July Tip Bits
Inflation is coming: should you increase your prices?
Inflation is currently running at 1.5%, but experts are forecasting that it’s likely to increase over the next year or two. The rising cost of goods and services has been driven by local labour shortages as well as higher shipping costs and product scarcity worldwide.
The result of all these higher prices is that it is becoming more expensive to run your business.
Should you increase your prices?
Reasons to increase your prices
You could be ready to raise prices if:
- You haven’t raised prices for a long time, or you usually raise prices annually but didn’t in 2020.
- Competitors are raising their prices, or you’re more than slightly cheaper than the competition.
- You have reviewed the market and you think customers will accept a price increase.
- Your costs have increased significantly and you need to meet those costs.
Reasons to leave prices the same
You might choose to leave prices the same if:
- You recently raised your prices.
- Competitors are not raising prices, or you’re more expensive than the competition.
- Your research indicates your clients would not accept higher prices.
- The cost increases haven’t impacted your business much.
- Changing to new pricing would cost more (in marketing or printing prices, for instance) than you would gain.
A difficult decision
It can be difficult to make the decision on increasing your prices. We can work with you to run a cost-benefit analysis of the potential outcomes, so just drop us a note or give us a call and we’re happy to help.
Ever thought of asking your accountant these questions?
When a client who we haven’t seen for ages comes in to sign their tax returns and we skim over their accounts, we like to ask them is there anything else I can help you with? Our day is made when we are asked questions about the business. There are a couple of opener questions that we would love to engage you with.
- Is there any way you can help me grow my cash, my profit or my revenue?
- I would like to discuss how to improve my team performance & culture.
- Am I structured correctly for the size of my future business?
- Is it a good time to grow my team?
- Do you have any ideas about marketing?
- Can you help me set some new goals and keep me accountable to the changes I want to make in my business?
- What do you teach in your workshops?
- How would it be helpful for my business to set a budget?
- Am I likely to achieve my retirement goals with my present level of savings/investment?
- Is there a digital app that I could implement this year to help me be more efficient?
So next time you visit feel free to ask one of these or one you’ve been thinking about yourself. We are accountants who are privileged to see into many business and there are certain habits that the best business owners have and one of them is to ask lots of questions and really seek understanding.
The Holidays Act is changing – but you’ll need to comply in the meantime
A major overhaul of the Holidays Act 2003 is underway, which is welcome news because this is a notoriously tricky Act for businesses to comply with.
Many businesses have been caught out over the years, including Bunnings, NZ Post and McDonalds. Even the NZ Police, several local councils and MBIE have found themselves with big wage bills to pay after unintentionally underpaying staff for holidays.
The new legislation is designed to make it simpler for businesses to correctly calculate holiday pay, and it looks set to be introduced in early 2022. In the meantime, though, you’ll still need to comply with the existing Act.
Keep accurate and up-to-date records
You don’t want to underpay or overpay your staff members, so it’s important to keep accurate records of when they work. This includes:
- Records of the hours each person has worked and what they were paid for those hours
- Annual leave accrued and taken
- Sick leave and bereavement leave taken
- Any public holidays worked and what was paid for those hours
- Keep all your records up to date.
Workers may also be entitled to domestic violence leave or parental leave, and they can apply for unpaid leave.
Tools and guidance
Or you can give us a call. We can help you sort out your payroll and make certain you’re complying with the Holidays Act, even in complex situations with part-time employees.
Sick leave entitlement changes
The recent passing of the Holidays (Increasing Sick Leave) Amendment Act increased the employee sick leave entitlement from 5 to 10 days per year. The change comes into effect on 24 July 2021. The day in which the employee’s sick leave increases is based on their next entitlement date and not automatically from 24 July.
Median wage increase
The median wage increased from $25.50 to $27 gross per hour from 19 July 2021. This has implications for employers who may be intending to employ staff on an essential skills visa or residence visa.
Covid-19 vaccinations and employees
As the vaccination programme rolls out across New Zealand, you might be wondering what your obligations are as an employer. Make sure you are clear on what you can and cannot do when it comes to Covid-19 vaccinations and your workers. Employment New Zealand has released some guidelines to help employers understand their role in the vaccination process. The guidelines can be found on their website together with a one-page PDF for your workplace.