The low-value asset threshold (of $5,000) for depreciation ends on March 16th

The low-value asset threshold (of $5,000) for depreciation ends on March 16th

The temporary increase to $5,000 for the low-value asset threshold for depreciation ends March 16th. For assets purchased on or after 17 March 2021, the new threshold will be permanently set at $1,000. Talk to us for more information.

The temporary increase to $5,000 for the low-value asset threshold for depreciation ends March 16th

This means if you buy something now, you could write off the whole amount against your taxable income this year.

Depreciation spreads the cost of assets that you buy for your business, by claiming a deduction from the IRD in your tax return.

In March 2020, the NZ Government introduced legislation to temporarily raise the threshold for depreciation on low-value assets from $500 to $5,000. The aim of this change was to stimulate the economy during the Covid pandemic by encouraging people to invest in their businesses.

The change to the $5,000 threshold ends 16 March 2021

What does this mean for you?

  • Businesses (including landlords) can deduct the entire cost of an item (under $5,000) in the year it was purchased, instead of spreading the cost over the life of the asset.
  • The distinct asset must be bought between 17th March 2020 and 16th March 2021.

The raised threshold change is only available until March 16th 2021. For assets purchased on or after 17 March 2021, the new threshold will be permanently set at $1,000.

In order to claim you will need a proof of purchase to support your records. Note that there are some terms and conditions in the rule which apply to the threshold:

  • If you bought multiple assets at the same time from the same supplier and it cost $5,000.00 (noting that it has the same depreciation rate), the threshold applies across all the assets acquired.
  • The “cost” pertains to GST exclusive for a GST registered and GST inclusive for a non GST registered.
  • If the asset is being acquired in the form or part of another asset, the deduction is immediately not applicable.

Contact us for further information.

Understanding your revenue drivers

Understanding your revenue drivers  

For your business to make money, you need to generate revenue.

You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.

But what actually drives these revenue levels? And how do you get in control of these drivers?

Knowing where your cash is coming from is more crucial than ever

As a trading company, you face the multiple challenges of a global recession, an increase in online consumer buying and a ‘new normal’ when it comes to trading, markets and buying expectations. The better you can understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.

This helps your medium to long-term strategic thinking, and your decision-making, allowing you to be confident that you’re focusing on the business areas that deliver maximum revenue.

Import areas to consider will include:

  • Revenue channels – where does your revenue actually come from? Do you create income from online sales and ecommerce, through retail sales in bricks and mortar stores, or through wholesales to other businesses? You may focus on just one of these channels, or it could be that you use a mixture of two, three or more.
  • Revenue streams – your total revenue will be made up of a number of different ‘streams’ So, you might be a coffee shop, whose revenue streams include coffee sales, cake and pastry sales and lunch sales. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions. If 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.
  • Product/service split – Do you know which products/services are the most profitable in the business? Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change? The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.
  • Value vs volume – Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin? Based on this, can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue? By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels.

Talk to us about exploring your revenue drivers

If you want to boost revenue and increase your overall profitability, come and talk to us. We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company.

Get in touch to kickstart your revenue generation.

Start the New Year Right with a Clean Slate

Start the New Year Right with a Clean Slate

When it comes to the New Year, tidying up your accounting may not be your first instinct. However, business owners need to ensure accounts are well-organised before the start of the year, in order to stay financially healthy throughout the coming months. GoFi8ure is urging companies to meet the coming year with a clean slate of accounts; a process made easy with the help of their team of expert accountants.

A clean slate of accounts can benefit business owners greatly, as it can reduce confusion and errors that can compromise a business’ finances. Cleaning up accounts and optimising processes can requiring a lot of work, possibly even taking weeks if business owners choose to go it alone. This is why GoFi8ure is offering professional accounting services to small, medium, and large scale businesses, to hire help them deal with time-consuming accounts, and start fresh come January.

GoFi8ure strives to help businesses get the help they need in all things accounting – tax returns, management reports, payroll, GST reconciliation, financial statements, and more, in order to take a business to the next level.

As a certified Xero partner, GoFi8ure can provide Xero training, which will allow companies to save time and valuable resources, while still transitioning to a more efficient process of accounting. By offering different packages tailored for what a business needs, GoFi8ure can deliver solutions for start-ups, small companies, medium to large companies, and offer full-service financial administration.

GoFi8ure has offices nationwide, and can travel to clients located in Wellington, Hutt Valley, Wairarapa, Auckland, or Dunedin. GoFi8ure also offers cloud-based services nationwide.

What’s in the forecast?

What’s in the forecast?

You do not go fishing without checking the forecast, nor should you run your business without an annual forecast!

When we set out on a fishing trip or hike, we always check the weather forecast.

It’s no different in business. The forecast tells us if there’s bad weather (poor cashflow) in store based on the direction we’re heading.

Your forecast will tell you:

  1. Whether you have enough sales in the pipeline to give you the desired level of profit you want for the year.
  2. Whether your margins are appropriate.
  3. If you need to review your pricing or production processes.
  4. If your business is running as efficiently as it could be.
  5. Where savings can be made.
  6. Whether you should invest more to get a better return.
  7. How much money you need to set aside for tax.
  8. How much money you can draw out of the business each month without running short.
  9. How much debt you’ll be able to pay off.
  10. Whether or not you will be able to meet all of the bank’s requirements.

The difference between a business forecast and a weather forecast is that, when the business forecast is showing bad weather, you can do something about it to make the sun come out. The forecast will tell you what’s going well and what’s not, so you can make adjustments to reduce the impact of bad weather.

Just as you wouldn’t go fishing without checking the forecast, you shouldn’t run your business without an annual forecast. So, don’t live in your raincoat, waiting to get soaked – take control and talk to us about getting your forecast done so you know what to expect.

“Planning is bringing the future into the present so that you can do something about it now.” – Alan Lakein