The New Buzzwords: Digital Disruption

Have you heard of this phenomenon – Digital Disruption? If you haven’t you had better get used to it; it is happening right now and it is not going away. So, what is it?

It can be described as changes that occur when new digital technologies and business models affect the way we do business currently. It is best explained by way of an example.

The Ecovis KGA team were recently going out to enjoy an annual staff dinner. After enjoying pre-dinner drinks in the office we left to catch our pre-arranged taxis but after a 20 minute wait and numerous calls to the taxi company we realised that we were without transport.

Some of the more tech-savvy members of our team got onto their Uber apps and within minutes we had cars arriving to take us to our dinner destination. Uber’s gain was the traditional taxi company’s loss; all through the use of available technology.

Within the next year or two, for the first time in history, workplaces around the world will see concurrent participation by five generations when the Gen Zeroes start working. That generation represents people who have grown up around smartphones and tablets, apps and social media and see them as essentials in everyday life.

The business that fails to adapt to this new wave of technology and manage digital disruption is in serious danger of being left behind: the world is changing far more rapidly than most of us realise. Technology is transforming the way we operate and how we engage with our business partners. We all have to both recognise that fact and have strategies to deal with this new way of doing things.

In 1919 Conrad Hilton founded Hilton Hotels and today the group has about 680,000 rooms available in over 4,000 hotels in 91 countries and the value of the company around US$25 billion.

In 2008, two men in San Francisco who were struggling to pay the rent on their apartment started renting out space via the internet in that apartment, to unknown guests who got to sleep on air mattresses and were fed a home-prepared breakfast. Thus, Airbnb was born. Today, without any significant real estate owned by the company it lists 1,500,000 accommodation alternatives in 190 countries and the company has an estimated value of US$20 billion.

It is unlikely that Airbnb is going to bring about the demise of Hilton; there will likely always be a demand for the services Hilton provides, but traditional hoteliers will need to adapt to the new phenomenon and use technology to their best advantage to keep pace with the market.

At Ecovis KGA we realise that technology has had an enormous effect on the way accounting services are rendered and in this issue of our quarterly newsletter we examine some of the technological innovations and how they will affect you, making it easier for us to render our services to you.

As scary as this may all sound, it is not something to be feared. Instead, we should embrace it and see it as representing both challenges and opportunities for the future.

The challenge is to keep up with technology and to stay ahead of the game; the opportunity is to transform the experience that your customers have in doing business with you.

Understanding Cloud Computing

Cloud computing got you perplexed? You’re not alone. Most of us talk about ‘the cloud’ without even realising what it really means. We’re clearing the air on cloud computing and how it can benefit your small business.

So what is the cloud?

The cloud is where you put all your data, all your files and even your software so you can access it all from any computer or device, anywhere, at any time. See the difference the cloud can make in how you work, bank, communicate, sell and buy.

• Traditional banking vs internet banking
  It used to be the case that your financial data was only available to you when you were physically at the bank. With internet banking, your financial data is available online in the cloud. You can access it anytime, anywhere and on any device.
• Traditional mail vs web mail
  Traditionally, your correspondence was only available at the post office. Web mail means that your mail is available whenever you’re online. You can send an email anytime, from anywhere and on any device.
• Traditional filing vs cloud storage
  Your files used to be accessible only at the office. With online or cloud storage, your files are conveniently available for you whenever you’re online at anytime, from anywhere.
• Traditional shopping vs online shopping
  When your physical business is open only at limited times and places then customers have a limited time frame to view and buy your products. With online shopping, customers can enjoy the convenience of being able to view products and shop anytime, anywhere and on any device.
• Traditional accounting software vs cloud accounting software
  With traditional desktop software, your data lives on your computer or laptop. This means it’s only available at limited times and on limited devices – and often to a limited number of people. With cloud software, your data lives online, so it’s always accessible from anywhere at any time if you have an internet connection. Good cloud software will also let an unlimited number of people use it at the same time, provided they are authorised to do so.

Cloud myth busting

The cloud isn’t all rainbows and sunshine, we’re tackling the tough questions about cloud computing so you can be prepared before moving your small business to the cloud.

• Isn’t cloud computing just the internet?
  You use the internet to connect your device to the cloud, but the internet is just the connection – the cloud is where your data lives.
• Isn’t it possible to lose your data in the cloud?
  Your data is actually much safer in the cloud than on your computer. Your computer can be stolen or corrupted quite easily, but cloud companies spend millions on systems and experts to protect your data.
• Isn’t the cloud an Apple product?
  Apple has a product called iCloud which uses cloud technology, but many other companies provide products in the cloud such as Google, Dropbox and Xero.
• Aren’t you stuck if the internet goes down?
  These days, the internet is like electricity – it’s very rare for it to go down and when it does you just have to wait a short time for it to be available again. In the meantime, all your data is safe in the cloud.
• Isn’t cloud computing just a fad?
  The cloud has been around for years and it’s only getting bigger. Internet banking started over 15 years ago. Now the technology is so fast and cheap that it’s being used for everything.
• Isn’t cloud computing expensive?
  It’s much cheaper because you only pay for what you use. You’re not paying for endless upgrades, system maintenance, support fees or additional hardware like backup systems.
• Don’t I lose control of my data?
  You actually have much more control of your data, since you can access, share and work with your information, anywhere, anytime, on any device. You also control who has access – which you can revoke in an instant.
• Isn’t the cloud only for tech people?
  The cloud is much easier for everyone – you just log in and it works. Imagine: you don’t have to install files, worry about versions, or deal with patches and upgrades. Just log in.

Let the cloud set you free

As you can see, the big benefit of cloud computing is that it lets you get at your data anytime, anywhere. The cloud breaks the chain between your office computer and your business information.

Need access to your business bank account while you’re on the move? No problem with the cloud. Want to buy office supplies while you’re on the train? It’s easy. Need to update your accounts while you’re out of the office? Now you can.

With the cloud there’s no need to keep all your files and applications on a single computer – no need to worry about backups, theft, data loss, support and upgrades. It’s all taken care of by dedicated teams of technical people. You no longer have to worry about what’s happening behind the scenes.

The cloud takes the stress out of computing. It lets you use computers, laptops, tablets, smartphones and other devices to access all your business information – seamlessly, securely and in real time. Just log in and go, anytime and anywhere.

Original article by Xero Limited

Business in the Cloud

Cloud computing is on the rise, especially in the business sector. The cloud lets you use computers, laptops, tablets and smartphones to access your business information – seamlessly, securely and in real time. It allows you to access your data and operate at any time and from anywhere. We can help you to review your current processes and offer solutions on how cloud computing could assist you to deliver efficiencies in your operations.

There are many cloud based apps that can assist you to run your business on any device, any time and share it all easily between your team. They can help you with: Payroll, Inventory Management, Workflow, Document Storage and Management, Customer Relationship Management and much more….

There are over 450 cloud based applications for businesses and we have compiled a few that may be of use to you. There are applications that suit a variety of industries: Agriculture, Healthcare, Hospitality, Manufacturing, Property & Realty, Retail and Trades. If you can’t find what you are looking for talk to us to find the right solution for you.

Inventory Management

Unleashed

Unleashed provides online inventory software for Xero, allowing accurate costs, margins and stock control. Integration with Xero is seamless and easy.

Dear Inventory

Enables you and your team to manage all products, customers, suppliers, contacts, purchases and sales. It tracks the costs of raw materials, labour and overheads through your production process to help you formulate the right pricing strategy.

CIN7

Online inventory management and point of sale software for multichannel (online, offline, warehouse and wholesale) enterprise businesses. It allows for multi-store retail point of sale, warehouse management and real-time stock updates to eCommerce and branches.

Customer Relationship Management

Capsule

Use Capsule to keep track of the people and companies you do business with, your communications with them, opportunities in the pipeline, and what needs to be done and when.

Pipedrive

A sales or lead management system. Your deals are displayed by your different sales stages in an easy drag and drop table. This clearly shows how your team is doing and helps you focus on the right deals if an extra push is needed.

Workflow Management

Workflow Max

From leads to quotes, to time-tracking, all the way to invoicing. It’s a cloud based job management software that is aimed at Creatives, Engineers, Architects and other related service industries.

Timely

Appointment software for clinics, salons, personal trainers or anyone that needs scheduling. Save time, attract clients, integrate with Facebook and online booking systems, and sync invoices & payments with Xero.

GeoOp

Online job management for businesses with mobile workers. Features real time job sheets, live job scheduling, GPS tracking, quoting, invoicing & more.

Payroll

iPayroll

The Internet Payroll Service for New Zealand that keeps your records, does your banking and pays your staff, PAYE and KiwiSaver all in one go.

Smart Payroll

An easy to use and cost-effective online payroll/wages system. Saves you time, money and hassle by automating your payroll tasks.

Flexitime

FlexiTime saves you time on pay day and improves the accuracy of your payroll by combining rosters, timesheets and payroll in one great online tool.

Xero Updates

In the past twelve months Xero has made 750 updates to its system, many of which you wouldn’t have noticed, or even noticed them being implemented. These updates improved the design, speed, processes and the current standard features and included the release of new features.

Some of these new features released of note over the past few months included;

A simple Online Payroll System

Xero now has a simple payroll system that allows you to process payroll, track holiday & sick leave, pay your employees and file reports with Inland Revenue. It comes with a Mobile app for your employees. This allows your employees to apply for leave and view their pay history. Upcoming updates for this include the ability for employees to enter their timesheets and view upcoming rosters. If you are still after a more comprehensive payroll system then on of the cloud based add-ons may still be your best bet for now. These can be viewed here.

Check out a video for a quick summary of this update.

Business Performance Dashboard/Reports

The Business Performance Dashboard allows you to see how you are performing on a range of key performance metrics. Beware though garbage in – garbage out, if your account codes are not correctly mapped then it may be incorrect. Some of the performance metrics that can be tracked include, Gross Profit, Debtor Days and Debt to Equity etc. If you are unsure of what these mean or would like to know more so you can track them and understand your reports better please contact us and we can go through them with you.

Check out a quick video about the Business Performance Dashboard below.

A simple Inventory System

Xero Inventory tracks the value and quantity of your inventory. It allows you to assess the profitability of your products and easily see which items are being sold and at which margins. The Xero inventory update is the solution for someone looking for a simple inventory solution. If you are after an advanced system that tracks multiple warehouses, batches and the manufacturing process etc then a Xero add-on partner will be better suited (read more).

Check out a video for a quick summary of Xero Inventory and if it is suitable for you.

Updates to the Mobile app.

Xero’s mobile app allows for you to manage your accounting system and business on your phone or tablet anywhere, anytime.  It has recently updated the Android app with a new look.  The app allows you to reconcile bank statements, create & send invoices, add receipts (with photos, no more paper receipts) and create expense claims.

Check out a video for a overview of Xero for Android.

Download the app today by clicking on the links below:

Xero for iOS

Xero for Android

New Property Tax Rules from 1 October 2015

The media and politicians have, in recent months, been heavily focused on the seemingly insatiable growth in the residential property market in some parts of the country. New Zealand has no broad based capital gains tax that applies to gains from property sales and some believe this is a contributing factor. New tax rules will soon be introduced in an effort to bring some of those gains within the tax net and possibly curb the trend of rising house prices.

The general rule is that a property acquired for purposes of a long-term investment represents a capital asset and any gain from its ultimate disposal is not taxable, but where the intention was ultimately to sell that property for a profit such gain can be taxed. It is a very fine line.

The practical issue for the IRD has been to assess that intention and, particularly in the case of individual taxpayers, the gathering of sufficient information to make such assessment has proven to be difficult.

The proposed changes are threefold:

• To introduce a brightline test of a period of two years from the date of acquisition of residential property during which the gain arising from the sale of that property, with certain exceptions, will be taxable
• To provide additional information to the IRD in residential property transactions and
• The introduction of a Residential Land Withholding Tax (RLWT) where the vendor of a property to which the new brightline test will apply is an “offshore person”

The Brightline Test

This will apply in addition to the existing rule that where a property is acquired with the intention of a resale any gain that arises is taxable.

Where any residential property is sold within two years of its acquisition, regardless of the underlying intention, any gain arising from the sale of residential land will be subject to taxation. There are, however, exceptions, namely if the land being sold is the vendor’s “main home”, or the sale is part of a relationship property settlement, or if it is a sale of inherited land.

Also, because the new rules apply only to residential property, farmland and business premises are excluded.

This proposal is in Bill form and there is still a legislative process through which it will need to proceed, so it could yet change.

Information Changes

New disclosure requirements become effective from 1 October 2015.

The parties involved in a property transaction will have to provide their IRD numbers at the time of the transfer and those who are not residents of New Zealand will have to provide their appropriate tax identification number in their home country.

There is an exemption from this requirement where the property is being purchased as a “main home” or the vendor is selling their “main home”. Where the property is owned by a trust, the trust will need an IRD number regardless. Therefore the “main home” exemption for purposes of provision of information does not apply to trusts.

Non-residents who meet the definition of an “offshore person” will be required to obtain a local IRD number and to have a local bank account, which means that they will be subject to identification verification procedures for anti-money laundering purposes.

This may be a means of checking the progeny of funds being introduced for purposes of a property purchase. It appears, though, that once the IRD number has been obtained there is no requirement to retain the bank account.

The aim of this change appears to be to give the IRD greater oversight of the people who are involved in transacting in the residential property market and hence enable the IRD to better assess whether the gain arising is of a true capital nature or not.

RLWT

The government is proposing that effective from 1 July 2016, where a residential property is sold and the brightline test is met and the vendor is an “offshore person” tax must be withheld from the sale and purchase consideration.

That tax will be the lower of 33% of the vendor’s gain (the standard rate) or 10% of the total agreed consideration (the default rate).

It will likely be incumbent upon the solicitors or conveyancing agents acting to withhold the tax and that responsibility will probably lie with the purchaser’s conveyancing agent.

These new rules are likely to add another layer of compliance requirements and, while the proposals have not been finalised yet, we can foresee property investors being faced with various dilemmas.

As always, your Ecovis KGA adviser is able to assist so if you are contemplating a residential property transaction, check in with us first.

Points to Note

Health and Safety

The Health and Safety Reform Bill took another step forward in late July with its second reading in Parliament, but nothing has yet been finalised. Even so, you can take steps to prepare.

What you can do in the meantime…

Ahead of the legislation ACC are keen to help businesses be proactive about health and safety. ACC has a range of programmes to help different businesses assess their systems, evaluate whether they are suitable to how the business works and the people affected, and make any improvements needed. The aim is to make sure each business has the right health and safety processes for its people and operations. Businesses that successfully complete these programmes enjoy reduced ACC levies and the benefits of the ACC tools and resources made available through the programmes.

We expect that you already have procedures in place to assess risk and manage hazards. If you are not sure whether these are robust enough, there is a good opportunity here to review and strengthen your safety systems. If you would like more information about what’s available to help you do this, please contact us.

Employment Standards

The Employment Standards Legislation Bill has been introduced to parliament, proposing changes to strengthen enforcement of employment standards. This will introduce tougher sanctions for breaches and greater accountability for people and entities associated with the employer — such as directors, senior managers, legal advisors — if they are knowingly involved when an employer breaks the law.
The changes target unfair practices such as unreasonable deductions from employees’ wages; or where an employer does not commit to hours of work, but expects employees to be available when required; or where an employer cancels shifts without providing reasonable notice or compensation to the employee.

Penalties

Serious breaches, such as exploitation, will carry maximum penalties of $50,000 for an individual and the greater of $100,000 or three times the financial gain for a company. Individuals who commit serious or persistent breaches of employment standards may be banned as employers.
The penalties for minor to moderate breaches will remain $10,000 for an individual and $20,000 for a company. Employers who have breached minimum standards may be publically named.

Employment Records

Record-keeping for wages, time, holidays and leave again come under scrutiny. Requirements will be made consistent across all employment legislation.
The core requirement is that, when an employee or labour inspector requests it, an employer must be able to produce an easily accessible record of the number of hours worked each day in a pay period, and the pay for those hours.
Breaches will attract infringement notices, with a maximum penalty of $1,000 per breach capped to $20,000 if there are multiple breaches.

Bank Account

If you have changed your bank account, please let us know before we undertake completion of your tax return, otherwise you might miss out on your tax refund.
We have heard of cases recently where the refund has gone to an account no longer associated with a business and the taxpayer has missed out.
Make sure that you have given us your current bank account details for the account you would like your tax refunds paid to. And let us know immediately if your account details change.

Residential Properties

Residential properties have recently come into more scrutiny by Inland Revenue. Either as investment properties generating rental income or as speculative properties generating capital gains. It is important that your structure, treatment and intentions align. The recent ‘Bright-Line” test and tax statement requirements are not the only things Inland Revenue are currently focusing on. Things such as your intention at purchase date and cash flow projections are increasingly coming under more scrutiny. If you are unsure of where you lie and for more information please contact someone from our team to discuss your position.

Important Reminders

Another Reminder about the PPSA

The Personal Property Securities Act 1999 became effective in 2002 and thirteen years later there is still confusion around the law, with many businesses still neglecting to avail themselves of the protective mechanisms it offers to providers of credit. We can help you to reduce your risk of loss by using the PPSA to your advantage.

The PPSA allows for the registration of a security interest in collateral, on a centralised register, which anyone can search to determine what charges may exist over the property of their business partners.

It also allows for anyone who is granting credit and thus has a security interest over the goods underlying that credit to register that interest and thereby record the fact that their debt is secured by the described collateral.

What we have seen over the years is a surprisingly large number of credit providers who have simply ignored the benefits of taking security over their credit, or are just not aware of their ability to do so. Also, in considering the provision of credit we often see businesses failing to check what existing charges may be registered.

In the unfortunate situation where the debtor is placed into liquidation, the creditor who has had the foresight to register a secured interest is more likely to see some or all of their money back than a creditor who has not.

In a recent large liquidation we were surprised at how few creditors had security, particularly in light of the simplicity in registering a financing statement. Those who held some form of security saw a return of part of what they were owed while others without security went unpaid.

An added benefit is that where you have security and have been paid by your debtor under that security, it is more difficult for a liquidator to attack that payment as voidable.

If you are selling goods on credit, or provide any form of credit to your customers, you need to consider the PPSA implications.

The law is complex but we have a good understanding of it and its application, so if you have any queries please get in touch with us right away so that we can assist you in protecting your rights.

Reminder of Companies Amendment Act Changes

If your business is a registered company, a law change means you must have a director who lives in New Zealand — or who lives in Australia and is a director of an Australian registered company — by 28 October 2015.

You’ll also need to provide some extra information about directors and any ultimate holding company with your next annual return.

Make sure you’re sorted by following this quick and easy checklist

Companies Amendment Act Compliance Checklist

By 28 October 2015 make sure:

• Your company has at least one director who:
  • lives in New Zealand; or
  • lives in Australia and is a director of an Australian registered company. You’ll be asked for the Australian company’s name, address and Australian Company Number (ACN). (Note: if your company has more than one director living in Australia and they are a director of an Australian registered company, each director will be required to provide the details of an Australian company that they are a director of).
• You provide the following details of any ultimate holding company (if applicable):
  • name of the ultimate holding company
  • its registration number or code (if any)
  • its country of registration
  • its registered office
• As of 1 July 2015 all company directors must provide the Companies Office with their date and place of birth

If Ecovis KGA Limited files the annual return for you, we will be in touch shortly if we have not received the information required to ensure that your company is compliant.

Please contact us should you have any queries or if you want to check or update your details.