Your small business Christmas checklist

Christmas lists aren’t just for kids and Santa Claus. Before summer arrives, tick off our small business Christmas checklist to ensure you’re in the best possible shape for the year ahead.

Plan cash flow

Make sure your business has enough funds on hand to pay suppliers over Christmas and January, remembering your tax obligations in the first month of the year.

Prepare your cash flow forecasts well in advance and consider holding off on big investments, renovations, and upgrades until well into 2024 if things are tight.

Try Christmas marketing

As we all know, people love to spend money at Christmas, so why not take advantage of the mood with a personalised Christmas promotional campaign? It’s not too late to send a marketing email to your customers thanking them for their business – and it can help build brand loyalty.

Review your website

Web traffic tends to spike over Christmas, so make sure your website is working well without any glitches before you clock off. E-commerce problems can be hard to fix while everyone is away, so ensure web and mobile sites are up to speed.

Check your inventory

Don’t guesstimate your inventory or leave things to chance over the summer; make sure your business has enough stock to meet customer demand. Check how much stock you used last Christmas for a guideline.

Sort out staffing schedules

Getting to Christmas and discovering no one is rostered to cover late December and early January is a nightmare scenario. Avoid that worst-case outcome by planning ahead with your staff. Ensure employees take turns to cover the most inconvenient times of the year to keep things fair.

Chase up invoices

Chasing up late payments is a pet hate for every business owner. If you have overdue payments in the run up to Christmas, chances are the situation will get even worse in the New Year. Make sure you get paid in full before the summer break.

Get some rest

Christmas is an important time to get some well-earned rest, so schedule time to relax! A recent study found that New Zealand workers are more likely to suffer burnout than in any other country. Take the time to reset so you can walk into 2024 with the right mindset.

FBT vs PAYE vs Entertainment Expenditure

 

 

In the context of Christmas parties, gifts, and staff bonuses, various taxation rules come into play, namely the entertainment rules, PAYE, and FBT.

The entertainment rules place a 50% deductibility restriction on certain expenditures related to recreational events, such as Christmas parties or corporate hospitality. This limitation is grounded in the recognition that there is typically a private enjoyment aspect to such events. Both on-site and off-site consumption of food and drink can fall under the purview of the entertainment rules.

FBT (Fringe Benefit Tax) comes into play when non-cash benefits are provided to employees as part of their employment. While there is some overlap with the entertainment rules, the latter generally takes precedence over FBT, except in cases where the employee can choose when to enjoy the benefit or if the benefit is enjoyed outside New Zealand and not in the course of employment duties.

PAYE (Pay As You Earn) rules apply to monetary compensation provided to employees, covering bonuses, gratuities, and reimbursements for personal debts. The PAYE regime captures direct payments by employers for personal expenses incurred by employees.

 

Scenarios and Examples:

  • Christmas Event Costs:

Expenditures related to off-premises Christmas events, including venue hire, food, and drink, fall under the entertainment rules, allowing a 50% deduction. This also applies to incidental costs like glassware, waitstaff, and music.

  • Employee Vouchers:

If an employer gives vouchers for a restaurant meal as a gift, and the employee can choose when to use them, the cost of the voucher falls under FBT. However, reimbursing employees for meals would be subject to PAYE.

  • Gifts to Employees:

Most gifts, including gift baskets with food and drink, are subject to FBT as they can be enjoyed at the employee’s discretion. Some benefits subject to FBT may qualify for exemptions, such as the de minimis exemption.

  • Staff Cash Bonuses:

Cash bonuses paid to employees are taxable under PAYE, and they should be taxed at the ‘extra pay’ rate. These bonuses are considered payments made in connection with employment.

  • Company Vehicle for Personal Travel:

FBT arises when a company vehicle is available for personal use by an employee. If an employee pays for their petrol and provides evidence to the employer, these costs may be deducted from the taxable value of the fringe benefit, reducing the FBT payable.

  • Gifts to Clients and Customers:

Oddly, the entertainment regime is considered to apply not just to food and drink consumed at a function but to any provision of food and drink. Inland Revenue specifies that certain items in a gift basket may have different tax outcomes, with some being fully deductible and others only 50% deductible.

 

Still Confused?

In case of any confusion or questions, it is recommended to consult with usual advisor.

 

 

What new migrant worker law means for your business

Do you employ migrant workers? You need to be aware of the Worker Protection (Migrant and Other Employees) Act, which comes into force on January 6.

The law, which amends the Immigration Act 2009, Employment Relations Act 2000 and Companies Act, will introduce a tough penalty regime to deter the exploitation of migrant staff.

What you need to know

  • Under the law, employers must comply with requests from the Labour Inspectorate within 10 working days, including providing any employment-related documents.
  • Employers that fail to meet the 10-day deadline can be hit with an infringement notice, so be mindful of the changes.
  • The new law grants the High Court powers to disqualify a person from being a New Zealand company director if they are convicted of exploitation of unlawful employees and temporary workers under the Immigration Act.

If you employ migrant workers, be aware of the forthcoming changes and ensure your paperwork, including HR documentation, is easily accessible and in good order.

Give us a call if you think the new law could affect your business.