Thinking about hiring your first employee? Reaching a point in your business where you need an extra pair of hands is a milestone to celebrate. It is also a time when you recognise that in order to grow your business, adding new team members follows along naturally.

Before you start asking for resumes, there are some steps to follow first:

  • Assessing if you are truly ready to hire your first employee
  • Identifying the role, they will play by creating a job description
  • Calculating how much it will cost you to hire an employee
  • Deciding how you will manage the hiring process
  • Learning about your employee’s legal rights and entitlements
  • Choosing a payroll system
  • Onboarding your new employee

We’ll cover each of those here today.

Are Your Ready to Hire Your First Employee?

How can you tell when the time is right to hire your very first employee? Here are some signs to look out for:

  • You are so busy that you can’t do all of the work yourself
  • Your business is growing and your cashflow is above what you planned for
  • You are ready to grow your business but can’t do it by yourself
  • Your customer service levels are dropping as you can’t provide excellent service by yourself anymore
  • You need new skills to work alongside yours to grow your business
  • There are new services or products you want to offer, but you don’t have the skills to do them yet
  • Your free time has completely disappeared, and you’d like some of it back

It’s going to be a combination of these signs that demonstrates to you the need to considering hiring your first employee. Talk things over first with a trusted advisor if you are unsure if it’s the right step for you and your business.

Writing a Job Description for Your First Employee

When taking on a new employee, you need to have a very clear understanding of what you want them to be doing. This means nailing down the specific roles they will be performing for your business. Creating a job description will help you identify their day to day responsibilities and tasks, the skills, experience and qualifications they will need to perform the role, the hours they will work and what their salary will be. You will also need to be clear on:

  • The type of employee they will be – casual, contractor, permanent, part-time, full time
  • The amount of responsibility you are happy to delegate to them
  • What resources you will need to have before they start, such as equipment, insurance, and wages
  • The specific skills they need to be able to demonstrate they have
  • What training you are prepared to offer, or if they need to be fully trained already
  • The number of hours it would take to do specific tasks each week

All of this information can be put together into a comprehensive job description which can be given to prospective employees and help you create the advertisements for hire too.

How Much Will It Cost You to Hire Your First Employee?

Here we’re not only talking their wage or salary, but also holiday pay, KiwiSaver contributions, business insurance, training, new equipment, uniforms and recruitment costs. The Ministry of Business, Innovation and Employment’s website has a handy Employee Cost Calculator which is free to use and can help you identify how much it will cost.

How Will You Go About Hiring Your First Employee?

You’ll need to decide if you will manage the entire recruitment process yourself, or if you will hire a professional to help you do this. Besides your budget, there are a few things to consider if you should use a recruiter to help you or not, depending on how confident you are with:

  • Writing job advertisements
  • Analysing CVs
  • Performing interviews
  • Making an offer to an applicant
  • Creating employment contracts
  • Checking references

There are pros and cons for both, but for your first employee, we’d recommend getting some support when you do it.

Understanding an Employee’s Rights & Responsibilities

Employment legislation is present for a purpose: to avoid employees being used and ripped off. Neither of you can opt-out of these entitlements, and they are valid regardless of any signed contract. To understand fully the minimum rights of employees, we recommend taking a read of the Employment New Zealand website’s employment rights guide. Generally speaking, an employee’s rights include:

  • Pay at or above the minimum wage
  • Paid time off and public holiday entitlements
  • Sick and bereavement leave
  • Maternity leave
  • Overtime pay
  • Leave for jury service
  • A safe working environment free from discrimination

Once again, a recruitment or human resource professional will be able to assist you further with these, helping identify specific ones in your unique situation too.

Choosing a Business Payroll System

It may not be too much of a biggie with just one employee, but what if your business continues to grow to five or twenty employees? A payroll is a list of your employees and contains information about the money you pay them, including tax deductions. You can run your payroll by:

  • Good old traditional pen and paper spreadsheets
  • Outsource to a payroll professional such as ourselves
  • Use a DIY software which can work out things for you, but you need to make payments
  • Full-service software which does everything including making payments on your behalf

Doing the payroll means you’ll have to do things such as calculate gross pay, pre-tax deductions including KiwiSaver, PAYE, taxes on benefits, student loan repayments, pay the wages, file and pay taxes and deductions, plus keep all of these things on record for at least seven years!
One of the things we’re here to do is to help you decide which payroll system suits you best, and even assist you with the running of it if required too.

Onboarding Your New Employee

The contract is signed, sealed and delivered. It’s time for your new employee to start work. This means you’ve already organised the equipment they will be needing to use, gotten all of the digital systems ready such as IT logins and let your insurer know they need to adapt your coverage. You’ll also have to start an employee file, where you keep information about them and their role, plus all of the specific onboarding requirements:

  • Health and safety policies
  • Dress codes
  • Hours of work
  • Detailed training required
  • Access to the workplace and other tools
  • Organise holidays and leave
  • Introducing to customers
  • How reviews will be done

Many businesses spend time creating a written onboarding process to make things easier for the first and subsequent employees.

Here at MBP, we like to think of ourselves as our client’s right-hand helper (not man, cause we’re all equals here). From accounting to bookkeeping services, business development and planning, we do it all. Get in touch with us today or check out our business packages to learn more about how we can help you grow your business.

With all work and no play making Jack a dull boy (plus stressed, unhappy and exhausted), is having great work-life balance necessary? Today we look at understanding what having a work-life balance means, plus five simple tips on how you too can achieve one.

What is a Work-Life Balance & Do I Need One?

Feeling like you never spend quality time with your kids anymore? Are you only home to sleep and eat nowadays? Finding that socialising with others just doesn’t rank on your to-do list anymore? Well, you may have joined the ranks of many business owners who suffer from a poor work-life balance.

It’s the ability to live well and work well which many of us struggle with. A work-life balance is about feeling fulfilled and successful both in your working and private life. It’s doing the things you feel are important: having meaningful enjoyment and achievement every single day at work, with family, with friends and for yourself.

In other words, it’s about winning.  Sometimes winning at everything just seems like too much work, and you take a loss at something to achieve something else. Those losses add up over time though, creating guilt, high-stress levels and even relationship problems.

Do you need a balance? Yes, we think so, and we’ve got five tips to help you achieve it.

How to Achieve a Successful Work-Life Balance

You’ve decided you want to improve your work-life balance (or are at least thinking about doing so). Here are five tips which can help you get started:

  1. Identify your goals – what will make you feel great about your work and your personal life? These are the things you need to aim to achieve.
  2. Set your boundaries – you know what you want to achieve, now it’s time to decide what you will and won’t do. This includes saying no to people and things when they don’t fall within your ideal plan.
  3. Communicate – get all involved parties on side by explaining what you will and won’t do, plus the reasons behind them both.
  4. Rethink things through – is a spotlessly clean home really that important to you? Do you need to visit the supermarket to shop, or could you order online? Identify what is important and what is negotiable.
  5. Get active – you’ve already got a busy life but adding exercise to it will make it easier. Endorphins, increased energy and improved concentration are all benefits of daily exercise and can help you achieve more.

There’s one more thing we need to add. You don’t need to do everything and be everyone for your business! Our team of business advisors and accountants are here to help you take the load off by working with you and your business. Learn more about the services we offer here on our website, and then give us a call to get started today.

Most good accountants are great at reading the data and giving implementable advice to their customers to help improve that bottom line. They are worth their weight in gold if they can tell you at a glance about seasonal fluctuations, government policies that may affect you and areas where you can streamline or invest to get the most productivity. But all of this great insight and advice is worth very little if actions aren’t taken. That is where your accountability coach comes in.

“Professional Nag”

When you became self-employed or bought/took-over your business, I bet you thought that having someone on your case (like a boss), was in the past.

As humans, we’re very good at putting things off. That dental appointment, getting Xero reconciled and taking steps to improve your business, get moved to the end of the list in favour of instant gratification tasks (and the social media rabbit hole – don’t pretend that you don’t know what I’m talking about).

An accountability coach becomes your secret weapon of productivity;

Need to spend time getting your website built? Everyday you get to check in with your accountability coach that you’ve done half hour and that equates to a fully functioning website that can make you more sales without having to employ more sales staff.

You know a quite period is coming up so need to set up a marketing plan now. Your accountability coach can make sure you’ve scheduled posts, set up an onboarding system and are putting your best foot forward to reach your target market.

An accountability coach can save you from burn out. They can tell you when you need a break, when you’ve done enough, and you just need to trust the process. This is one of the hardest things for driven business owners to do, but it is vital to avoid a crash, that could wipe you out. Reducing your time out of the game.

You’ll build a trusted working relationship with your Accountability Coach

They’ll be someone you can reach out to when the unexpected happens, when you just can’t see the start point. You will be able to discuss the whole experience of being your own boss including all the ups and downs of being a human (health, dependents, confrontations, anxiety, personal barriers and financial realities). Because a good Accountability Coach knows from experience that being the boss means that the business needs you to be able to make clear decisions and life doesn’t hit pause just because you’re in work mode.

Like your Accountant and/or Bookkeeper, an Accountability Coach can be part of your team. The team that supports You as the business owner. Just because you’re self-employed doesn’t mean you have to go it alone.

Want to talk to an Accountability Coach, see if the service is right for you & your business? Talk to AJ The Business Owners Accountability Coach W: aj-pipe.com  T: 021 246 4244 E: ajpipe@ajpipe.com

 

Note: MBP will only be responsible for the terms and conditions for an engagement undertaken directly with MBP. If you undertake a new engagement with a separate firm or a related entity you will need to enter into your own contractual arrangements directly with that firm or entity. We will not accept any liability in respect to any work they may undertake for you.

We all have things we’ve wanted to get done for ages but are no closer to getting them sorted today than we were a year ago. It could be anything from writing a book, a blog, redeveloping your website or putting time aside to develop your business. The list of things we’d like to do but just aren’t doing is often long. If this sounds like you, it might be time you got yourself an accountability coach.

What is Accountability Coaching?

Accountability coaching is your business’ secret weapon.

Your accountability coach is a person who you hold yourself accountable to for achieving the goals you set yourself or that you set with them.

It involves partnering with a coach that will understand your vision, your goals and will discuss with you the steps and tasks that need to be undertaken to get to where you want to be. They take those list of unfinished or not yet begun tasks, they prioritise them and then work with you to develop a timeline to completion. Your accountability coach then holds you responsible for achieving those tasks.

Your accountability coach will get in touch with you regularly for coaching sessions. As you tick off the tasks assigned in the times allocated, you’ll get that instant gratification that everyone craves but that you seldom get when working alone on these small but important tasks. If you don’t deliver, you’ll usually suffer some sort of penalty. This generally varies between coaches and clients. Some pay a penalty fee, others make unique arrangements based on what motivates them the most.

Ongoing failure isn’t an option. Your accountability coach will work with you as much as is needed to get you to develop the new skills and habits to start working through your list. If, however, you are unable to meet any of your deadlines, no matter how much coaching and support, your coach will likely dump you. If you are not benefiting from their services, there is no point in continuing.

How Would An Accountability Coach Help Me?

Your accountability coach helps to end the frustration that’s building up inside you at not being able to get that list of wants and needs ticked off.

They are able to help you with whatever you need. From personal wish-lists to business development. Whether you want to get your books in order, lose some weight or get a novel written, the list of things your accountability coach can help with is endless.

Accountability coaching is all about helping you to achieve your measures of success while simultaneously developing new and more productive habits. These are habits that will serve you well long after you ever finish your coaching.

Finding The Right Accountability Coach

Take your time to find a coach that is a good fit. This needs to be someone that you can open up to. That you don’t mind sharing your hopes, dreams and aspirations with. Someone that you connect with, trust and respect.

At MBP, we offer monthly and quarterly business coaching but we aren’t accountability coaches. We leave that to the experts. One of the best accountability coaches that we have worked with is AJ Pipe. AJ is a specialist business owners accountability coach. She has run her own businesses so understands the obstacles you face to achieving your goals. Her flexibility and the ability to ‘rent her brain’ means that your coaching with her can change with the needs of your business month to month. Reach out to AJ here to start a conversation and see if she is the right fit for you.

 

Note: MBP will only be responsible for the terms and conditions for an engagement undertaken directly with MBP. If you undertake a new engagement with a separate firm or a related entity you will need to enter into your own contractual arrangements directly with that firm or entity. We will not accept any liability in respect to any work they may undertake for you.

New Zealand does not have the most liberal tax laws when it comes to making claims for work clothes. This is one thing that our cousins across the ditch are far more generous with.

There is a very narrow definition in NZ tax law and IRD interpretation as to what is a deductible business expense for work clothing. In order to help you avoid making expensive mistakes that could land you with an audit, back taxes, interest, penalties and even home detention, we’ve drawn up this simple list and handy explanation of the law that limits your claims. That’s right, its not just a grumpy accountant that won’t let you claim things, its actually the law.

What Work Clothes Can I Claim As A Business Expense?

If you want to claim for clothes that you (or your employees) wear to work the clothes must:

  • Be a uniform that is distinctive to your business, or
  • Prominently and permanently advertise your business, or
  • Be necessary for protection in the workplace (e.g. protective eye wear, steel capped boots, etc.), or
  • Be required for health and safety compliance on the work site (e.g. high-visibility or waterproof clothing), or
  • Is a taxable clothing allowance paid to employees to purchase their work attire (FBT or PAYE is payable), or
  • Simply is not clothing that you or an employee would wear for private purposes.

Essentially, the simplest test we can think of is that it’s deductible if you only wear it because you have to. To quote the IRD, claimable clothing “only includes uniforms or specialist clothing that isn’t reasonably suitable for private use and is necessary and peculiar to a particular occupation.”

You might get away with it once or twice, maybe even 46 times, but the IRD will likely catch up with you eventually. After filing dozens of flawed claims, a personal trainer was given home detention and hundreds of hours of community work for claiming exercise clothing (among other things) as a business expense. Chances are your new shoes for your real estate work are not allowable (unless they are steel capped for visiting industrial property and emblazoned with the company logo).

What Limits What Work Clothes I Can Claim?

The main thing that limits your claims for work clothes as a business expense is this pesky thing call the law. In particular, two sections of the Income Tax Act 2007 (ITA 2007). These two sections work together to highlight and limit all claims that can be made for business expenditure, including work clothes.

Section DA1: The General Permission

Section DA1 sets the groundwork for all business expense claims as it allows for a deduction as long as there is a nexus, or link, to business activity or income generation. This broad allowance is known as the general permission. You can read the full section here, but for your convenience here is the core of it:

DA1 (1) A person is allowed a deduction for an amount of expenditure or loss, including an amount of depreciation loss, to the extent to which the expenditure or loss is—
  (a) incurred by them in deriving –
     (i) their assessable income; or
     (ii) their excluded income; or
     (iii) a combination of their assessable income and excluded income; or
  (b) incurred by them in the course of carrying on a business for the purpose of deriving –
     (i) their assesable income; or
     (ii) their excluded income; or
     (iii) a combination of their assessable income and secluded income.

For an expense to be deductible, it must first pass the low bar of the general permission test by having a link to your income generation. However, just because something passes this first hurdle doesn’t make it instantly deductible. Other sections of the ITA 2007 act to limit or override the general permission. In terms of work clothes, this is where section DA2 comes in.

Section DA2: The General Limitations

Where section DA1 creates what many might see as the freedom to claim anything and everything, section DA2 firmly squashes most dream deductions.

Of particular note for work clothes is section DA2(2):
“A person is denied a deduction for an amount of expenditure or loss to the extent to which it is of a private or domestic nature. This rule is called the private limitation.”

Clothing falls squarely under this private limitation. You may argue that you need clothes for work but you also need them for basic modesty. When you aren’t wearing clothes for work, you aren’t going to the supermarket naked. Therefore, your clothes fall into the category of being a standard private expense, any business use is simply incidental rather than peculiar.

If you are still confused or on the fence about an item you’d like to claim, get in touch with the team at MBP. What you can and can not claim is not always black and white and each situation has subtle differences that can make a big difference to the deductibility. Not getting your claims right up front can result in back dated tax assessments, penalties of over 100% of your mistake and use of money interest on the outstanding back tax.

This advice is general in nature and should not be relied on as a recommendation. Every situation is unique and requires tailored advice. Get in touch for a free consultation by emailing mailbox@mbponline.co.nz or call us free on 0800 86 85 86.