Technology is having profound impact on retail. Retail precincts form the heart of small towns but the rise of Amazon and other retail websites are putting retail stores all over the world under threat.
Small countries like New Zealand, lacking in scale, are particularly affected. We’ve seen a push for legislation that adds sales tax to overseas purchases to level the playing field, but I’ve always thought a better approach was to change our mindset and compete globally.
It was delightful to see this TV One article over the weekend where Kathryn Wilson has blended a beautiful retail experience with technology.
Also some great advice from eCommerce NZ on capturing and measuring data to refine what works.
I’m sure many of us feel a little upset when we drive through communities and see empty retail spaces. Rethinking retail so customers are not just in your town but your country, or even the world, can flip this situation around. We can create new location-independent jobs that require great design, marketing and logistics skills.
What I loved about the story was how proactive Kathryn and her team are. There are plenty of marketing specialists and web consultants in every town ready to help retailers navigate this new world.
I hope Kathryn inspires many more retailers to start the journey.
Did you know you can claim for cleaning costs and wear-and-tear on your furniture at your home business? Xero Australia Managing Director Chris Ridd explains what you can and can’t deduct.
As the name suggests, a home-based business is one where you operate the business at the home or from the home.
That said, you don’t have to do your work at home to be a home-based business. For instance, a house painter would do most of their work elsewhere, but if they didn’t rent or own other premises other than the home, then that would count as a home-based business as well.
Generally speaking, a home-based business can claim all of the deductions that any other SME can; yet there are also some specific deductions you should be aware of.
There are broadly two types of expenses you can claim related to your home business area: occupancy expenses and operating expenses.
Parts of the home you use for business
Occupancy expenses include rent or mortgage interest, council rates, land taxes and home insurance premiums.
Before you can claim occupancy expenses, you have to pass the Australian Tax Office’s interest deductibility test. This means you must have an area of your home set aside exclusively for your business activities, such as an office or workshop. When assessing this test, the ATO will consider factors including whether you have a sign identifying your business at the front of your house; whether or not the business area is also suitable for domestic purposes; and whether it is used regularly for client visits.
If you pass the test you can claim the proportion of your home mortgage or rent which corresponds to the amount of space you use for your business.
For instance, if the floor area of your home office or workshop is 15 percent of the total area of your home, you could claim 15 percent of your rent or mortgage interest, council rates and insurance.
Deducting part of the home mortgage sounds great, however there’s a potential sting in the tail you need to be aware of. You might have to pay capital gains tax on the sale of your home if you pass the interest deductibility test. This can apply if you ran a small business from home, even if you never claimed – the issue is how much you transformed your home into a place of business.
Operating expenses: The costs of doing business
It’s a great time to be a small business. The local and global economy have stabilised after the financial crisis, owning a business can be a fantastic lifestyle choice, it can be a way to shore up your investment future, and New Zealand is ranked third in the world for ease of doing business. Over 97% of NZ businesses have fewer than 20 employees, contributing almost 30% of our GDP, meaning there is a huge network of peers to collaborate with, learn from, and inspire each other.
With the recent release of the government’s 2014 Small Business Report, the Xero team are really proud to see that we are championing many of the core themes outlined in the paper. For example, spending time growing your business and not wasting hours managing your financials and navigating red tape.
I’m a massive NZ Inc fan and a massive champion of growth. If you’re not going down the growth path, whether from a micro business level or as a country, the other road looks awfully painful. With our small businesses being such an important part of the local economy, what concerns me are the challenges that are clearly still being faced which impede the ability for NZ businesses to compete and grow.
- The New Zealand small business market is not growing, which is troubling.
- The lower rate of innovation amongst our SMBs compared to offshore companies.
- We’re in a global marketplace these days, competing hard for products and services as well as talent and investment dollars. We can’t afford to be on the back foot.
- The internet has gone way beyond just sharing and finding information (our predominant uses). Leveraging the cloud for collaboration is key. Despite New Zealand being a village, we’re less collaborative than our SMB peers globally.
Why is growth important? Because the statistics show it’s our smallest businesses that are significantly more vulnerable to ‘death’. There are a number of ways to reduce the likelihood of business death;
How do you ensure that ‘death’ doesn’t happen in small business?
- We MUST free up our SMBs to focus on growing and adding value into their businesses. This means a complete commitment to removing red tape which burdens a business owners operation. Reducing unproductive time means the lifestyle aspects of the business remain possible. I am highly supportive of the gains our government is making in this space, it’s just that the proposed ‘ten year’ plan is too long!
- To compete locally and globally, we have to increase small businesses access to capital. The newly created R&D tax loss initiative from this year’s budget is one policy that will help small innovative companies.
- To export small businesses need confidence, talent, and networks. The export market is perhaps the most challenging area of them all, and is the biggest vulnerability for us as a nation when you consider global technology and consumer trends.
The one-day event was primarily focused on reviewing and discussing a comprehensive whitepaper that has been been recently developed by the IPA in collaboration with Deakin University. The whitepaper looks at a range of key issues facing small businesses in Australia, and aims to provide substantive policy input to the Federal Government. The document is due to be submitted to the Federal Government in December.
Casting my eye around the room, I saw a who’s-who of influential people in attendance, so I knew this was going to be a good, productive session. There were representatives from government, business, regulators and industry bodies, including Australian Small Business Commissioner (Mark Brennan), ACCC Deputy Chairman (Dr Michael Shaper), CEO of the Australian Chamber of Commerce & Industry (Kate Carnell AO), as well as senior executives from NAB, REIA, Telstra, Family Business Australia and more.
Central themes of the day
Six key topics were covered over the course of the day, and each one was fleshed out into a well-considered list of new initiatives and recommended policy changes that can positively impact and invigorate the small business sector.
- A simplified and targeted small business tax system which supports small business growth
- Australia’s small business are appropriately regulated – providing a safety net without stifling entrepreneurship
- Competition policy which supports and promotes small business by creating a level playing field
- Adequate and affordable access to responsible finance for small business
- Promoting productivity through innovation and use of technology (such as Standard Business Reporting)
- Links to our regional trading partners being facilitated to open export markets for small business
The Honorable Bruce Billson MP, Federal Minister for Small Business joined us as the beginning of the day. His passion for this whitepaper was clear. And so it should be, with his department declaring an ambitious agenda to cut red tape in small business to the tune of $1B per annum during the Liberal Party’s current term in government.
Minister Billson made some impressive announcements about reducing SME reporting burdens from 260 down to 26, and the government’s recently-announced ‘Digital by Default’ initiative, which is all about small business embracing online and cloud technologies to create more seamless exchange of data with government bodies. It was also great to hear Minister Billson give a shout out to Xero, commending us for our ground breaking efforts in embracing SBR in our recent tax platform. Continue reading ›
Following hot on the heels of ASB, Kiwibank has also launched support for next-gen banking with Xero, providing further validation of the vision to bring internet banking and accounting software closer together.
Kiwibank has added support for automated provisioning to their business banking customers, who can now quickly set up feeds for Xero. They can also send payments from Xero back to internet banking for approval.
By creating connections between Xero and the data and systems provided by the banks, businesses can have better control of their financial position. Plus, with the help of their advisors, they can now react more responsively to changing business dynamics.
But our vision goes beyond the simple flow of transaction data from the bank to the accounting system. Our platform will allow customer instructions to be seamlessly sent to the bank from Xero, which allows accounts and feeds to be created automatically. This removes the traditional friction associated with dealing with banking systems, while providing better visibility and control over a small business’s financial position.
And this is just the beginning. When customers connect Xero with the banks and their systems, their businesses can take advantage of additional banking products and services. This will allow them to react faster than ever before, and give the banks more opportunities to help their customers be successful.
By establishing relationships with ASB Bank, TSB and now Kiwibank, Xero is opening up new opportunities for small businesses to interact with their banks. This will save them time, improve their financial visibility and, ultimately, give them even more control over their business and its financial needs.
To use this service, sign in to internet banking and visit Your Settings & Services, click on Xero Services and follow the instructions.
And for our Australian customers, direct feeds have arrived for:
Rural Finance – provides banking services to the Victoria region, and in particular to the agricultural business sector. More details are in our Help Centre. Feeds are available now.
Maitland Mutual - services clients in the Maitland and Hunter valley regions of New South Wales, and are one of the oldest building societies in Australia. They’re providing feeds to Australian customers. Feeds are available now.
IMB (Illawarra Mutual Building Society) - is the oldest building society in New South Wales and the third largest building society in Australia. We are currently transitioning existing IMB customers over to direct feeds – we’re accepting applications now and feeds will start on the 9th of July. More details are available in the Help Centre.
Our current list Australian direct feeds is available in our Help Centre. More to come soon.
We’ve released updates today in payroll make it even easier to manage your end of financial year for Australian payroll. We’re holding free online payroll training sessions to get you ready and give you an opportunity to ask any questions. Book now to make your payroll end of year as easy as possible.
Payment Summary Annual Report
You can now lodge your payment summary annual report online from payroll. If you’re an employer you need to lodge this report with the ATO each year. Your report includes all the payments you made to your employees and the tax which was withheld. You can make it easier for your employees to lodge their tax returns by lodging your report early and electronically.
Lodging your payment summary annual report online from payroll is the quickest and most secure way to meet your obligations. All you need to lodge online from payroll is an AUSKey. This is a secure login that identifies you to the government on behalf of a business. For more information access our Help Centre guide.
Payment Summaries can be emailed to your employees from payroll or made available for them to download from My Payroll. They need to be issued to your employees by the 14th July and the annual report lodged with the ATO by the 14th August.
Updates for Auto-Super
We’ve also released a number of changes to further enhance Auto-Super in payroll including:
- Changes to ensure your compliance with the SuperStream data requirements.
- The ability to include a negative super accrual to ensure that any adjustments made, e.g. overpayments, are included within the total super payment owing for that employee.
- Plus other smaller tweaks you won’t see like support for international phone numbers when using SMS authentication.
Starting the new financial year ready to go
The Superannuation Guarantee (SG) rate increases from 9.25% to 9.5% on the 1st July. Moving relevant employees to the new rate has been automatically taken care for you so you don’t have to do anything in payroll. We’ve also updated the payroll tax tables as we do every year so you don’t have to worry.
If you like what you see and haven’t yet made the change to Xero check out our conversion partners or contact to one of our certified advisors. We have some exciting updates coming soon to Payroll and we’ll share these with you as soon as they’re ready.
For full details please check out our release notes.
Today we’re pleased to announce the release of Federal e-file in US Payroll. Back in April we released the first version of Taxes & Filings. This provided you with signature ready completed tax forms to ensure you could meet your filing obligations.
Easily meet your Federal payroll tax obligations with Federal e-file
With Federal e-file, Xero creates and electronically files your Federal payroll tax forms for you. This allows you to file with the IRS online, at anytime from anywhere to meet your filing obligations. Federal e-file is available to customers on Premium pricing plans. To use Federal e-file it’s required that you enroll your business with Xero. For instructions on how to enroll please click here.
Although we’re not yet at our goal of making everything electronic, we’ve achieved a key milestone in this release with Federal e-file. We’re now focused on bringing you Federal electronic payments and other key improvements to continue to strengthen the experience.
Our vision is to provide you with the worlds best payroll experience for small businesses, in all states, allowing you to manage your payroll; easily and without fear. However, at this time we have no plans in the short term to support more states as we focus on the experience in the current states. With our Payroll Add-Ons you can still benefit from using Xero by using one of our integrated partners to manage your payroll.
For the last few years I’ve been in the US building a very small team whose sole focus is on delivering new features that drive additional value to our customer base. Innovations like Online Invoicing and Files have come out of this team. Today I’d like to introduce Smart Lists.
Having run my own small business before starting Xero, and after talking to a lot of our customers over the last eight years, I’ve learned quite a bit about how small businesses work. Actually, both the most amazing, and the most frustrating, thing about building software for small businesses is that while there are a lot of similarities across small business, every business is unique in some way. It’s beautiful. And the reason why we wanted to build them beautiful software.
When I ran a business the one thing that always struck me was how hard it was to find new customers. It was much easier making my existing customers extremely happy so that we could do repeat business. What I’ve realized is that for many small businesses, this is their prefered approach. In fact, according to Bain & Company, it costs six–seven times more to acquire a new customer than to retain an existing one. This is a key metric for small businesses of all types, and it highlights the importance of the connection you have with your existing customer base.
We’ve built Smart Lists because marketing to your existing customer is important. Smart Lists is all about unlocking the treasure trove of information you store in Xero about your customers – what they’ve purchased, how much they’ve spent, the last time you invoiced them, where they’re located and so on.
Smart Lists is essentially an advanced search over your existing customer base, using the accounting platform as the search engine. This search lets you generate highly targeted lists that you can then use to sell to, chase for payment, gather information about, or basically anything else you want!
Many small businesses don’t have Customer Relationship Management (CRM) software. With Smart Lists, you’re able to communicate with organisations that are already your customers, using the data you’re updating everyday – it’s far less hit and miss.
This morning we released a ton of updates to Xero. Here are some of the highlights – check out the Xero release notes to see the rest.
Xero TV on the login screen
We now display education videos right on the login screen making it easier for all users to be smarter with Xero, and discover new features. Our education team has been investing significantly to create useful content for Xero TV and it’s the best place to learn about Xero.
Support for four decimal places on unit prices
We’ve heard you! Plenty of you have been asking for Xero to support unit prices with more precision – a bit more to it than you might think but we hire smart people, so good to be able to tick this off. For most of you it will just work – however, if you use DOCX invoice templates you need to make a small update.
The end of the financial year is approaching in Australia and small business owners need to start planning their tax strategies. Here are our tips on how to reduce your small business tax bill by timing your income and expenses.
We all know that when you run your business, you want to maximise income and keep expenses as low as possible.
But when it comes to tax time you should aim to do the opposite – minimise income and maximise expenses in order to reduce your assessable income and the amount of tax you have to pay.
Of course, you don’t do this by turning away customers or needlessly spending money!
Instead, it’s all in the timing. In other words, you bring forward expenses into the current tax year, and defer income into the following tax year.
While you might eventually have to pay tax on the money you save, in the meantime the extra money is yours to use as you see fit – to invest back into your business, to reduce your borrowings and hence your interest payments, or to earn interest in the bank.
Crunch the numbers: cash vs accruals
Many small business-owners start out with cash accounting – that is, recognising the income and expenses in your business when they are physically paid.
Timing strategies work best with accrual accounting so, if you haven’t already, you might consider making the change.
Accrual accounting recognises income and expenses when you issue an invoice or receive a bill, not when you receive or pay money. This accounting method creates debtors and creditors, so it’s a good idea to use online accounting software like Xero, which makes it easy for you to keep track of your business’s cash flow and its true financial position.