EMAIL NEWSLETTER
JANUARY 2009
Welcome
again to the McLean
and Co. Newsletter
in which we discuss current taxation and business matters. We trust
you find it informative.
We
are happy to accept new clients. We would be happy to assist colleagues
and acquaintances as new clients.
INDEX
-
Provisional
Tax due 15/1/2009
-
ACC Workplace Safety Information
-
Annual Holidays
-
Previous McLean and Co Monthly Emails
PR
OVISIONAL
TAX DUE 15/1/2009
Just a reminder that for clients with a 31 March balance
dates (the vast majority are) and who are either not registered for GST,
or who are registered for GST for periods excluding 6 monthly with GST filing
dates 31 December and 31 March, that you are due to pay the second instalment
of 2009 year Provisional Tax, if you are liable to do so, by 15/1/2009.
If your 2008 Income Tax Returns are completed by now you would
have been advised the amount to pay (if any) and would have been provided with
a Payment Slip.
For clients who have not completed the process of filing 2008
Income Tax Returns it is suggested that you pay the same amount McLean and Co.
recommended that you should pay on 28 August 2008, if you were liable to do
so.
If you pay by internet bill payment ensure that you quote
Income Tax is being paid and that your payment relates to the period to
31/3/2009.
If you have any queries on this subject, do not hesitate to
contact McLean and Co.
ACC
WORKPLACE SAFETY INFORMATION
The Department of Labour has developed an online tool that provides small
businesses a self-assessment guide for managing hazards, along with an
introduction to the basics of managing health and safety.
ACC Workplace Safety Discount Programme
If your business is eligible, you can also use the Hazard Handler online tool
to apply for the ACC Workplace Safety Discounts programme.
To be eligible for Workplace Safety Discounts, you must be either
self-employed or a small business within the agriculture, construction,
forestry, motor trades, or road transport industries.
To use the Hazard Handler online tool follow this link
http://www.dol.govt.nz/onlinetools/hazard.asp
For more information on how to apply for ACC’s Workplace Safety
Discounts see
http://www.acc.co.nz/levies-and-cover/employers/how-to-pay-less/workplace-safety-discounts/index.htm
ANNUAL HOLIDAYS
Under the Holidays Act 2003 all employees are entitled to a minimum
of four weeks annual holidays.
This section has information on how to calculate annual holiday
entitlements and pay, and how the transition from three to four weeks
annual holidays works.
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informational purposes only. McLean and Co. accept no
responsibility for the opinions and information expressed in the
information provided and it is provided "as is" without
warranty of any kind. The user assumes the entire risk
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can assist further, please email McLean and Co as follows:
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BACK TO HOME PAGE
How can you
boost gross profit -
in dollars and the GP margin?
HOW
ery Important Tip
* higher prices are not the only way to boost gross profit margins - keep
reading this LONG list!
Option 1 - Increase Dollars of Gross Profit by Increasing Total Sales
* make sure your advertising is effective - monitor each programme and either
keep
it as-is, refine it, or drop it. Don't just change it for its own sake,
if it works!
* make use of in-store displays and demonstrations
* make sure the exterior appearance and identification of the business is clean,
professional and helps customers find your store
* employ effective, hard-working sales staff (and train and motivate all people
to stay
that way!)
* seek referrals from existing customers
* seek referrals from related businesses
* use staff incentives and competitions to encourage up-selling or sales of
companion lines - you can even use this to promote sales of older
stock items or
slow-moving stock
* measure the conversion rates in your business. For every 100 prospective
customers, how many ask for a proposal? Of those, how many ask for a
demonstration? then how many eventually buy? Increasing the effectiveness
of the
sales process can lead to rapid increase in sales, without any additional
cost or
time.
* increase the average sales size:
• sell higher quality or enhanced features
• use merchandising and display to group related products together or to
promote
seasonal lines
• stock displayed at close to eye-level generally sells better
• using more lineal space for a product generally promotes sales of that
product (ie
allowing twice the shelfspace will generally lift sales of that product)
• look at your stock and sales mix to ensure that they closely match each
other
• sell accessories or add-on products: either have your staff do this at
point-of-sale,
or use signs and 'deals' in the store to encourage purchase of
additional, related
items
* increase repeat trade from customers:
• through positive, friendly and helpful staff
• sales staff members' ability to understand customer needs - promoting only
the
products of genuine value to the customer
• business image/appearance/housekeeping
• provide regular follow-up
• create 'clubs' for groups of customers; use newletters or email or letters
to tell them
about relevant products; run special events just for regular customers
etc; add
promotional pieces into (eg) your mailings of monthly statements
• provide high quality service
Option 2 - Manage The Margin
These pointers largely influence the 'cost' aspect of 'Cost of Goods Sold'.
Improvements to gross margins can be achieved here without the firm's customers
even realising what is going on.
Avoid the factors that reduce your closing stock:
* eliminate shoplifting of minor items with: vigilant staff; well-located cash
registers; use of mirrors etc to provide good supervision of all areas
* eliminate staff pilferage of minor items, through suitable penalties,
training, etc
* eliminate or minimise damage to stock while it is in storage or on display -
place it in suitable locations and use display units to protect it
* make sure that all stock received is checked against delivery dockets or
invoices, so that you only pay for what is actually received in good order and
condition
* make sure damaged stock is returned to supplier for replacement or credit
Eliminate or minimise high-cost purchases:
* avoid placing too many small orders with high freight costs
* avoid dealing with too many suppliers - you'll lose quantity discounts
* avoid carrying too wide a range of stock (again, losing the scope for volume
discounts)
* take advantage of settlement discounts where they are worthwhile
* plan purchases according to likely demand or seasonal factors
Eliminate 'Depressed Sales Values' from the level of stock sold:
* check your pricing practices (inaccurate cost prices lead to incorrect sales
prices)
* make sure you re-price stock (e.g. on old lines, or after a promotion)
* make sure your sales mix blends sales of the low-margin items with sales of
higher
margin lines
* improve merchandising and display to encourage customers to buy products they
reasonably need
* eliminate excessive discounting (e.g. 'mates rates') by your staff
* minimise the extent of heavily-discounted 'end of season clearance sales'
Option 3 - Look at Your Prices
Check your pricing:
* adjust your markups so that your prices are not out of line with competitors'
prices
* price some stock lines to keep customers coming back, then set a suitable
margin
on the related product sales
* make sure all stock on hand is priced consistently (don't let customers pick
the
cheapest from amongst identical items on the shelves)
* use technology to make price changes quicker and easier; or to create price
tags
etc
QUOTES AND ESTIMATES
An estimate is a price the seller thinks the work will
cost, based on their past experience in that kind of work. It is not a firm
offer to do the job for that price.
A quote is an offer to do a job for a certain price.
Estimates
Estimates are useful if you have never had to buy that type of service or
product before and you want a ballpark figure of how much you are likely to be
charged – eg, getting a tap washer replaced or having a driveway laid.
The seller must use reasonable skill to provide the estimated price so that
your decision to use the seller is based on sound information,
If you get an estimate and you decide to use that particular seller, make
it clear before the work starts that you want to be informed if the final
price is going to be hiqher than the estimate. If you can, get their agreement
to do this in writing. Asking to be informed of cost increases will give you
the opportunity to cancel the work before it costs you more than expected.
Once you have an estimate, and the work is likely to cost a lot – eg,
home renovations or building a fence – you should ask for the price to be
fixed by getting a quote.
Quotes
If you accept a quote, the seller has to do the work for that price. In
most cases, it is best to ask for quotes in writing. Then, if a problem arises
you will have a record of what was agreed to.
A written quote should show:
- what work is to be done
- start and finish dates
- the hourly rate
- the cost for materials
- how long the quote is good for.
The costs of materials, hourly rate, etc will change over time. It is
reasonable to agree that a quote is only good for a set period of time.
How do I qet a quote?
Sometimes it's just a matter of finding out the standard price. But, when a
seller has to look at the job to work out the cost, you should get a written
quote. For example, plumbers will need to see where the drains are and how
much digging is needed to reach them, before they can say how much it will
cost to clear a blocked drain. Find out if they charge for making a quote.
Quotes checklist
- Decide what you want done, what the finished job should look like or do,
the quality you expect, and when the work is to be completed. Write the
details down so you can explain them clearly.
- Contact at least three sellers and ask them to give you a quote in
writing. This will give you several prices to choose from.
- Give each seller the same information so that all the quotes are based
on doing the same work and using the same materials. If you make any later
changes to what you want, tell each seller so they can change their
quotes.
- Decide which quote you will accept and tell the successful seller. You
do not have to tell the others who you chose, nor how much the other
quotes were for.
Before you accept a quote which is much lower than the others check that
they understood the quality of work and materials you want.
- If you don't understand a quote ask for help from your local Citizen's
Advice Bureau.
Note about GST
A quote must include GST in the price, or state that GST is not included.
If GST is not mentioned you are entitled to assume that it is included in the
price given – but it is wise to check this with the seller so there is no
unnecessary disagreement later.
Paying for a quote
eg, you take your watch to a repairer because it
won' go. They say they will look at it. When you return for the watch they
say it is not worth repairing and ask you to pay $10 for looking at it.
Some quotes are free. However, it is common practice to charge for a quote,
so check this out with the seller. If you have the work done, some sellers
will take the price of the quote off the repair bill.
Needing extra work after quote received
eg, you accept a quote to re-line your bathroom in water proof wallboard.
When the old lining is removed it is found the timber studs are rotten and
must be replaced.
The seller must get your permission to carry out extra work. You always
have the right to refuse or accept any extra work suggested by your seller.
But when extra work is needed to complete the job, you may have to pay more
than the quoted price.
In order to reach an agreed price above your quote, contact others in that
industry for information on costing. This will give you some idea of how much
more you should expect to pay. If the work is done at a fair and reasonable
price, then you should pay the cost.
Seller carries out unauthorised work
For example, you ask the garage for a Warrant of Fitness for your car. The
garage's fee is $25. The garage fits a new tyre and charges you an extra $90.
They say you would not have got the warrant without it. Because you did not
agree to spend more than $25 the garage should not fit the tyre without your
agreement.
You do not have to pay for work you did not agree to, even if the quote is
not written down. (Of course, in this case the garage can remove the tyre and
give your old one back!)
For more details, see unauthorised
work.
What if the service includes goods?
For example:
- replacement parts with repairs
- carpet and carpet laying
- curtain fabric plus a measure and making service.
Make sure that the quote you get includes the total cost of any goods
supplied, plus the price of the service.
When things go wrong
Here are examples of two problems that can happen and what you can do about
them.
Charging more than the quote
Write a cheque for the amount of the quote.
Send the cheque to the seller with a note on the back, or a separate note,
which says:
This payment is offered on the condition that banking it will be
considered full and final settlement of your account no... dated...
Signed...
Keep a copy for yourself. If the seller doesn't accept this amount as full
payment they can either:
- bank the cheque and still bill you for the rest of the money, or
- return the cheque.
Although the seller may not accept your offer, sometimes it is worth trying
to reach a compromise. If you are determined not to pay any extra, you may
have to take action through the Disputes Tribunal or Court to sort the matter
out.
Sometimes a shop will offer free measuring, making or installation when you
buy goods. Compare prices of the same goods in other shops to be sure the cost
of the service has not been added to the price of the goods.
High price with no quote or estimate
eg, You ask a mechanic to fix the car's radiator. When you collect the
car you receive a bill for $450. You think this is too high for the work
that has been done. You can ask the mechanic for an itemised account showing
the cost of parts, labour, any other charges and GST. Then ask two or three
other garages what they would charge for the same work. Average their prices
out – this is the amount you should pay for the work done on your car.
The Consumer
Guarantees Act says if you buy goods or services and the price is not set
or discussed at the time then you only pay a reasonable price. You can work
out what is a reasonable price by finding out what other sellers are charging
for similar goods.
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