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McLEAN AND CO.
NEW CLIENTS
What is Bankruptcy?
Business Names
Save on Your Mortgage- 12 Steps www.mcleanandco.co.nz/Page135.htm
| Business Legal Structures www.mcleanandco.co.nz/Page128.htm
| GST- Second Hand Goods www.mcleanandco.co.nz/Page108.htm
| Finding Customers www.mcleanandco.co.nz/Page82.htm
| Keeping Records www.mcleanandco.co.nz/Page41.htm |
TAX CHANGES IN THE HORTICULTURAL INDUSTRY
The government is to tighten the law to stop tax evasion in the fruit picking industry.
As from 1 April 2006 growers will be required to deduct 15 cents in the dollar from all payments made in relation to seasonal labour for agricultural, horticultural and viticultural thinning, picking, packing and pruning activities regardless of the operating structure.
Contractors with a good compliance history will be able to apply to Inland Revenue for an exemption certificate.
COMPANIES OFFICE AND IRD WORKING TOGETHER
Taxpayers can now apply for an
IRD number at the same time as registering a company, due to an
integration of government agency services designed to streamline business
start-up.
Small Business Minister Rick Barker and Associate Revenue Minister David
Cunliffe launched the new online collaborative tool.
"This new service will reduce the need to deal with two separate
government agencies at the start-up phase of a company," said Mr
Barker.
"Having more collaboration between government agencies is something
businesses have called for and the Small Business Advisory Group's report
last year said practical tools are needed to help simplify processes for
small businesses in particular.
"This initiative is one of the ways we are looking at addressing the
issues identified by the Group."
The service will be optional but if no application for an IRD number is
made during the online company incorporation, companies must then apply
directly to Inland Revenue using the existing services, when a number is
required at a later date.
The service is available on the Companies Office website www.companies.govt.nz
. Information entered will then be transferred to Inland Revenue via a
secure web service.
As well as obtaining a company IRD tax number, the service allows the
business to set up a nominated person to act on behalf of the company with
Inland Revenue, and allows registered tax agents to link the company to
their agency.
Both departments will need to be notified of any later relevant changes to
information, as no information will be shared beyond the incorporation
process.
The service is available to New Zealand companies incorporated online.
NO-DECLARATION RATE FOR EMPLOYEES
If you are an employer and an employee of yours does not provided a fully completed and signed Tax Code Declaration (IR330) showing their name, IRD Number and tax code, you must deduct PAYE at the no-declaration rate and enter the tax code "ND" on your Employer Monthly Schedule (EMS). The rate of deduction is either 46.2 cents in the dollar (including ACC Earner's Levy) for employees, or 15 cents in the dollar on top of the normal witholding tax rate foe self employed contractors.
You will need to tax your employees at the no-declaration rate until they have completed this form and given you therir IRD Number.
WHAT IS BANKRUPTCY?
When you have creditors calling trying to collect on your debts and you don’t have the means to pay, bankruptcy is the only viable option for many. By filing bankruptcy you can stop the creditor harassment, wipe out your debts and start new. It is a ‘do-over’ at your finances; a second chance to do it right.
Although bankruptcy may seem like an easier way out then paying your debts outright, there are a lot of negatives to consider. It will severely hurt your credit rating and you will have a very difficult time, perhaps impossible, obtaining new credit cars or loans for cars or houses.
Each person needs to individually access their own financial profile to see if bankruptcy is worth the negative credit rating, the stress, and possibly the depression that may follow for those that view bankruptcy as a failure.
Who should file bankruptcy?
Bankruptcy should only be used as a last resort by those who absolutely cannot pay their bills, not as an easy way out of your obligations. Because of the serious negative impact on your credit rating you should seek the advice of a reputable credit counseling agency first—they may be able to negotiate with your creditors to reduce your payments and interest rates.
Some of the main reasons why people choose to file bankruptcy are due to a severe financial setback such as a loss of a job or decreased income because of a demotion or forced to take a new, lower paying job because of layoff.
Many people are also forced into bankruptcy because of a death of a spouse, divorce or separation, child support and/or alimony, or because of a serious medical condition that prevents employment and comes with costly medical bills.
You should consider bankruptcy as an alternative if you are unable to be out from under your credit card bills and/or unsecured debt within 4 years with strict discipline and budgeting—the long-term stress just isn’t worth it. Also, if you are more than two months behind on your payments, are getting collection calls from your creditors, collection agencies, or solicitors, or if you have received foreclosure or repossession notices.
How can bankruptcy help me?
Filing bankruptcy helps to eliminate your debt or can structure your debt payments so that you can get back on your feet and get a fresh start. If you are receiving annoying creditor harassment calls these will cease. When you file for bankruptcy the courts will notify your creditors and they will be ordered to stop attempts at collections.
Filing bankruptcy may be better for your overall credit. If it would have taken you several years to pay off your debts, you are consistently behind on your bills anyway, your credit is probably already negative. By filing bankruptcy you can get the financial relief that you need to start building up a savings reserve and in time can apply for new credit.
How can bankruptcy hurt me?
Obviously, bankruptcy is not easy or everyone would do it. Some of the worst negatives will be your inability to get new credit. Because a bankruptcy may stay on your credit report for a period of time, if you are able to secure a new loan or credit card it will probably be at an extremely high interest rate. Lenders will see you as a bad credit risk and, until you can prove otherwise, you will have to pay for the privilege of getting and using credit.
Bankruptcy may also come with so not so obvious problems that you may not be aware of:
It could raise your insurance rates – some agencies factor in your credit rating when determining your rates |
It may effect
being hired for a new job or promoted – although it is illegal to
discriminate against someone because of bankruptcy, you may be viewed
as an irresponsible person and be passed for promotion to someone who
is equally qualified. |
BUSINESS NAMES
Proprietors of new businesses often expend a great deal of energy deciding upon a name for their business attempting to ensure exclusive use of that name, when such exclusivity is in practice very difficult to obtain and expensive to enforce.
The reality is that sole traders and partnerships are free to use any business name they choose, but if it is the same as a Registered Trade Mark, or a Limited Liability Company’s registered name, they run the very real risk of litigation from the owners of the registered trade mark or registered name. This litigation process through the civil courts, while slow and expensive, will inevitably result in forcing the sole trader or partnership to stop using the registered name.
In New Zealand, unlike some other countries, a business name cannot be ‘registered’ in isolation from a Limited Liability Company. If a Limited Liability Company is formed the first step is registering a name and the Companies Office moderates the applications and will reject a new company name that is too similar to an existing registered name. This is the process that ensures no two Limited Liability Companies have the same name, and there is a parallel process within the Intellectual Property Office of New Zealand regarding new trade marks.
In effect if you create a Limited Liability Company you can be certain that another Limited Liability Company cannot be formed with a name exactly the same as yours, but you have no immediate control over existing or new businesses operating as sole traders or partnerships that choose to use your name. You can take them to court to force them to stop using your name but that will take time and money.
Similarly if you create a trade mark you can be certain that another trademmark cannot be formed with a name and image exactly the same as yours, but you have no immediate control over existing or new businesses operating as sole traders or partnerships that choose to use your name. You can take them to court to force them to stop using your name but that will take time and money.
If you operate as a sole trader or a partnership it is quite possible that someone else will use the same name and there is nothing you can do about that. In many sectors sole traders in different towns use the same name. For example, businesses called Budget Tyres exist in Palmerston North, Wanganui, Lower Hutt and Whakatane, who are apparently all separate sole traders, and they live with it.
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