Doing the business with businesses

July has been a busy month so far, especially for my small business portfolio. 

On Monday 5th July I hosted a Smart Business breakfast in Christchurch. It was a  cosy meeting (despite the frosty morning!) at the ‘Under the Red Verandah’ cafe  with a diverse bunch of people including representatives from the renewable energy sector, coffee  roasting  industry and even an open source software consultant. Last Friday  morning I hosted another breakfast for Wellington small business owners in the Southern Cross bar and restaurant. Again, another success with a range of industry leaders and business sectors coming along, including local councillors, an architect, solicitors, a theatre director and an osteopath.

As I meet with more small to medium enterprise (SME) owners and industry leaders many themes are coming to the forefront. Of course, compliance costs are a biggie for all those involved in business but focusing in on which compliance cost is causing the most stress is a heated topic. Tax (especially the looming GST rise to 15%), IRD, staff holidays and ACC seem to keep steering the conversation. As does the question of who should or is responsible for supporting the SME industry – is it central government? Local government? Regional councils? Or even the SMEs themselves through cooperatives or clusters?

How SMEs access information is evolving too, with the realms of social networking being used more and more to keep abreast of government announcements and changes to current legislation, and also to communicate with customers, co lleagues  and even competitors. The business world is changing rapidly and  there is clearly value in the Greens lobbying  government to ensure SMEs are not only supported, but remembered when making big decisions.

It will be interesting to see if these themes arise strongly throughout the rest of the country. In the coming month we’re hoping to be in Waitakere City  and Nelson. Let us know if you’re keen to attend either event.

To top it off we’ve had over 70 SME owners complete our online survey, we’re hoping to reach 100 before August so please fill it out if you own or are involved in the operation of an SME (20 or less employees) or pass on to anyone you know who is.

9 Comments Posted

  1. My gripes
    I want to be able to set up direct debit with IRD.
    As it stands I am required to file (various) returns, I’m the required to make payments. If I’m late I get whacked.
    It should be that, once I’ve filed a return I can relax in the knowledge that the correct amount will be extracted on the correct date.
    Legislation does not allow IRD to direct debit. How dumb is that when they ultimately have power to take EVERYTHING should I default.
    Secondly… employee tax. Why, in the modern computer age, do I have to F around with my employees multitudes of taxation?? I should just send in my employees Gross Pay data with each payroll, that’s it. IRD should then sort out the PAYE, ACC, student loans, maintenance, kiwisaver, employer contributions etc etc. The appropriate amounts should be direct debited/direct credited from/to the appropriate accounts. No further returns would then be filed.
    Statistics New Zealand… Please f-off and leave me alone! IRD has all my data, why should I have to re-file information AGAIN to them?

  2. As someone old enough to have used a slide rule, I can assure readers that you cant perform arithmetic addition on them. However, they can multiply, so two times two is possible…

    Kinda spoils the joke though 🙂

  3. Toad, the real accountant interview question is:
    – I have $20 in this hand and $20 in that hand; how much do I have?

    You’re right about one of the answers. The recognised answers range from:
    – Put it all in one hand and then I’ll tell you.
    (Because there might be costs in the transfer.)
    – What do you want it to be?
    (Because I will do arithmetic until it is.)

  4. @Gerrit 3:22 PM

    A rebate to SMEs for collecting GST – that’s actually an interesting idea.

    @rimu 4:58 PM

    That comment reminds me of a very old joke I heard as a teenager (so long ago that pocket calculators were not allowed, and we had to use slide rules in tests and exams):

    There are three people shortlisted for a management position, with respective qualifications in engineering, mathematics, and accounting.

    The engineer is the first to be interviewed, and after the usual questions, the Managing Director asks a peculiar question “Can you tell me what two plus two is?”

    The engineer pulls out a slide rule, and then says “I can assure you that it is somewhere between 3.008 and 4.002.”

    Next is the mathematician. Same line of questioning, finishing with “Can you tell me what two plus two is?”

    The mathematician responds: “If you have 10 minutes, I can show you a short proof which demonstrates that it is four.”

    Next the accountant. Same line of questioning, finishing with “Can you tell me what two plus two is?”

    At which point the accountant jumps up, closes the blinds, opens the door, looks left, looks right, closes and locks the door, and then whispers in the Managing Director’s ear: “Tell me what you want it to be!

  5. Yeah, the tax system has incentives that pretty much require you to go into debt. Lame, for sure.

    I guess if capital expenditure wasn’t counted as profit then there would be no justification for claiming it back as depreciation later?

    Dunno, accounting does my head in. It all seems very arbitrary and built on sand.

  6. Depreciation (or lack of it) can be a killer.

    One year we needed to buy about $75,000 of new equipment. However less than $5000 of that could be claimed as depreciation the same year.

    The remaining $70,000 spent on equipment, had to be considered by the IRD as profit, so we are slammed for over $20,000 additional tax on money we’ve never ever seen.

    It will be ten years down the track before we can claim most of that back as depreciation.

    No wonder a large majority of companies starting out fail. This is when you need to buy new equipment. This is when you don’t have such a great income. This is when the IRD slams companies who have been cautious and self funded their growth organically rather than through debt.

  7. Oh, and add to that the burden of being an unpaids GST collector for the state.

    If the GST where to come off basic food items, the correct collection and return of the GST becomes even more burdensome.

    Wouldnt mind a .5% GST rebate for being a revenue collector of the GST.

  8. Great initiative by the Greens. About time someone took notice of the SME.

    A growth constituancy for sure.

    I will take time later to do the survey, but top of mind for the biggest gripes are

    1, Provisional tax. PAYE workers dont have it foisted upon them why should a SME? Where does that provision come from and why do we still have it.

    2, Access to capital. Short of morgaging the family home there are very few financial resources available. Means that people dont start SME and employing people till after the morgage is payed off.

    3, ACC rates there are huge for the benefit received. No rime or reason to them in regards rates versus risk assesment.

Comments are closed.