitor have shown the SME sector is still cautious about the potential for further economic recovery, with two-in-five (41%) expecting the New Zealand economy to decline this year. The latest research ... More>>