Our business finance section this month delivers the latest news and developments on payroll, accounting and bookkeeping, and is brought to you by iPayroll, Xero, GoFi8ure and Bartercard.
Post Payday Filing: new priorities for payroll
It has been a busy year for the NZ payroll industry.
The compulsory rollout of Payday Filing coupled with Inland Revenue’s modernisation of their platform has resulted in some challenges for the industry says iPayroll managing director Martin Gleeson. iPayroll has been working with Inland Revenue closely on making the transition as smooth as possible for iPayroll’s many thousands of customers. With all NZ Employers being migrated to Payday Filing over such a short period of time there has understandably been a few transitionary challenges, in particular the processing of PAYE returns has slowed down. While there has definitely been an element of “fix as you go” placing additional stress on the system Gleeson believes this may not be fully resolved until IRD completes the decommissioning of its legacy FIRST system programmed for 2021.
Gleeson says iPayroll is optimistic that over the coming months as the industry and Inland Revenue adjust to the new regime and platform, PAYE returns processing will speed up. iPayroll has benefited from its scale as one of the largest PAYE Intermediaries and with its dedicated tax team has been able to minimise the impact of such transitionary operational issues for their customers. The new Inland Revenue API’s used by iPayroll to seamlessly transmit PAYE returns reliably are the first of a number of new integrations that iPayroll has been working on with Inland Revenue to further streamline compliance for PAYE. These new integrations will allow iPayroll to reduce the amount of manual overhead needed to keep the Inland Revenues systems in sync with necessary tax information, easing compliance for its customers.
In Australia the Australian Tax Office (ATO) is also taking a similar API first approach for PAYE Tax submissions. Both iPayroll and its fully owned Australian subsidiary CloudPayroll have benefited mutually from the reuse of technology, processes and learnings across both jurisdictions.
Security is a major priority for iPayroll, to help address the cyber-security concerns of business owners. The ATO has already made two-factor authentication mandatory for payroll providers across the Tasman. Gleeson says all their Australian customers, using CloudPayroll, are now covered under this requirement. “They’ve adopted multifactor authentication quickly. As a result, there has been a dramatic reduction in customers being exposed to fraud or data breaches.”
There’s good news on this side of the ‘ditch’ too. iPayroll has mandated multifactor authentication for all its internal staff and, while it is currently optional, iPayroll is moving to make multifactor authentication mandatory for all Kiwi customers – ensuring they have similar levels of security as the Australians.
“We recommend that businesses look at enabling multifactor authentication to core business systems as this significantly reduces the risk to their business,” advises Gleeson, “for example if staff passwords or private email accounts are compromised.” As well as ensuring that your software providers have solid security policies and technical controls in place, he says it is equally important to invest in education of employees on how to be safe online. Important aspects to consider include password management, device management, data management, processing electronic communications, establishing identity and working with external parties.
“As a minimum make sure that you and your employees are vigilant about common risks in this increasingly interconnected world, and what to do if they think they have been compromised.”
iPayroll services businesses of all sizes and from all sectors. Its user interface (UI) is designed to make navigation intuitive and to save time.
“Clients have tools for HR functionality, document storage in the cloud, leave projections, top-up tools, and many others – all at no additional cost as they form part of iPayroll’s core system,” explains Gleeson.
“We pride ourselves on the calibre of our service though our highly trained and friendly support team who are always available on the phone, or by email if you prefer.”
When choosing a payroll provider, his advice is to look for value – not the cheapest price. Not all payroll providers are created equal.
“Largely the difference between a superior product, which offers considerably more value than a lesser solution, is often just the equivalent of a cup of coffee per week. So choosing an established, trusted, and proven payroll provider is essential.”
Incorporating Bartercard into your day-to-day accounting
Bartercard helps New Zealand businesses grow and achieve financial success through bartering unfilled capacity through its network using an electronic currency, trade dollars. It couldn’t be simpler. And what’s more, Bartercard can be integrated into a member’s existing accounting system, such as Xero, and MYOB via BankLink without any hassle.
When making a Bartercard purchase, members treat funds in the same way they would cash. There are no special tax considerations when using trade dollars. If there are funds in a Bartercard account, tax will need to be paid as if it was a normal cash amount in a normal bank account.
Similarly, the accounting treatment of assets bought on Bartercard is identical to assets bought in cash. Depreciation rates and methods remain the same. If an asset is sold, the depreciation recovered becomes a taxable income for the business.
GST is payable on business purchases with a valid tax invoice and data for income and expenses should be recorded off these account statements for calculating tax and GST.
Wages or drawings can also be paid to employees or directors using a staff card option.
A simple system to benefit Bartercard members
Bartercard provides business opportunities to members by converting unutilised trading capacity and excess inventory into business opportunities with new customers. It’s supplementary to cash business. At no point is any member obligated to take on Bartercard business over cash-paying business, giving them complete control. All members also have the ability to choose which products and services they sell through the Bartercard network, and they can adjust offers to the Bartercard community as it suits their business at any time, for example, incorporating seasonal peaks and lows.
A member using Bartercard for their business encourages other members to utilise their goods and services. This in turn will help them gain new business, create customer loyalty and increase profits.
Furthermore, unlike loyalty schemes and daily deal sites, trade dollars never expire.
All Bartercard members sign up to trading terms and the community is self-regulated. It’s therefore important that members are transparent and promote services and goods fairly to the network and customers.
Bartercard can open up your business to new customer markets, improve cash flow, reduce business expenses and clear idle and excess stock without having to discount. It’s easy to use and acts no differently to a normal bank account or line of credit.
For more information on how Bartercard can benefit your business, visit Bartercard.co.nz or contact 0800 639 287.
All information contained in this article is true and accurate to the best of the author’s knowledge. No liability is assumed by Bartercard, authors or their employees for any potential liability suffered by any person relying directly or indirectly upon this article. It is recommended clients consult a Chartered Accountant from the Bartercard directory or their own tax specialist before acting on this information.
Accounting matters: some simple truths
In a busy year for accounting and payroll compliance, GoFi8ure’s Executive Director Lisa Martin dishes up clarity for Business Owners.
How are Business Owners letting themselves down in 2019?
From Lisa Martin’s viewpoint it’s through the inability to plan, a failure to grasp the fundamentals of business planning, and the old chestnut of ‘being busy being busy’. “All of which means you can become reactive, not proactive.”
It is a failure to plan cash flow, as well as understand financial weaknesses and key metrics that is letting owners down, she says. “Basic things like how long, on average, does it take for customers to pay me? And how can I improve on that?”
In recent times many Accountants have morphed into business coaches. GoFi8ure, whose genesis was bookkeeping, now offers a ‘one-stop accounting shop’; one of a new generation of transformational accounting agencies which regularly sits down with clients to discuss concerns, answer questions and provide clarity – in layman’s terms and without an information overload. All for a fixed fee.
Not surprisingly payday filing has been, and still is, one of those discussion points.
Six months after its introduction, Lisa says it’s an ongoing issue for some Business Owners out in the regions – particularly those that have minimal contact with their Accountant and are largely ‘left to their own devices’.
“There’s a heap of horror stories,” Lisa says. Sometimes it’s a case of not knowing what to do, so let’s do nothing at all – until the IRD comes calling and produces the desired reaction.
The 20th of the month is crunch-time for payday filing. There are still teething problems associated with filing, and again, Lisa believes its smooth execution all comes down to good planning.
The landscape for Bookkeepers and Accountants has changed. Services have been combined through agencies such as GoFi8ure, and Lisa describes Bookkeepers as the “new-found in-house management Accountant”. They have the real-time data to control what is happening on a daily, weekly, monthly basis, and allow faster reaction to cash flow management issues.
Their brief now extends to advising, reporting, and even managing anti-money laundering requirements.
Choosing between the new breed of Bookkeeper and a traditional Accountant could simply depend on the size of your business. If you have multiple Shareholders and Stakeholders, you will probably require both, and working in tandem, says Lisa – as a Chartered Accountant is vital for audit and assurance reporting.
“Remember, an audited set of accounts carries a lot of weight.”
Do your homework, advises Lisa. “Ultimately [choosing an accounting partner] is all about developing a strong relationship and building trust.”
New payroll requirements don’t have to be a headache for Kiwi small business owners
Many employers manage their payroll manually in a spreadsheet, but this can be a particularly painful process. Having to calculate different pay and taxes, tracking leave and managing expenses can be confusing, and there’s always the risk of human error.
Previously, Inland Revenue required employers to manually submit payroll information once a month for tax filing purposes.
Earlier in the year though, Inland Revenue introduced payday filing requirements, which meant employers had to file these reports every time they paid their staff. For some small business owners, that meant going through this manual process every week.
But, payday filing doesn’t have to add another pain point to managing your business. It can be made a whole lot easier with an online accounting and payroll system. To help simplify this process, Xero built a direct integration to IR’s online system, so payday filing reports can be sent with the click of a button. Xero has crunched the numbers and found that using its payroll system business owners doing weekly pay-runs could save at least 16 hours a year in time spent doing administrative tasks with its direct link to IR. That’s two full working days – valuable time that could be spent working hard on the business or taking some time to hang out with family.
Haley Wilson, founder of accountancy and bookkeeping firm My Two Cents, often has clients telling her after using Xero, they can’t believe how much time it’s saved.
“They’re right, Xero is a very simple, intuitive system. And with the help of an accountant or bookkeeper, you can have peace of mind that you’re not missing anything,” says Wilson.
Before My Two Cents, way back when she started her business career, Wilson was using another accounting system. Getting tired of entering the same data over again, she tried Xero in the hope of becoming more efficient.
“It was so easy to use and I found I had far more time in my days. I thought I must be leaving something out,” she says. “But it really was that simple. No more entering the same information twice; everything is so seamless.”
With Xero’s easy-to-use payroll software, employers can send payslips to staff and organise their employee information, as well as manage leave requests and timesheets all in one place.
Wilson says her clients who are using Xero Payroll to pay their staff are relieved at how simple payday filing is. “Everyone assumed the new requirements would double their workload,” she says. “But in fact, it actually cuts down the time it takes to complete and file a pay run”.
Keeping your business in line with government regulations can be a real challenge. Xero wants to make payroll less of a headache and more of a walk in the park for small business owners.
Xero’s accounting software is cloud-based and provides a secure place for all your business information. This reduces risk and is more secure than working off different versions of an offline spreadsheet or relying on other manual systems. Managing payroll and accounting in the same solution significantly reduces the risk of human error that is common with manual data entry.
The Xero payroll add-on automates a lot of the time-consuming, admin tasks for business owners, while meeting the latest security standards. With an automated and connected solution, you’ll have peace of mind knowing that you’re compliant with Inland Revenue payroll requirements all thanks to Xero.