“Advisory boards – What are they and do you need one?”  That was the question posed to the panel at yesterday’s Business Owners Forum – and here are some of the points emerging from yesterday’s event:

An advisory board is a forum to challenge, stretch, support and test your ideas with people you trust.  These could be your advisors – or people from your network.  Bruce Sheppard put it bluntly when he said:  “Boards that are overly focussed on ticking the boxes are worse than useless.”

 

An advisory board is distinct from a real board of directors in that directors have statutory obligations and potentially liabilities under the Companies Act and other legislation.  An advisory board should be a discussion forum rather than a decision making forum – or they run the risk of being deemed to be directors under the Companies Act.

 

In a more corporate environment, the roles of owner, director and manager are quite separate.  The directors form strategies that the owners are prepared to fund – and the managers are prepared to implement. 

But in owner managed businesses, there are often murky boundaries between these roles.  An advisory board can help the business owners wear these different hats.

Business owners are often consumed with doing the operational things that are urgent – and advisory boards can help provide the discipline to rise above this.  To get the most of your advisory board, provide them with regular crisp reports of your business’ performance against its KPIs well ahead of each meeting.

 

An Advisory Board needs a mix of skills – probably including financial and marketing skills.  Industry knowledge is not essential – remember that businesses are 98% the same, just like the DNA of a mouse and a human.  These people will most likely come from within your own network – or through recommendations from your network.  An Advisory Board does need a good chair to keep meetings focussed.

 

An Advisory Board may meet as frequently as monthly – or as infrequently as quarterly, depending on the needs of the business.

This is my quick summary of the points from last night’s event – but free to add comments or observations below.

A big thank you to Bruce Sheppard, Jacqui Bensemann and Mike Ashby for your role on the panel of last night’s event.  Details of the next Business Owners Forum on 16 September are here >>>.

 

 

   

Foursquare is a mobile application that allows users to connect with friends and update their location.  Users can post 140 character twitter-style tips or comments about the locations or venues they check into.  Users can choose to have their check-ins posted on their accounts on Twitter, Facebook or both.  

 

I would liken FourSquare to a location based Twitter.   And like Twitter, it is free to join and free to use. 

 

Sounds pointless, right?  

Foursquare launched in 2009 with functionality in 100 cities worldwide.  In January 2010, it expanded to allow check-ins from any location worldwide.  In March 2010, users had grown to 500,000 – and by last week it was reported that FourSquare had grown to 2,540,800 users with 28% growth in the month of July alone. 

Although penetration is still quite low in New Zealand compared to say the USA, this thing is growing faster than Twitter ever did!  

New York based FourSquare was co-founded by Dennis Crowley, who has been named one of the “Top 35 Innovators Under 35” by MIT Technology Review magazine.  FourSquare has 27 employees – and has just attracted venture capital investment of US$20 million giving it a pre-money valuation of US$95 million.  Not bad just one year after launch! 

So do you need to get your business onto FourSquare? 

If you’re in the business to business space, I’d say probably not.  

But if you’re providing goods or services to the public, yes – get yourself onto FourSquare.  Particularly if you’re involved in leisure, entertainment, hospitality or the like.  And I’d say definitely get involved if your target market includes overseas visitors. 

  

There may also be opportunities to use FourSquare to promote loyalty or advertising campaigns. We haven’t yet figured out how we’re going to harness FourSquare other than by being seen to be there, but here >>> is the Elevate CA venue on FourSquare.

 

This may only be a fad – and FourSquare users may only ever amount to being a subset of Twitter users, but the number of people using FourSquare is exploding, so why not stake your claim.  Even if the only benefit is being seen by your community to be an early adopter of new tools.

 

The rate of GST goes up to 15% on 1 October.  Are you ready?  Here is a quick summary of what you need to know.

The IRD will send you the relevant GST 101 form and calculation sheet for your business.  For most businesses, this return is likely to take longer to complete than usual so you should get onto it as early as possible in October.  Just give us a call if you have any queries – or if you’d like us to take care of filing your transitional GST return.

Here is a quick questionnaire to find out what you need to do to correctly file your transitional GST return.

For Invoice Basis Filing

1. Is your return Period to 30 September 2010?

No – go to question 2.

Yes – the good news is that you don’t have to do anything – just file your September GST return as usual using the old 12.5% rate, and your future GST returns using the new 15% rate.  Easy.

2. Is your return Period to 31 October 2010?

Yes – You will need to complete a transitional GST return which identifies your activity to September at the old GST rate of 12.5% – and all activity from 1 October 2010 at the new GST rate of 15%.

For Payments Basis Filing

1. Is your GST Return period to 30 September 2010?

No – go to question 2

Yes – You will need to prepare a debtors and creditors* list as at 30 September 2010 – and adjust for these amounts in your GST return.  This will ensure the transactions that relate to the old GST rate are still taxed at 12.5%.  See below for the calculation.

2. Is your GST Return period to 31 October 2010?

Yes – You will need to prepare a debtors and creditors* list as at 30 September 2010 and adjust for these amounts on the transitional GST return which identifies your activity to September at the old GST rate of 12.5% – and all activity from 1 October 2010 at the new GST rate of 15%.  See below for the calculation.

*Debtors are all amounts still owing to you by your customers for invoices dated up to and including 30 September 2010.

*Creditors are all amounts still owing by you to your suppliers as at 30 September for goods and services with an invoice date on or before 30 September 2010.

Here is the calculation for Debtors and Creditors that you will need to complete if you are on payments basis.  The IRD will send you the calculation sheet, so you just need to work your way through it.  There will be no need to file the calculation sheet with your GST return, but you will need to keep it on file in case of audit.

Once you have completed your debtors and creditors as at 30 September 2010, you will need to complete the following calculation – and then to add or subtract the balance from box 9A.

(Total Creditors $xx Minus Total Debtors $xx) divided by 51.75

ie say Total Creditors at 30 September is $15,000 – and Total Debtors are $8,500

so – $15,000 – $8,500 = $6,500

$6,500 / 51.75 = $125.60.

Add (or subtract if the amount is negative) this amount (in this case $125.60) from box 9A.

For some businesses, this will be very easy – and for others it could take some time.  If you have any problems just give us a call.

 

There has been welcome clarification of the rules regarding the depreciation of commercial building fit-out this week.  The Revenue Minister released a joint Treasury and IRD discussion paper on Wednesday that said a commercial building includes only structural items such as foundations, framing, walls and the roof, rather than the fit-out.

This has become an area of concern for commercial property owners since it was flagged in the 20 May budget that the ability to depreciate commercial and residential property would be axed.  Since the budget it has been unclear whether fit-outs on commercial buildings would be dealt with in a similar manner to residential property. 

 

 

In the case of residential properties, many chattels are considered to be part of the building and therefore not able to be depreciated under the new depreciation rules.

 

The discussion paper states “The law would be changed to clarify that fit-out associated with commercial, industrial, recreational and certain short-term accommodation (for example motels, hotels, rest homes and hospitals) would be able to be separately depreciated.”

 

The rationale for treating chattels differently in commercial versus residential properties appears to be that there are fundamental differences between residential and commercial fit-outs, with the value of commercial fit-outs depreciating more quickly justifying a depreciation regime.

This appears reasonable from the point of view of commercial property owners.  After all, fit-outs have a significant cost and often don’t survive longer than an individual lease contract which may be as short as six years or less.  Whereas much of a residential fit-out can last as long as the building itself.

This removal of depreciation on buildings will heighten the importance of the distinction between capital expenditure and repairs and maintenance – an area which can be rather grey.  With repairs and maintenance typically being 100% tax deductible – and capital expenditure potentially not even depreciable, the stakes have become higher with regards this distinction.

 

 

Hoax emails have been doing the rounds claiming that the recipient is due a tax refund.  Some of these claim to be from a company calling themselves “NZ Tax Refunds” and others claim to be from the IRD.

These emails contain links to a false internet banking login site.

The most recent hoax email claims to be from IRD advising that after the last annual calculation the recipient is due a refund of $988.50 – and requesting the recipient to click on a “Refund me now” link.  The link goes to a false internet banking login page which asks for your personal login details.

 

Here’s an example of the hoax email doing the rounds this week:

 

After the last annual calculations of your fiscal activity, we have determined that you are eligible to receive a tax refund of $988.50.   Please submit the tax refund request and allow us 3-5 days in order to process it.

Click Refund Me Now to submit your tax refund request.

Note:  A refund can be delayed a variety of reasons, for example submitting invalid records or applying after deadline.

Best Regards

Inland Revenue – Te Tari Taake

 

If you have received one of these emails, just delete it without clicking on any of the links.

And if you suspect you have responded to a fraudulent email, please call your bank immediately to alert them.

To be safe, always type your bank’s web address (for example www.bnz.co.nz) directly into your browser rather than following a link – and remember your bank will never send emails with links to internet banking login pages nor to pages that ask for personal information.