Businesses react to problems as they come up rather than being proactive. Businesses will typically think about tax liability when it is time to pay taxes or think about expenses when it is time to pay the bills.
This is one of the leading causes of new business closures in New Zealand. Not limiting tax liability, not keeping up with business expenses and worst of all not understanding how expense planning can save thousands of dollars and prevent a business from closing.
Prioritizing
The key is to spend as much time as possible on sales generating activities and offload/limit management duties.
It is extremely stressful for business owners to act as a book keeper and at the same time try to generate sales for their business. When the bills are due and when taxes need to be filed business owners must shift the focus from growth to acting as an Book keeper. These moments when the focus is on book keeping rather then making sales or taking care of current clients can cost a business important opportunities.
Time
Larger business spend 70% to 80% of work hours on billable work but sole traders and new businesses spend only 40% of their time on billable work and 60% of business management and being reactive. This is very clear and simple companies who spend more time on growth will win. This is the critical question every business owner must answer to have a chance at success.
This is extremely important for new ventures. Each new customer is vitally important as word of mouth is still the most powerful marketing tool available. Many business owners want to provide the best service they can to their customers however when business owners are faced with accounting deadlines they panic and lose focus. There is no point in disappointing your current customers to save a few dollars on book-keeping and accounting fees. One bad moment with a customer can undo months of hard work to bring that customer to you, why risk revenue and word of mouth simply because you are stressed about your expenses and tax?
BUSINESS INSIGHTS
45% of business owners will be unable to provide financial statements on demand. From our experience this is not a healthy sign of a business.
This also means a business owner is not actively taking steps to limit tax liability, costing the business thousands per year. Most business owners will only speak to an accountant during tax time. If you hire an accountant during tax season you are just paying someone to fill out a tax form for you. The accountant at that point will find it very hard to help your business. Therefore, it is vitally important to have a proactive accountant or book keeper by your side throughout the year. Book keepers can provide financial tax forecasts for you at any point of the year, these tax forecasts are extremely important to limiting your tax liability. business owners can literally save thousands every year simply by having a book keeper nearby. Every little bit your book keeper helps you save during the financial year will add up to a significant amount during tax season.
Without access to financial statements business owners are unable to see what products and services are providing the most value, what expenses are becoming too high therefore unable to fix a flaw in their business, what marketing campaigns are effective. The list goes on and on. Every business owner must have access to financial statements as a fundamental of their business.
HIRING AN BOOK KEEPR IS EXPENSIVE
It is true that hiring your own book keeper in New Zealand is very expensive. Most small business owners will be unable hire a dedicated book keeper. The next logical step is to outsource your accounting while this will reduce the cost, but it will still be very expensive. Many business owners have horror stories of being billed $100 for simply calling their accountant or book keeper. 93 Accounting is different. We have designed a package with small businesses in mind at the best price you will find in New Zealand.
Our package includes:
Accounts payable management
Accounts receivable management
Unlimited Taxation advice
Financial performance reviews
No extra or hidden fees
Starting at just $50 a week