Spotcap’s accounting partner, Beany, is doing a series of guest blogs to help business owners navigate important business decisions throughout these challenging times. This weeks’ theme is cash, a key focus for any business, especially now.
How to make key business decisions in an uncertain environment?
Part One: Cash
Sue de Bievre | Beany
Making decisions when there is a high degree of uncertainty is a challenge. How can you plan and decide when there are so many variables? How much will your turnover fall? When will it recover? How does this impact your team? And to compound the uncertainty, stress inhibits good decision making as our frontal cortex shuts down when we are faced with external threats. This is the part of the brain we use for planning.
Every business owner is faced with this. This is the first of three articles on how to navigate this uncertainty and be proactive. Beany looks after thousands of small businesses all across New Zealand. This three-part series attempts to build a framework for decisions which can be applied to your specific situation.
So, part one, if in doubt.
Preserve your Cash
Most commentators are predicting a period of deep uncertainty and constrained cash for at least 12 months, probably 18 months. The name of the game is survival. The businesses that survive will then be able to thrive when trade picks back up again. Cash is no longer king, it is God.
1: As hard as it is, take a long hard look at all your expenses.
2: Cut all expenses which are not directly related to your core business.
3: Talk to the IRD.
The Beany team met last week with the IRD to understand the current position. Our best advice at this moment:
- You must keep filing your returns, even if you can’t pay
- You need to ask for interest & penalties to be waived. (they won’t just do it)
- You can ask via your MyIR for a tax payment plan or interest to be waived – this will probably not be checked as long as you are proposing to pay within 2 years. In other words, they will accept your proposal.
- The IRD is not differentiating between different tax types so GST, PAYE and income tax are all the same in terms of priority.
You can also request a deferral of tax payments or remittance of interest or penalties:
- You can apply as a group for your company and shareholders under one arrangement.
- Secure mail needs to be sent via MYIR detailing all the tax payer’s IRD numbers and the taxes you want interest/penalty remitted on or payment deferred.
- Details of how you are going to pay your tax.
When you’re making your decisions, think about how much cash you need to survive and make the hard calls.
For more information, resources and advice during COVID-19 visit our business hub or give us a call on 0800 444 540.
Originally published May 21 2020 , updated May 21 2020