Succession planning for small businesses


Rob Young, whose company Platform 1 works with business owners on ensuring they get the best possible return when selling their business, was recently interviewed.  

Click here to listen to sound file.

Rob, what are the biggest mistakes people make around succession planning?

Not starting early enough.  Generally, an owner will wake up after New Year's and say "I've had a gutsful, I'm going to sell it," and they will ring a broker on the 3rd of January and expect to have the business sold by the middle of January!  It just doesn't happen.  Planning needs to start two to four, even five years out.

What are the key things that people need to think about and when?

What options they've got for disposing of their business.  We think there are five different ways to do it.
  1. Close the business down and sell the assets
  2. Sell to a family member
  3. Sell to an employee
  4. Just a straight sale to an outside party
  5. The Platform 1 model.
  6. How would you characterise the Platform 1 model?

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It takes guts to start a business.  But to succeed also takes a strategic mindset.

What does that mean, exactly, and how would you know if you're thinking strategically enough or not? 

One way is to imagine you're about to put your business on the market. 

What would a potential buyer hope to see in your business? 

What would you add or take away to make it more attractive?

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Employment New Zealand (as part of the  Ministry of Business, Invovation and Employment (MBIE)) has created a free interactive website where you can learn about your responsibilities and rights as an employer or employee.

Employers can access free employment learning modules and learn essential information about:

Working arrangements
  • Different types of working arrangements and the importance of getting it right
  • How to identify the correct type of Working Arrangement for each of your employees responsibilities you have regarding trial periods
  • How to establish an employee's right to work in New Zealand, and what is required of you as an employer

Annual leave/holidays: from calculations to payments

  • Key things to know about employees' Annual Leave/Holiday entitlements and calculating holiday pay

Read more…

Parental leave puts an onus on employers



Prime Minister Jacinda Ardern probably won't take 18 weeks' paid parental leave when she has her baby this autumn, but New Zealand law says she's entitled to it.

Staff who've worked for you or any other employer for an average of at least 10 hours a week for any 26 weeks of the year preceding the birth or assumption of care of a child can take paid parental leave so long as they are the primary carer of the child and take leave to care for the child.

Whether that staff member can take extended leave without pay will depend on whether they have been employed with you for an average of 10 hours a week for the previous six months.  If so, they can take six months' leave (in total, i.e. including primary carer leave). If they've met these criteria for a full year, their total leave is one year.

If employees give the right notice for the right parental-leave reason, you have to keep their jobs open until they return to work.  If they're taking more than four weeks' parental leave, you have to keep their jobs open, unless those jobs are defined as key positions or there's redundancy.

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What shape are your end-of-year accounts in?


The end of the financial year can be either stressful or a seamless part of what you do.

Ideally, your end-of-year accounts will confirm what you think your business has been doing for the past 12 months.

Be a good Scout to avoid end-of-year migraine

Being prepared is the key to avoiding end-of-year financial drama and stress.
  • First make sure you have all the documents we'll need, such as PAYE statements, bank statements showing interest earned, dividend statements for shares, and receipts for expenses.
  • Don't forget receipts for charitable donations.
  • Look at writing off old debts. Scrap redundant or worthless assets, so you get a deduction on your books.

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Safe as houses: Stop Press!



Revenue Minister Stuart Nash has confirmed the bright-line test on residential property sales will be extended from two years to five years.

At present, income tax must be paid on any gains from residential property sold within two years of acquisition, with some exceptions (such as the family home).

The extension means that profits from residential investment properties bought and sold within five years will generally be taxable.

To make this happen, changes to law are currently making their way through Parliament.

Read more…

Business health check


With the end of the tax year approaching, check your systems and documentation now and plug any gaps.

A good approach is to dig out the EOY checklist you got from us last year and use it identify any information you need to start gathering now.

That way, you won't be rushing frantically later when we need the information.

Take Rob Young's advice and check that your business is fit for sale.

If it relies fully on you, plan a one-month holiday in a year's time and start setting things up to run without you.

Ask us and your lawyer what we'd do differently if we were you.

And focus on profitability rather than minimising your tax liability.

Income tax returns about to get easier



In April, IRD will also introduce payday reporting of PAYE information – that is, employers will need to report employee payments to Inland Revenue (IR) every pay run.

To give you time to put systems in place, businesses will have a year before it becomes mandatory.

Hand in hand with that, IRD will begin collecting PAYE info for the 2018/19 year to allow pre-population of income tax returns.  That should make life a bit easier for SMEs.

What's more, the release of Working for Families is being brought forward to 2019, to coincide with tax returns being done under the new system, which – again – will make things simpler for SMEs.

Let us know if you have any questions about the upcoming changes. 


One of the first questions business owners ask when a new government enters power is what changes, if any, are coming in the area of tax.

Revenue Minister Stuart Nash provided a good steer on that when he addressed Chartered Accountants Australia and New Zealand last November.

The biggest question, he said, is whether our current system is fit for purpose. 

A week later, the government demonstrated its commitment to finding an answer by announcing the tax working group, to be headed by Sir Michael Cullen.

Its brief is wide and includes specific emphasis on GST (but is unlikely to include GST rates) and the overheated housing market (almost certainly by focusing on speculative property buying).

Read more…

New law will make dirty money easier to spot


Money laundering is big business in New Zealand. 

Every year $1.35 billion of fraud- and drug -related money is laundered through seemingly legitimate businesses.

In response, the Government introduced specific Anti-Money Laundering and Countering Financing of Terrorism legislation to address this risk.

Previously, only a few types of organisation had to comply with the legislation.

Following amendments to this legislation passed last year, it is now confirmed that this legislation extends to these groups taking effect from these dates (or earlier if the Government legislates by an Order in Council):
  • 1 July 2018: lawyers, conveyancers and businesses that provide trust and company services
  • 1 October 2018: accountants who provide particular kinds of business services
  • 1 January 2019: real estate agents
  • 1 August 2019: businesses trading in high-value goods, sports and racing betting.
If you are in any of these categories, of course you must make sure that your business complies. 

Read more…

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