Business and Tax Updates July 2023: IBBZ Accounting

Summary:

As we step into the second half of the year, here are some highlights with key developments this month. 

Tax Season Recap and Planning Ahead

The dust has settled on another successful tax season, and we want to extend our appreciation for your cooperation and responsiveness during this period. By working together, we navigated the complex tax landscape and ensured compliance with the latest regulations. As we move forward, let's start planning for the upcoming tax year to maximize deductions and optimize your financial position. Reach out to our experts to strategize your tax planning for the rest of 2023.

Understanding the Benefits of Chat GPT

In today's digital age, chat GPT has come with a blessing to lot of businesses. Chat GPT, or conversational AI powered by GPT (Generative Pre-trained Transformer), offers several benefits that make it a valuable tool in various applications. For example, if you need to send email to a client it can prepare a draft email for you. Or if you need to reply to an email, it will do that. It can even draft a business contract. Over the time it will be learn from us and will be more robust. It can be accessed via openai.com. sign up and use the chat functionality.

Key Performance Indicators (KPIs) for Business Growth

Do you know if your business is on track to achieve its goals? Monitoring Key Performance Indicators is crucial for evaluating your company's performance and making data-driven decisions. We'll walk you through essential KPIs that provide insight into your financial health and assist in charting a course for sustainable growth.

For example: a healthy gross margin for a builder typically falls within the range of 15% to 25%. Gross margin is the difference between the total revenue generated from a project and the direct costs associated with that project (such as labour, materials, subcontractors, and equipment). It represents the portion of revenue that contributes to covering overhead expenses and generating profit.
Also, for example a closer look at the labour cost is equally important the percentage target can be applied to the any industry. Rule of thumb the labour cost should not be more than 40%. As a general guideline, the labour cost percentage for a builder typically ranges from 20% to 40% of the total project cost.

To calculate the labour cost percentage, follow this formula: Labor Cost Percentage = (Total Labor Cost / Total Project Cost) x 100

One should continuously monitor and analyse their labour costs to ensure they are competitive in the market and maintain a healthy profit margin. Effective workforce management, training, and productivity improvement initiatives can help a business optimize labour costs and enhance overall project profitability.


Cyber security

We want to highlight some key information from the conference we recently attended. Cyberattack is no longer a matter of if, it is a matter of when. At some stage we will have attack, at that point of time there may be a serious harm and data breach/private information breach. We need to be prepared how this can be handled. Key takes were:

1. A tool is at privacy.org.nz/ to help you prepare for such attack. All businesses must have privacy officer.

2. If the breach is serious which leads to loss of private information of clients this breach must be notified to the privacy commissioner through their website within 72 hours.

3. You also need to notify your clients about the breach.

4. Mitigation plan could be to have cyber attack insurance, implementation of 2 factor authentication, and regular staff training.

5. It might be a good idea to create hypothetical scenario and test that how your business would deal with such attack.

6. It is also critical to have less data, delete all unnecessary data. If you are carrying less data, then you would be dealing with less problems.
   
   

 Business Updates 

1. On 12 July, the monetary Policy Committee announced that the official cash rate will remain at 5.5% and is expected to stay there for a while. The reserve bank also stated that global growth has remained weak and inflationary pressures were easing as inflation drops down to 6%, but still remains an issue for kiwis.

2. Retail businesses selling finished goods such as dairies, jewellers, bottle shops etc are eligible for a $4000 fog cannon subsidy. Business NZ provides an eligibility test to check if you can receive the subsidy.

3. As of 1 July, single-use plastics including drinking straws, cutlery & tableware and plastic bags have been banned.

Tax Updates

1. GST on land use and exempt supply: In the 2022-23 Annual Rates Platform Economy and Remedial Matters Bill, IRD discuss in detail the GST and apportionment rules. An interesting amendment is the addition of S 14(4) which will allow GST registered persons to treat the supply of certain goods as exempt supply. This will impact to all those taxpayers who have mixed use of Land and GST is claimed on the purchase.

2. Government payments to businesses (grants and subsidies) S CX 47 and DF 1 are the grant provisions which apply to payments in the nature of a grant or subsidy from a local or public authority or public purpose crown controlled (PPCCC) entity to a business. These provisions are intended to make tax grants neutral to a business. Specifically, CX 47 treats payments as non-taxable and S DF 1 treats expenses funded by such payments as non-deductible.     This means expenses that are funded by the grant will not be deductible.

3. Trustee tax rate is 39% from this year.

Client Spotlight: Success Stories

At IBBZ Accounting, our success is directly tied to the achievements of our clients. In this section, we shine the spotlight on some of our valued clients, sharing their success stories and how we've collaborated to overcome financial challenges. Be inspired by their journeys and see how your business can also reach new heights with our dedicated support.

This month we want to highlight Mr. Guthrie, he is sales agent of home ventilation system at HRV. Over time, Mr Guthrie has demonstrated a strong commitment to managing his finances wisely and responsibly. He has worked hard to ensure that he stays in control of his financial situation and makes informed decisions to achieve his goals. Currently running a profitable business. If anyone is need to home ventilation system or heat pumps this winter contact Mr. Guthrie.

Community Involvement: Making a Difference Together

As part of our commitment to giving back, IBBZ Accounting is actively involved in community initiatives. This month we sponsored Immune Deficiencies Foundation of New Zealand (IDFNZ) / Kids Foundation Charity in their annual appeal of 2023.