Visit our web site for
comprehensive Knowledge Centre with taxation, accounting and business
to other useful business websites.
required for tax return preparation
McLEAN AND CO.
McLEAN AND CO APRIL 2003
NEWSLETTER PAGE 2
COMPANY INCORPORATION/ ADVANTAGES/ DISADVANTAGES
The setting of up a business entity as a company
may not be appropriate and necessary for all business entities for self
employed persons and small business firms. Here are some of the
advantages and features and disadvantages of the company structure:
Can have any number
of business owners (shareholders) providing varying levels of investment
capital and personal services. A sole trader is limited to one
and a partnership normally will have fewer partners than the business
owners of a company.
· Provides limited liability, Claims against the company fall on the company, not the shareholders. That is there can be a separation of business risk from the shareholders personal assets. A company allows shareholders to limit their maximum possible liability for the debts of that company. If a shareholder holds 50 $1.00 shares in a company, that shareholder's liability for the company's debts is limited to $50.00 (liability can be increased in situations where shareholders and directors provide guarantees to Banks or other Financial Institutions to cover the company's borrowings) Similarly, shareholder's loans to the company can also increase the potential risk in the event of financial collapse of the company. This situation is to be contrasted with the position of a sole trader or partner in a firm, where their liability for the debts of that business is unlimited.
Registration of the Name. Once a name is approved by
the Registrar of Companies no other company can be registered with an
identical or near identical name. There is no register
for unincorporated bodies such as sole traders or partnerships.
Separate legal entity. An individual can not enter
into a contract with himself but a shareholder can enter into a contract
with the company. As a consequence of this a shareholder
may be employed by the company and may also loan money to the company on
the same basis as any unrelated party.
May offer tax advantages when the tax rates for companies and
individuals differ e.g. tax rate for companies is 33c in $, whereas tax
rates for individuals differ (19.5c to $38,000, 33c $38,000-$60,000, 39c
Taxation and employing Relatives. By introducing
family members as employees and/or as shareholders income splitting is
possible to enable tax less tax to be paid at the higher rates.
Approval from the Inland Revenue Department is required to allow a claim
for wages paid to a spouse of family of a sole trader or of a partner in a
partnership. Restrictions are placed at the hourly rate which
can be paid. With a company there is no such
restriction. The amount of remuneration paid is to be in
keeping with the value of the work undertaken.
Tax-Dividend Imputation. With the introduction
of dividend imputation from
must be fully aware of the financial operations of the company to
prevent it trading while insolvent. |
not provide any opportunity to spread business income to family
members on lower marginal tax rates other than through legitimate
losses have to remain in the company (unless the company is a loss
attributing qualifying company) and cannot be offset against a
shareholder’s taxable income from other sources. |
public company has to declare financial results publicly and has to be
|Depending on profit levels in first year, may have to start paying income tax earlier than other business structures.|
McLEAN AND CO APRIL 2003
NEWSLETTER PAGE 4
To be eligible for family assistance the person looking after the
child needs to be either:
Caring for a child who is both resident and present in
Family assistance cannot be granted if the person applying:
Is here on a visitor’s permit
Only has a temporary work permit, or
Is here on a study grant
Families can register for Family Assistance at any time of the
year. To apply, have
your IRD Number handy and call 0800-257-773 and request a Family
Assistance Registration Pack (IR200).
The Family Assistance (FS1) Application Form is found in the pack.
The information that you will have to supply when completing the
Details about yourself and your partner (if applicable)
IRD Numbers of child/ children in your care- you can get IRD
Numbers by completing an IR594 Application Form, also in the pack
An estimation of your income for the year
Birth Certificate of child/ children- if child/ children do not
already have an IRD Number
Any other information about other income you receive (e.g. self
There are two options for receiving Family Assistance payments.
To receive payments fortnightly, taxpayers need to estimate to IRD
how much they will earn in the year they are applying for the payments.
The other option is to receive a lump sum payment at the end of the year,
in which case an estimation of income is not required.
The table below shows how much you can earn and still be eligible
for Family Assistance:
McLEAN AND CO APRIL 2003
NEWSLETTER PAGE 5
YOUR REBATES !!!!!!!!!!!!
and Co notice that a number of clients do not claim the rebates
they are entitled to. These
specifically relate to Donations, Childcare and Housekeeper.
These are not claimable on Income tax Returns nowadays, but instead
of a separate form, IR526
Claim for Personal Tax Rebate, which clients can arrange to be sent direct
to themselves and claim before they bring their business financial
documentation into McLean and Co for their yearly Income Tax return
following can claim rebates:
(not companies, trusts or partnerships)
who have earned taxable income in the period they are claiming for
who are in
long as you have a receipt for them, you can claim a Rebate for donations
of $5 or more, in any one year the maximum you can receive is $500 for
donations totalling $1500 or more.
Your partner can claim a rebate of up to $500 for donations you
made over $1500 as long as he or she fits
the criteria above. A
rebate can be claimed for each receipted donation
of $5 or more to:
approved charitable organization
research schools and universities
overseas aid funds
schools, school Boards of Trustees and Parent Teacher Associations. To
qualify, the school must be a state school (this includes integrated
schools) or be approved as a charity for tax purposes.
These payments must be donations, not payments of school fees
you paid for Childcare you can claim this rebate if one of the following
applied to you:
were a single parent, and your child was under 18 or unable to work
because of a disability
and your partner were both working (this does not apply to couples who are
and your partner were disabled or physically unable to care for the child
note that you can’t claim this Rebate if you live in a communal home,
such as a rest home or a hospice.
can claim the Housekeeper Rebate if you (or your partner, if you’re
married) were disabled or physically unable to do for housework, and paid
for a housekeeper.
maximum you can claim under
the Childcare or Housekeeper Rebate is $310 for payments totalling $940 or
more, and 33% of qualifying payments.
If you have a partner who is eligible to claim the rebate, you can
each claim a portion of the Rebate- for example, you can claim half.
register and to obtain Claim for Personal Tax Rebate forms ring IRD at
0800-377-774, and have your IRD Number handy.
will normally continue sending these Claim Forms to you every year if you
filed a claim for the previous income year.
CHANGES TO THE
REBATE CLAIM PROCESS- CHILDCARE AND
who claim a Childcare Rebate this year will notice a few changes to the
claim process. The most important changes for people claiming Childcare
and Housekeeper Rebates is that IRD now require all receipts to be
attached to the IR526 Rebate
taxpayers should therefore ensure that they receive them from your
childcare institution or housekeeper
McLEAN AND CO APRIL 2003
NEWSLETTER PAGE 6
TEN TIPS FOR WINNING SALES
Make sure you can clearly articulate to prospective customers the
business outcomes they will derive as a result of using your product or
service. Be precise- numbers, percentages and time frames make your value
proposition even stronger
specific market segment.
Don’t chase every available opportunity.
Focus and increase your knowledge and expertise in a particular
market segment. Learn as much as you can about their business needs,
terminology, issues and marketplace trends.
Before you meet any new prospect, research their business.
Find out what’s important to them, their challenges, goals and
Use your brain and think for your prospective and existing
seller who consistently brings business ideas to the relationship becomes
indispensable- winning contracts with minimal competition and at full
Don’t try to rush sales, even if you’re desperate. Customers
feel your push and immediately erect a wall of resistance.
On first sales calls do NOT lean forward.
To maintain a consultative approach you must LEAN BACK.
Lean back, slow down, and you’ll get the business sooner.
Quality, not Quantity.
Make fewer sales calls, but better ones.
Focus all your efforts on preparing for the meeting. Determine the
next logical step. Think about what you need to make the outcome a
reality. Test every idea you come up with from your customer’s
perspective. Think- if I
said or did this, how would my customer interpret it or react?
Make Follow Up
Don’t leave a meeting without scheduling your next one- or you
may never catch up with your customer again.
The longer it takes to reschedule, the more their desire for the
offering fades. Get the
meeting on both your calendars now, even if its just to talk on the phone
your sales calls.
Ask yourself: What
went well? Where did I
run into problems? What
could I do next time to get better results?
This will assist you in improving your technique.
Stop blaming the economy or anything else for your problems.
There are many things totally within your control.
Approach all tough sales situations with a “what’s possible”
or “how can I” mindset. Accept
100% responsibility for your sales successes and continually be on the
lookout for creative approaches to take your business to the next level.
ADDITIONS TO OUR WEBSITE
have recently added the following to our website:
National Standard Costs for Specified Livestock
Steps to Starting a Business
Low Cost ways to Market Your New or Existing Business
If we can assist further, please email McLean and Co. as follows:
CONTACT McLEAN AND CO. BY EMAIL BY CLICKING ON THIS LINK
BACK TO CLIENT NEWSLETTERS HOME PAGE