Updates from ACC
Important updates from ACC regarding changes to self-employed invoices. Also what you need to know about...
You’ve got a great idea – so how do you start a business? Starting a business takes a lot of work, but this 10-step guide2should make the job a little bit easier:
GOVERNMENT SUPPORT FOR NEW BUSINESSES
The Government has developed some useful resources to help you through the new business start-up process. The Ministry of Business, Innovation & Employment (MBIE) website3 has some practical interactive tools and step-by-step instructions which guide you through the process of setting up a new business and help you to:
These tools include a feasibility and risk checker to help determine if your business idea is viable and a quiz to test your knowledge on which expenses can be claimed for tax purposes. There are also links to other government agencies, such as a market and competitor research tool on the Statistics New Zealand website.
MBIE’s website also provides a range of funding and support services for new business ventures, such as the Regional Business Partner Network4, which supports all businesses, at all life stages and Callaghan Innovation, who assist high-growth or technology start-ups, and a low-cost mentoring service. Access to funding is limited, with grants only
available to technology start-ups and beneficiaries who wish to start a business or become self-employed. New Zealand
Trade & Enterprise (NZTE) also has some useful resources designed to help you navigate business start-ups. These include dedicated information on market research, governance, investment readiness and strategy.
Targeted assistance is available to specific businesses who meet NZTE’s criteria for different phases of business development, such as ‘Build’ and ‘Focus’.
SPOTLIGHT ON THE FINANCIALS
We are accountants after all! In order to establish a sustainable business, you will need to make sure that your business is able to fund its costs. Costs can come in a variety of different shapes and sizes. There are likely to be one-off establishment costs like securing a domain name, perhaps securing premises to operate from, or paying for website creation. Your business costs can also be fixed (such as when you enter into a contract, including an employment contract, that locks you into making pre-defined payments on a regular basis) or variable (costs that you can more or less control and ‘wind down’ if needed, such as electricity or printing costs and purchasing supplies).
In any business cash is king and this is particularly the case for new businesses which don’t have well established credit histories or a guaranteed client base or revenue streams. New business ventures are commonly funded from a mix of personal savings and bank or other loans. As such, it is important to get your cashflow forecast right – to make sure that you are able to pay your business expenses as they fall due, and also pay for your own living costs. While it is relatively easy to set up a new business, only two thirds of New Zealand businesses survive – up from less than a third of businesses in the mid-2000’s5.
Another key thing to focus on is your asset base. While people are often considered to be the richest asset of any business, in pure financial terms, we are talking about the assets that will appear on your business’s balance sheet – both the physical assets, like land, buildings and computer equipment, and the intangible ones, such as potentially the software you have developed or the website created to help you sell your products or services. From both an accounting and a tax perspective it is important to build in depreciation expenses for your assets, recognising that these will need to be replaced over time as they deteriorate and also recognising that you will want to make sure you are able to claim any tax benefit relating to use of your assets.
SOUNDS LIKE A LOT?
While there might be things on this list you’re not quite prepared for, thankfully we’ve got you covered with approved Regional Business Partners and advisors across the country who can help you navigate through the business start-up process and resolve any accounting issues you might encounter along the way.
Let us make sure your business is set up right from the start and allow you to focus on growing your business. Get in touch with your closest Staples Rodway Business Advisor to discuss how we can help.