Merger with MTM Accounting Limited

We are excited to announce the merger of Dowse Murray Chartered Accountants Ltd with MTM Accounting Ltd from 1 April 2017.

The merger will enable both firms to improve efficiencies and provide a higher level of service to clients.

With the staff of Dowse Murray Chartered Accountants Ltd all transitioning to the new combined firm we expect there to be little practical change for clients with regards to fee and the level of service provided.

The new combined firm will be called MTM Accounting Ltd and will operate from premises at Level 1, 100 Tory Street, opposite Moore Wilsons.

We look forward to continuing to work with you to further improve your business or personal financial activities and if you have any questions about the merger please call us.

Changes to tax deducted from payments to contractors

When announced in the Budget last year this change appeared to be about allowing contractors to choose their own withholding tax rate – within limits.

But as they say the devil is in the detail.

In a nutshell, if you are invoicing an IT services or recruitment company for your contract services then the IT services or recruitment company will be required to deduct withholding tax from all payments to you from 1 April 2017 (even for March 2017 work paid in April). And the default rate is 45%. The new change is that it now affects those contracting through companies.

Sole traders:

If you’re a sole trader the 45% will cover more than your usual tax obligations as the top tax rate is 33% so after you claim your business expenses then you should receive a sizeable tax refund. But you’ll have to wait till year end to receive it.

Details are at http://www.ird.govt.nz/news-updates/contractor-changes.html.

To reduce the amount being deducted you can complete an IR330C form: http://www.ird.govt.nz/resources/9/c/9c019ad0-9071-4f3d-babb-7aa37e954bb4/IR330C.pdf but the minimum rate you can choose is 10%. The 10% is probably the best option but you may then have tax to pay at year end if that rate ends up being too low . You can calculate a more accurate rate using the IRD calculator at http://www.ird.govt.nz/calculators/tool-name/tools-t/tax-rate-estimation-tool-contractors.html. For example:

  • If your income after expenses and excluding GST is around $80,000 then the rate should be 22%.
  • If your income is around $100,000 then the rate should be 24%.
  • If your income is $200,000 then the rate should be 28%.
  • etc;

Remember by using a 10% rate you are deferring the tax you pay, but you end up paying the correct amount of tax based on your earnings in the end.

The other option is to complete an IR23BS. This is a complicated form but will potentially allow you to set the rate that the IT services or recruitment company charges to an even lower rate, depending on your costs and tax losses from other business activities for example, if you have a rental property with large losses.

http://www.ird.govt.nz/forms-guides/number/forms-001-99/ir023bs-form-special-taxcode.html

If you are a sole trader and already have a certificate of exemption from withholding tax that exemption will expire at 31 March 2018.

Companies:

It all becomes far more complicated if you provide your contract services through a company. By the intermediary recruitment or IT services firm deducting withholding tax, this reduces the amount paid to your company. Effectively then because of the personal services attribution rules the income will be allocated to you at year end but the tax will already have been mostly paid by your company. Meanwhile you still need to pay PAYE during the year on your salary (or provisional tax) and the company will receive a large refund at year end.
Because this doesn’t make sense you can choose a lower withholding tax rate for the company by completing an IR23BS in the company name and setting the withholding tax rate to zero. Otherwise the IT services or recruitment company can deduct tax at 45%.

Special tax code application (IR23BS): http://www.ird.govt.nz/forms-guides/number/forms-001-99/ir023bs-form-special-taxcode.html

The only other way to reduce the compliance costs of all this extra work and to minimise the real cashflow issues is for you to contract in your own name for those jobs that go through a recruitment or IT services company and just use the company for contracts you obtain directly. And you should expect to pay higher monthly fees to your IT services or recruitment company to cover their additional compliance costs. If the recruitment agency isn’t quite ready to implement these changes, they do have up until 1 July to get their systems set up which may delay things a little for you.

Example: IT Recruitment Co Ltd has agreed to provide web designers for Client Co. IT Recruitment Co arranges for Services Provider Ltd to provide people for Client Co. IT Recruitment Co Ltd is arranging people to provide work directly to clients. As a result, they are in a labour-hire arrangement and this labour-hire arrangement is part of their labour-hire business. As a result IT Recruitment Co Ltd is required to withhold tax at 45% from any payment made to Services Provider Ltd. Services Provider Ltd may apply for a special tax code to reduce its rate of withholding (including applying for a rate of 0%).

 

Our practice has grown with Xero!

Why this blog?

Someone suggested we nominate ourselves for the regional Xero partner of the year. Why not I thought so here goes…

Our commitment to Xero – the company and the product

  • Early adopter (2007)
  • Early investor (2009)
  • We are passionate about Xero and are always working to improve the product – ask departed Xeros Andrew Tokeley or Daren Riley, current Xeros Matt Barnett, Mark Blundell, Chloe Jackson
  • Regular attendees at Xerocon
  • Martin is a member of the Xero Global Advisory Council
  • Baubre has presented at Xero road shows and Xerocon and was on Xero homepage 2009 and 2010!

Snip20160623_1

We work the Xero way

  • We are a Xero Gold partner and 100% Xero
  • We use Xero Practice Manager
  • We use Xero addons
  • We are paperless and cloud based
  • We bundle Xero with our pay monthly packages
  • We have online checklists
  • We provide free Xero support for our clients, friends and strangers
  • It is a KPI for our staff to be Xero certified
  • We run free seminars for clients and the public

We have a great Xero partner website

While there may be prettier sites around (but it is arguable) ours is 100% Xero and really useful for clients, the public and anyone using Xero

How do we find clients?

Actually we don’t go looking for clients – they find us. They find us through word of mouth, through our website and through the partner page on the Xero website.

A lot of them come because we are a Xero practice.

What sets us apart?

We’re here for our clients and they’re what get us out of bed everyday. We listen, and solve their problems, whether its overdue taxes, cashflow, succession planning, or just gnarly transactions. We’re with them when they start up, making sure that they have the best operating structure, cloud based accounting , payroll and workflow management systems; we’re there when they have their own babies or move onto bigger things, we feel pride in their successes as if they were our own, we understand the late nights, and the lonely decision making that only another business owner can really understand, and we’re there when they sell their “baby” (the business not their physical babies!) or wind it up because they’re moving on to something else.

We’re about quality not quantity so although we’ve grown organically year on year we won’t win awards for being the fastest growing. But it’s very rare for a client to leave. Not only is it personally rewarding helping people grow financially it’s also an awesome privilege to be part of so many great people’s lives/ happiness/ success.

Trivia

  • Biggest regret – missing the first Xerocon in Hawkes Bay as we were overseas
  • First post on the Xero community – (I think I got that link right)
  • Our son was an intern at Xero and spent his time there fixing the unreconcile button
  • Rod was the guest speaker at our office opening
  • Winner of the inaugural Xero website of the year award (our old site probably this version)

website award 2009

A final word

We are committed to Xero and recommend it to our clients because we absolutely believe Xero makes their lives easier, improves their business and is great value. And time and time again clients have told us they love Xero.

As of now there isn’t anything else out there that comes close to Xero but rest assured – if or when there is a better product then we will absolutely recommend that product!

Thank you Xero – we have grown with you!

 

PS We are recruiting – if you are CA qualified come and talk to us

Getting paid faster

Reprinted from our April 2016 newsletter!

Cash flow is critical for small businesses and one of the best ways you can maximise your cash flow is to get paid faster and leave less sitting there in unpaid invoices you have issued.

Currently the average time it takes for a small business to get paid is around 40 days, although for business using Xero for invoicing this is less, closer to 30 days. That is consistent with what we experience.

getting paid

There are some simple things you can do to get paid faster:

  1. No surprises. Make sure your client knows what it will cost up front and when you will do the work.
  2. Invoice as you go rather than once a month. If you have finished the job then send the invoice while it is fresh in your, and the clients mind.
  3. Date your invoices appropriately. Larger organisations and government departments tend to pay on the 20th of the month after your invoice date, so using 30 April as an invoice date could result in you being paid a month earlier than if you used 1 May as the date.
  4. Make it easy for your clients to pay. Make sure you bank account number and payment instructions are easy to find on your invoices. With Xero it is straight forward to connect a payments gateway to take online payments.
  5. Regularly follow up your overdue invoices. You can use aged receivables reports or in Xero the Overdue invoices dashboard to see at a glance who is overdue. In Xero you can set automatically emailed invoice reminders triggered when an invoice becomes nearly due or overdue. For some clients though a phone call may work best. Around the 23rd of the month is a good time to follow up the overdue invoices as a lot of businesses have invoice runs that pay on the 20th.

In Xero you can add the accounts receivable days to your business performance dashboard to track how you are going.

business performance

The weather station, the Raspberry Pi and the ESP8266

In a previous post going back to 2012 I talked about how I used an Android netbook running Linux and wview to post data from my WS 2355 weather station to Weather Underground. Such a long time ago, things have changed a lot since then.

First up I replaced the Linux netbook with a Raspberry Pi running Raspbian and using pywws to upload the weather info for IWELLING61.  The netbook was ok but getting Linux on it had been a kludge so as soon as I found out about Raspberry Pis I got one in. Cost – around $60 NZD.

ws1Then a second weather station to go at the bach. This time I was pretty confident that I could get away with a cheaper variant so picked up a WH1082 from Trademe for about $185 and another Raspberry Pi from nicegear.

trademeA year or two rolled by and the original WS 2355 base station stopped communicating with the sensors – I tried cables and wireless without luck so I went hunting on Trademe for another weather station – this time it was a WH108x for $135 NZD from debra101 in Taranaki.

 

Another year and the $185 WH1082 at the bach stopped working so back to debra1010 for a $135 replacement.

That leaves me with a set of spare gauges from the WS 2355 and WH1082 lying around.

In between times I started playing with the cheap (< $10 NZD on ebay)  ESP8266 Internet of Things devices.  esp8266So much fun to be had here! The ESP8266 has a large fan base now so lots of resources around – it is  bit like a dumbed down Ardunio that you can use as a single purpose thing to do stuff. I had a choice between programming it in C using the Ardunio IDE or LUA using nodemcu firmware. I decided on nodemcu as although I hadn’t used Lua before it looked easy, especially if using the cloud firmware build service that has a lot of APIs to common sensors and devices built in.

So what do do with it? Well first up I  connected the ESP8266 to my Macbook Air and flashed it with a custom cloud build using esptool.py. I could then use a terminal program (I used zterm for the Mac) to talk to it at 115200 baud 8N parity. It seemed to work better with no flow control. Next up I created a small init.lua script to start the wifi and connect to my network. To transfer the script to the ESP 8266 I used luatool.py. The ESP restarted and was on the network. All good but I wanted a smarter way of transferring files and running adhoc commands. Some googling and I built Lua scripts for tftp and telnet servers for the ESP (thanks to whoever I stole bits of scripts from), loaded them up and then unplugged and I could access the ESP over wifi for most things I wanted to do.

You can download copies of the scripts here. There are also a few shell scripts in there to automate copying files, restarting the ESP etc;

espThe last thing I did was to hook up a very cheap and inaccurate it turns out DHT11 temperature sensor and post the results to thingspeak.

I’ve now ordered the better DHT22 (and another ESP, and a 4 line LCD display, and a relay … all up less than $20 NZD delivered) for my next project – that is get the ESP talking directly with my leftover rain, anemometer and wind direction gauges.

thingspeak

A couple of things to watch out for:

  1. You can only  run one TCP and one UDP service at a time on the ESP so if my telnet server is running then the ESP won’t be able to use https posts to update thingspeak.
  2. There are a lot of variants of the ESP around – you can buy them cheaply on ebay and probably a few cents cheaper still on Alibaba. Go for a 12E or better variant, apparently the newer ones have more flash and better wifi reception.
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