“Any sufficiently advanced technology is indistinguishable from magic,” Arthur C Clarke once said. Thankfully, if you are struggling with your small business paperwork, you can now pack away your Gandalf robes because Jason McFadden of McFadden Accounting says that advanced technology is now both mainstream and user-friendly when it comes to accounting software.
Approaching wizard status himself, Jason has seen the rise and rise of technology in his 30 years of accounting and remembers the day the first computer came through the corporate front door.
Now IRD is front-footing technology and, from 1 April 2018, will require businesses to electronically file their pay roll on every employee payday of the year.
The most popular accounting software packages are available for about $600 per annum. You or your accountant can run it, or a combination of you both. The cost can be offset through time saved at your accountant, but it depends on your business as to whether it really is a cost effective and suitable choice. “Firstly, always talk to your accountant before you decide to buy,” Jason says.
There are different features available, and part-time, low-transaction, or no-staff businesses can often do very well sticking with a simple cash book, while others keep organised with Excel.
Secondly, if you do purchase, get your accountant to help set it up for your business. Finally, learn how to use it properly and code transactions accurately, Jason says. “The principle of garbage in garbage out is fundamental to success with your software.”
Rumour has it the Beatles got taxed at 94 percent in the UK in 1963, rousing George Harrison to write the heartfelt lyrics, ‘Now my advice for those who die, declare the pennies on your eyes…. yeah, I’m the taxman, and you’re working for no one but me’.
We haven’t reached 94 percent in New Zealand, but according to Jason McFadden of McFadden Accounting, the New Zealand system is so complex, “people are often paying more tax than they need”.
Take Portfolio Investment Entities (PIE) and KiwiSaver, taxed at a discounted rate determined by your income band. People nominate the tax rate at the outset: if you set your tax rate too high and pay too much, you won’t get the excess tax back; set the rate too low and you have to include your PIE or KiwiSaver income in your tax return – you’ll be taxed in your income band and lose the discounted rate. “A rate set too high or too low sees you penalised. It is quite a prevalent problem,” Jason says.
Buy a new mortgaged home and rent out your retained mortgage-free house, then no claim on mortgage interest payments is possible. However, sell the renter into a company which raises the mortgage, and that company can claim a tax deduction for the interest. Jason says you will incur conveyancing costs, but you can be better off longer term.
With 26 years’ experience, Jason offers a competitive service, travelling to you to see where, why, and how you operate. Jason can see you promptly throughout Christchurch and North Canterbury.
Mark Twain once quipped, “What is the difference between a taxidermist and a tax collector? A taxidermist takes only your skin.”
In reality of course, getting organised to pay your tax is no joke and, after 27 years as an accountant in Christchurch, Jason McFadden of McFadden Accounting finds that because our system is complex, few people are getting it right.
Unlike IRD however, easy-going Jason won’t get cantankerous if you’ve got in a muddle or got behind. In fact, after working in a big accounting firm, Jason decided to specialise in helping small businesses and ‘mum and dad’ investors. Enjoying the personal service his role brings, Jason will meet you, look at your accounts and records and give you a cost-competitive estimate or quote. You can visit his home office, but Jason enjoys travelling to your workplace and doesn’t charge for travel time.
He’s happy to help with local investments, or overseas interests requiring assessment under the Foreign Investment Fund (FIF) regime. For small businesses he understands that being audited, paying GST, managing employees with PAYE, Kiwi Saver, child support, or other deductions can be stressful and are a burden when you are passionate about focussing on your business.
If the problems of provisional tax based on your previous year’s results are a headache, Jason can help with new IRD option: the Accounting Income Method (AIM) enabling payment of Provisional Tax every one or two months based on actual profit. Happily, a loss made during a period attracts an immediate refund.
Visit Jason’s website at www.mcfaddenaccounting.nz.