March Tip Bits Regarding Covid 19
With all the news reports coming at us daily, it’s normal to feel concerned about what the likely impact of Covid 19 will have or the forecast recession? How long will it be, and how deep? For those who are feeling this uncertainty as a team yesterday we got together and brainstormed some solutions. Our aim here at Tax & Trust is to offer suggestions to you our clients, to calm your mind as well as the discipline to confront the brutal facts of the current situation.
As a small office – we are continuing our accountancy business as per normal unless the ministry of health advises otherwise. All our staff who have travelled overseas at Christmas did self quarantine when they arrived back in the country and there are no further plans for any of us to travel outside of NZ for the next 3 months.
If you prefer to conduct your affairs electronically rather than visit the office at this time – we understand and please phone us to arrange how we can assist you. However, we still prefer our face to face meetings so unless you are sick please feel free to attend and make appointments as per normal – in fact we would like to see or hear from our clients more than usual especially as the recession starts affecting your business and you are looking for practical ways to get through this period.
Please express your thoughts and concerns to others – so that you are sharing the burden and hopefully finding strength and support with the trusted advisors that you turn to. Xero assistance is a free counselling service available to help staff or employees of businesses who are struggling with anxiety and would like to access some free professional help either face to face, telephone, live chat or online – all paid for by xero for those with standard or premium subscriptions. Here is where to access the XAP services and resources including online webinars on wellness. Communicate with staff, suppliers and customers early assuring them that as far as you can – business will continue to serve their needs as normal until otherwise advised.
2) Control your thoughts
For those who have recently been to a seminar or workshop here at TTP we talk a lot about the importance of correct thinking or mindsets in running a successful business. Our thought lives have incredible power over our mental, emotional and even physical well-being. If you are facing your stressful situation with a “glass full attitude” – stress can work for you propelling, you to even greater levels of productivity and creativity – the reverse is also true. If you are viewing your glass as half empty – you will make a difficult situation even worse for yourself. We suggest that it’s good to think of an easy mantra to say to yourself and stop the “worry” trail. Suggestions: I have got this”, “ I will make it through this”, “Things impossible for man are possible with God”, Never, never, never give up, do a search on google for positive mantras and adopt the right one for you saying it 50 times a day if necessary – until worry flees from your brain and ideas to use the extra time (from a drop in sales) start flooding your mind again.
3) Redundancy or reduction of Staff
The government today announced a package that will help some clients who are facing a temporary downturn get through the next 12 weeks and assist them to pay wages and this applies even if you are a self-employed contractor too. See the details here. If you want further assistance with how to apply or discuss other options with us – please contact your accountant.
For our tourism related business clients – our advice is to now follow that which is being practiced by airnz and consider slashing your workforce, with the intention that you free up the existing staff to find work elsewhere, while your business hunkers down and possibly hibernates for a few weeks or even months. As a small business owner is very difficult to let valued staff go –Michelle knows this as she has had to do this in the history of our business too. However, it’s not your business to be a social welfare agency and you must put your business’s health over other employee’s concerns.
4) Reduce Overheads
Take a look at your overheads, it’s best to do this with your accountant. Each business will have a different reaction to their costs and what ones can be deferred a few months and which costs cannot. The most important thing is the No 1 rule above – Communicate with us and with your other suppliers – if you can, sit down and help us create with you a worst case and best case scenario plan. Whenever we have spent the time doing business planning with business owners the increased clarity and focus greatly reduces stress and often increases cashflow too.
5) Pay Tax later (deferred)
The govt have announced today some ways to reduce the tax burden. How the government can help you will be different most likely from others – depending upon the extent the virus has impacted your normal returns. We can help so if you are unable to pay the Terminal Tax due on 6 April or the 7 May provisional tax – send us an email or call us. If you have a monthly payment plan – your tax management will be included in the plan and there are no extra fees for us to help you. Please reach out – we will let you know if we can help in your business situation or not only as we get into it more for you.
6) Sell Assets
When desperate for cash it is sometimes a sound strategic decision to sell assets. Michelle sold 2 rental properties last year and used the equity in those properties to help complete the building of our new office – yes, she would have preferred not to do this. However, it’s far better to do this and help the business that is providing steady income. Sometimes you can sell surplus assets or sell cars or equipment and take on a smaller value car or asset instead.
Another choice is to raise a mortgage or personal loan with the bank or a loan to fund accounts receivable or another part of your supply chain. Do this sort of action only after consulting with your accountant please. The OCR rate cut is supposed to help banks lend more to businesses in trouble. Our experience is that small businesses with under $1 million in turnover do struggle to get any significant business lending – in terms of overdraft or personal loans – However, it’s not impossible – do seek our help early.
7) Reduce drawings
This is a no brainer, if you have less cash coming in – reduce as much as you can your personal discretionary spending, defer upgrading your car, motorbike, sports equipment, furniture repairs, take up simple hobbies – gardening, cooking, cleaning, decluttering, do more reading or researching for your business education. Socialise in small groups around home or open spaces.
8) Increase Marketing/ Change Product Mix/ Increase Business Advice spend
Not all costs are equal and sometimes the best thing you could do is seek some further professional input and advice. Please do not hesitate to reach out to us here at Tax & Trust – we will do our best to help you and your business survive and if at all possible thrive as we ourselves put our own advice to action as well.