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Welcome again to the McLean and Co. Newsletter in which we discuss current taxation and business matters. We trust you find it informative.  Any feedback would be welcomed.

McLean and Co. is a home based chartered accountancy practice based in Clive, Hawkes Bay.    Readers are invited to peruse the practice website lists services provided, gives contact details and indicates how to become a client, contains an extensive base of articles on business and taxation matters,  and has links to other websites that may assist your business.    Being a small firm itself,   McLean and Co. strives to provide a personal and professional service largely to a self employed person and small business client base.  Enquiries are welcomed.



We are happy to accept new clients.  Please contact ourselves at the contact points highlighted above if we can assist you in your accounting and taxation requirements. Our website lists information required for this in the following link:



  1. Relevant Business and Taxation Articles.

  2. Business and Environmental Tax Changes

  3. Enduring Power of Attorney

  4. Buying a Business- the Due Diligence Process

  5. Feng Shui for Business Success



The McLean and Co. website contains an extensive number of articles prepared by McLean and Co. relating to taxation and business matters.    Here are a selection that will be of interest:

GST- Cancelling Registration         


Setting Prices                                  

Finding Customers                          

Family Trusts                                   





Recent changes to tax laws now mean it is easier for businesses to claim tax deductions for environmental expenditure. The June 2005 changes update, clarify and expand tax deductions available for business environmental expenditure.

This information sheet outlines the key changes and provides some answers to common questions.


What is different for my business?

Businesses that choose to clean up contaminated land now receive an immediate tax deduction. The Ministry for the Environment is currently developing a proposal for a national environmental standard for the clean up of contaminated land. When available, this standard can help businesses and landowners when they make decisions on the clean up of contaminated land.
Businesses can choose to direct some of their tax payments into a new voluntary site restoration fund. They can then call upon the fund to help pay for future site restoration and monitoring, thus reducing the overall cost to the business and encouraging site clean up.
An immediate tax deduction is now available for costs incurred in investigating and testing options to avoid, remedy or mitigate the discharge of contaminants, and for environmental monitoring.
Tax deductions for improvements that prevent or mitigate the discharge of contaminants are now spread over the life of the resource consent (or 35 years, whichever is less). Examples of improvements might include earthworks to reduce the effect of contaminants, or planting trees to reduce the impact of contaminants on a stream.


Do the changes affect farmers?

There are already specific provisions in the tax legislation that deal with agricultural environmental expenditure. Farmers now also have the benefit of qualifying for deductions under the general environmental expenditure rules. This enables tax deductions for a broader range of environmental expenditure, such as site restoration and large-scale riparian planting.


What do the changes mean for the waste industry?

The changes introduce better matching of income and expenditure for tax purposes. While certain costs are tax deductible over a longer period, a waste business can apply for tax deductions over a shorter period using the new environmental determination process. The changes also clarify that construction and restoration costs associated with a landfill are immediately deductible.


When do the changes apply?

Changes apply for income years beginning and environmental expenditure incurred after 10 June 2005. Environmental tax deductions for dealing with non-industrial waste are retrospective.




What is and Enduring Power of Attorney (EPA)?

There are two types, one for property (assets) and one for personal care and welfare.   By completing these two documents you are exercising your right to decide how you affairs will be managed in the event of your being unable to lioo under a Personal Care and Welfare EPAk after yourself.  Do nothing and, if you get into a situation where you are unable to manage your own affairs, the courts will appoint a manager under the provisions of the Protection of Personal Property and Rights Act to act for you.   The costs of having the courts appoint someone can be quite considerably more than you arranging an EPA yourself.


Property EPA

You can appoint an individual or organisation to act as your attorney and under this:
you choose when it takes effect, either immediately, or at a future date, , if, and only if, you become mentally incapable
you decide whether it is temporary or to remain in effect indefinitely
you retain control over how it is to be used and for what
you decide whether it covers all ofv your property or specific assets
you can still retain control of you affairs after it has been signed.  No one can take over from you unless you give them specific authority to that effect.
you can cancel or change it at any time, provided you are capable of understanding what you are doing
you can have several EPAs to deal with different assets that may need to be dealt with in different ways by different attorneys


Personal Care and Welfare EPA

Only private individuals can be appointed as attorney under a Personal Care and Welfare EPA, and that attorney would normally be a member of your immediate family that you trust implicitly.  This type of EPA can only come into effect if you become mentally incapable.


 Planning Your EPA

You need to:
consider carefully who will be the most suitable person to act as your attorney- you could have different people for a Property and a Personal Care and Welfare EPA if you wish.
think about how you would like your affairs mananaged if you became mentally incapable.
consider not only yourself, but also those close to you, as the way in which your affairs are handled can obviously affect them
tell your prospective attorney how you want your affairs managed and be sue he or she understands your wishes.   It is best to write down any detailed instructions you want carried outconcerning the management of your affairs.
Decide if you want to appoint a successive attorney to take over if the first one appointed is no longer willing or able to act.



Once you have found a suitable business that interests you, the next step is to investigate it thoroughly.

The due diligence process involves finding out if the business is viable and likely to live up to your expectations. It’s likely to involve some in-depth financial and market analysis. This is the step before you negotiate an offer price with the owner.

Due-diligence is the process of investigation by a purchaser together with their legal and accounting advisors before agreeing to proceed with a business purchase.

"Doing due-diligence" is just as important when buying a one person business, as it is when buying a multi-million dollar one. Whether it is large or small, the same things need to be checked out, but it takes more time with a larger business.

Good advisers will help you uncover any undisclosed liabilities in the business. For example, overdue bills, tax liabilities, redundancy agreements, bad debts or accumulated staff leave. They will also discuss with you the market potential for the products and services offered by the business and whether the business has the potential to grow.

It is best to make full use of your team of advisers for this process rather than attempt it by yourself. Buying a business is a major commitment so consider the investment in expert advice well spent if it saves you from buying a dud.


Why are they Selling?

There is good reason to find out why the business is being sold. One of the first questions to ask is "Why is it being sold?" Reasons can be many and varied; retirement, looking for a change of scene, wanting to concentrate on another business, are just some. However, if it is because the business has reached its full potential and cannot be further improved, or there has been a change in the marketplace, or some similar motivation, then you need to take this into account when considering the price.

The Premises
An important aspect of the due-diligence process is the premises. Where is the business located? Is it necessary to preserve those premises as an essential part of the business? If so, then you need to look at the terms of the lease and ensure you can continue to operate from them. Timing of rent reviews and other renewals are just two points. With this and other issues that I have referred to below, your solicitor can help you with suitable clauses in the agreement to give you time to investigate these.

Apart from the lease, other aspects of the premises need to be considered. There are many regulations and laws governing the operation of different businesses. Some of the regulations are administered by Government Departments, others by Local Authorities. It is important that all of these are checked out, such as zoning under the Resource Management Act, occupational safety and health requirements, food and hygiene regulations, or requisitions for work that needs to be undertaken to bring the premises up to standard. Staff can make or break a business, and are a very important factor. Who are they and on what basis are they employed? Do you want to keep them on? Their employment contracts are important.

You need to know how much money the business is making and will ask for a set of accounts.

These can often reveal a lot, but it is important that you not only see the last set of accounts, but also for previous years as well. These will show any trend in the business. It is an area where both your accountant and solicitor can be of assistance to you. The information is very important when you approach your financier for a loan. Your financier or bank wants to ensure that you are able to repay the loan and on what basis it can be repaid. The budgets which will be prepared by your accountant to show this, will be based on figures revealed by these accounts. They will indicate how the business is financed and what working capital you are likely to require. Once again your solicitor and accountant can be of assistance in this area.

The Customers
Who are your customers? Will you lose any of their business on a change of ownership because of some personal relationship that customers have with the vendor? Are there some sales that do not come through the door? Similarly, you need to see who your suppliers are. Is there any special relationship in respect of those suppliers which will end once the vendor sells the business?

These special relationships for either your customers or suppliers could fall into any number of categories. They could be companies or businesses owned by the vendor or vendor's family with whom he is dealing. Special arrangements with friends or people who only want to deal with the vendor are another possibility. There could be special discounts which you need to know about.


Know The Business

The agreement for sale and purchase should also include a clause requiring the vendor to provide you with assistance for a specified period.

You will need to acquaint yourself with the business and become familiar with it. The vendor can introduce you to the customers and to the suppliers.


Points to Investigate

 Goodwill. Most business sales include a goodwill component. The simplest way to describe goodwill is all those aspects of a business such as good location, loyal customers,  net profit and market recognition that might take you years to duplicate if you were to start from scratch. If the business has been based around the personality of the owner, what assurance do you have that the goodwill will not disappear with the owner? For example, the contracts the business secures might depend on the close rapport the owner has built up over the years with key customers. Can you depend upon these contracts continuing if you take over?
Reputation. Check the reputation of the business. Ask if you can work in, or observe, the business for a few days. Ask to speak to some customers. Ask others about its reputation in the marketplace (be discreet if necessary).
Lending and credit terms Will favourable lending and credit terms continue? For example, the owner may have built up favourable credit terms with key suppliers. Make sure these terms will not be withdrawn.


Positive Signs

Business systems and owner's attitude are reassuring signs of business competence.

Business systems- Look for:
A well-prepared Business for Sale folder containing all the key financial documents for at least the past three years, including the GST returns for this period.
Operating manuals. Well-run businesses have clear systems in place that you and staff can follow. This will speed the transition process when you take over.
Accounting, payroll and stock functions. Are they automated through well-functioning software?
Evidence that the owner regularly monitors key performance indicators (for example, stock turnover,  gross profit margins, bottom line indicators) and has acted on these signs.
Employment agreements with the staff.
Health and safety systems. And that safety and health is taken compliance seriously (this should be reflected both in the operating manuals and in the operating procedures).
Systems for resource efficiency. To reduce business costs and environmental impacts.

Owner's attitude

The owner is prepared to:
Stay on in the business for a handover period to explain the operations to you, help you make some of the early decisions and introduce you to key suppliers, lenders and customers.
Leave money in the business. Comparatively few businesses are sold for cash. Therefore if the owner is prepared to help fund part of the sale by leaving money in the business, this is a sign of the owner’s confidence in the continued viability of the business.


Negative Signs

These include:
The vendor explains that the business is better than the figures indicate because of the number of unrecorded ‘under the table’ transactions. First, there is no way of verifying these claims so they should be disregarded for business valuation purposes. Second, if the vendor has been cheating on taxes, what else might be suspect in the business?
A sudden surge in sales over the past year or part of a year. Be wary of this, as a tactic used by some vendors when preparing a business for sale is to start putting through the books all the previously unrecorded ‘under the table’ cash transactions. This can give the false impression that the business is in a strong growth phase.
The business is operating in a market sector that is in decline or under threat from new technology.
The business relies too heavily on one major customer. What happens if this changes? A hundred smaller customers is always better than two or three large customers.
The lease nearing maturity and the business is heavily dependent on its location for its success.
A new competitor (such as a chain store) is planning to open nearby.
Key staff planning to leave. Make sure you can maintain continuity of business expertise.
The business has too many staff or some are unsuitable. It may prove difficult and expensive to get the staffing to a level that suits you.


The matters outlined above are just some of those things that need to be considered when buying a business, and in carrying out the due-diligence process on that business. Large companies spend a lot of time in planning the process that they will go through in checking out a business that they are going to purchase. They use their solicitors and accountants both in preparation of the checklists, and in carrying out the checking. The process is a time consuming one, but very interesting things can be revealed.

When you are looking for a business to purchase, your real estate agent or business broker will be able to help you in locating businesses of interest to you. Once you locate the business that you think is right for you, you will want to prepare your offer for the purchase of the business as soon as possible. However, by consulting your solicitor for suitable clauses to be inserted in the agreement, you will be given the opportunity to carry out the necessary investigations before making the contract unconditional.

Even if problems regarding business are revealed during the investigations it is likely that you will still want to proceed with the purchase. However, you will be prepared and will also have the opportunity to amend your offer.
And that is what due-diligence is.




Feng shui (pronounced fung shway) is the ancient Chinese art of placing objects that will bring either favorable or unfavorable effects; the placement of which is based on the flow of energy in the universe call chi (pronounced chee) and on patterns of yin and yang.

The literal translation for the Chinese words “feng” and “shui” are “wind” and “water.” It is through wind and water that chi flows through nature and the universe. Chi should not be impeded but balanced so that any negative forms (sha chi or “poisoned arrows”) may be offset with positive adjustments.

Yin and Yang is both a symbol and belief of natural opposing yet complementary forces that allows a harmonious universe to exist. Nothing can be totally yin or yang; there will always be at the least a miniscule amount of one in the other. Yin, the black side, is characterized as weak, passive, dark, cold, winter and female; Yang, the white side, is characterized as strong, active, bright, warm, summer and male. Feng shui is based upon the yin and yang philosophy.

The Ba-gua
This is one of the most powerful tools in feng shui to create positive changes. The ba-gua is an octagonal chart that depicts the eight points of a compass. Each direction on the compass focuses on a different facet of life; i.e., Southeast influences wealth and fortune and can be characterized by the color purple and the number four. Using this knowledge can help to achieve goals in all aspects of life.



Declutter Your Desk and Work Space
According to feng shui, work performance and business wealth can be increased by decluttering and establishing order on your desk. Productive chi cannot flow if all that “stuff” on your desk is blocking its movement and cluttering up your mind.

Take everything off your desk and clean up any cluttered areas around it. Put back only items that are used everyday, and papers on your desk must be limited to those for one project only. Other items and papers should be placed elsewhere; in file cabinets, desk drawers, and storage cabinets/containers.

Now that your desk is clutter-free, add things that are lovely, positive and career-enhancing. Use the ba-gua to guide you; for example, to generate more wealth to your business, place a red or purple artifact on its southeast corner. The eastern side of your desk is your health, growth and family area, represented by wood and the color green. A plant would be nice in this space or a family picture in a wood frame.


Position of Your Desk in a Room or Office
In the practice of feng shui, the happiness, success and prosperity you have in your business life is greatly influenced by the position of your desk. The optimal position is one in which your desk is set back to view as much of the room as possible, with your back to a wall. You should also have a view of both a window and the door, but never in direct line with the door. Diagonal desk and door alignment is best. The doorway or window should never be directly behind your back; to do so would invite negative sha chi.


Flowers and Plants
Live plants and flowers bring many positive elements into the workplace. Aside from their natural beauty, they improve air quality, unite us with the natural world outside, and their green color encourages personal and business growth. Avoid any cactus or plants with sharp-looking leaves as these may cause sha chi .  To bring their positive influences, plants and flowers must be healthy and flourishing. If a plant dies, remove it and replace it with another. Keep in mind it better to have a silk plant than none at all. Just be sure to keep it dusted and vibrant-looking.


Water is the most powerful symbol of money in feng shui. Its sparkling chi energy is beneficial for your health and prosperity but care must be taken to keep water fresh and clean.

Fountains are wonderful but be sure their water flow is not blocked, stagnant or very rapid. Scaled-down fountains that are designed for a desk or small table are a good choice if space is limited.

Another great choice is either a fish tank or aquarium. Consider including goldfish in your tank as gold is a Chinese symbol for money and is thought to attract it.

Another great way to incorporate water into your business is the use of any artifact that depicts water.


Home Offices
Feng shui promotes the importance of keeping business and personal life separate when you have a home office. An outside separate entrance to your office is optimal. If not possible, a room near the front or back door of the house or apartment is best. When a home office is part of a larger room, be sure to partition it off with something like a screen or large plant. An area rug on the floor can also be used to mark off the office.

What type of ceiling do you have in your home office? Flat ceilings promote the flow of chi and are best; otherwise hang wind chimes from cathedral or sloped ceilings to offset sha chi.

Enhance your personal chi and your professional appeal by dressing well and taking care of your overall health, hygiene and appearance. Resist the urge to work at home while unshowered or adorned in your sweats or pajamas.

Keeping thoughts of work and home from commingling can be difficult at times when you work at home. Consider taking a short walk each day before and after your “work” day as another means of separating your business life from your personal life.


The information provided in this email newsletter is for 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 as to the accuracy and use of this document.   Readers are asked to seek professional advice pertaining to their own circumstances.    The McLean and Co. email newsletter may be copied and distributed subject to the following conditions:
All text must be copied without modification and all pages must be included.
This document must not be distributed for profit.    


If we can assist further, please email McLean and Co as follows: