Sterling Accountants Limited : Chartered Accountants, Christchurch, New Zealand

• Introducing Tracey
• Getting Paid 101
• Getting Tax Right on Work Functions

Introducing Tracey Maxwell

We would like to introduce our latest team member, Tracey. Tracey is joining our team as a senior accountant. She has been in the accounting field for 15 years. While Tracey is experienced in all areas of accounting and tax, her specialist area is farm accounting, so she is available for your farm accounting queries.

In her spare time Tracey enjoys spending quality time with her family, including her son. 

Getting Paid 101

Produce, sell, invoice, collect.  What a simple process business trading can be.  Many businesses have excellent systems in place for the first three aspects of trading, but fall down badly when it comes to getting paid by their debtors.  Here are some helpful hints for getting debtors’ money into your bank account.

Prior to making the sale:

•     Engage your customers and ensure they are familiar with and sign your terms of trade, which for             larger transactions should include a personal guarantee and an authorisation for credit checking.
•     Ensure your quotes are detailed and accurate and allow for any extras to be authorised if you are a         tradesperson
•     Develop quality control systems which prevent poor product or service delivery
•     Clarify with customers how and when payment is expected

After delivery of your product or service:

•     Send accurately detailed invoices promptly, restating the due date for payment
•     Promptly follow up any customer issues, avoiding the likelihood of a dispute
•     Contact customers immediately if payment is not received on due date

What next if you have a satisfied customer who just refuses to pay?

• If phone or email contact has been unsuccessful, write to the debtor advising that if the invoice is not paid within 7 days the account will be referred to a debt collector.
• Be true to your word and don’t pussyfoot around.  Take a strong stance and refer the debt for collection by a reputable agent
• The debt collector will take you through the process, which may include a number of legal remedies depending upon the debtor’s legal structure and the nature of the goods or services supplied.

Often the threat of legal action will frighten the debtor into paying up, so don’t be shy in demanding payment in this way.  Remember also that great debt collectors are very experienced at getting blood out of a stone.  Unless you or your staff have the experience and passion for collecting money, it’s unlikely you’ll get the same result.

This year, I would like to put on a proper staff and client Christmas function and maybe some gifts. Are there rules that I need to know about tax deductability?

ANSWER

Firstly, to be either 50% or 100% deductible for tax purposes, the expenditure must relate to the running of your business – this includes staff, clients, prospective clients and suppliers.

Remember not all entertainment expenses are 100 per cent tax deductible.

A formal Christmas function at which the business subsidises the entertainment, food and drink is also 50 per cent tax deductible.

If your employees make a contribution, that is deducted from the cost before working out the amount that can be claimed as an expense.

Gifts to your staff or clients such as wine etc are 100% deductible.

But be careful- Gifts to staff may result in fringe benefit tax (FBT) if the total benefits given to each employee in a quarter are more than $300 each and more than $22,500 for all employees in a 12-month period.

All a bit confusing? Talk to us before you plan your next Christmas function and gifts (even if you aren’t going to invite us!