Issuu on Google+

Featurefeature finance

finance

March 5, 2014

Mahurangi Matters

17

> FEAT UR E

Post-quake home insurance changes prompt warning A major change to the way houses are insured in New Zealand has prompted a surge in business for local surveyors and valuers. But local firms believe many homeowners do not yet fully understand the new system, and could be in trouble if they ever need to make a claim. House insurance premiums used to be based on the size of a house, and insurance companies would rebuild no matter what the cost. However, following the Christchurch earthquake, changes now being rolled out mean customers agree on the maximum price an insurance company will pay in the event of a rebuild. Warkworth-based Hollis and Scholefield director Steve Jack says business has increased four-fold as a result of the changes. “Our valuers are probably doing three or four insurance valuations each per week, whereas we used to do about one a month. But we are not getting the standard stuff, it’s more the old villa, quality architectural homes, or dwellings on difficult sites,” Steve says. Online calculators are available to calculate the cost of rebuilding, but many of those who are not internet savvy, or have a highly valuable or

Warkworth valuer Scott Morison says unqualified valuers have been setting up shop trying to make a quick dollar.

unusual house, are forking out for quantity surveyors, Steve says. Sheldon’s registered valuer Scott Morison says online calculators are okay for valuing standard brick and tile houses built on flat land, but for anything else the valuations are often inaccurate. “Almost without exception the calculators are to low in their estimations,” Scott says. “We are finding that people who are not confident with the calculations, or their house is not of standard construction or is on a steeper site, they are using us.” It is important to get the valuation

correct, as if the estimate is too low and the house is destroyed, they will have to opt for something smaller, or lower in quality. However, many are still unaware of the consequences, Scott says. “It might just take someone getting caught out, where their house has been destroyed and the amount they have insured their home for hasn’t been enough to rebuild their home.” Insurance brokers are also concerned that home owners are not taking the changes seriously. A local insurance broker says around 80 per cent of clients are staying on the default rate of $2000 per square metre, and there

If you’re self employed and need time off work through injury, you may not necessarily receive ACC payments - even though you’re paying levies.

Richard Gerard | Adviser 09 425 7400 | 027 291 1621 richard_gerard@amp.co.nz Level 1 17-19 Elizabeth Street, Warkworth

ACC CoverPlus Extra, on the other hand, allows you to agree upfront on a level of cover that you choose - ensuring you won’t pay unnecessary levies, and you can be certain of your ACC benefit when you need it.

Contact Richard Gerard for advice on ACC and other insurance matters

A disclosure statement is available from Richard Gerard on request and free of charge.

TAX RETURNS

    

is concern that older people might not be aware of the changes. Insurance Council communications manager Samson Samasoni says he is confident the public is aware of the change, and insists help is available for the elderly. “We believe these estimates are exaggerated as there has been a lot of publicity and information provided by insurers, banks and brokers to assist people to understand the need to carefully calculate what they might require to rebuild their homes,” Samson says. The council has also worked with various branches of Age Concern and Grey Power to get the message out, he says. There have been reports of unqualified valuers and surveyors starting companies to cash in on the changes. Property Institute chief executive David Clark says home owners need to make sure they hire a qualified quantity surveyor or a registered valuer. As well as getting an accurate appraisal, registered surveyors have indemnity insurance, which means if they value your house incorrectly and you’re left out of pocket, you can get the money back through the courts, David says.

Cash flow – Planning / Improvement Forecasting / Budgeting – To make money Profit Improvement – Managing what drives your business Taxation – Payment plans, planning, IRD negotiation Bookkeeping systems – Are you wasting time unnecessarily Lynn & Stephen Hailes

Reasonably priced Chartered Accountants & Business Advisors

Cnr Baxter & Neville Streets, Warkworth Phone 09 422 2423 | Fax 09 422 2426 Email: hailesca@xtra.co.nz


18

Mahurangi Matters

March 5, 2014

financeFeature feature


Featurefeature finance

March 5, 2014

Mahurangi Matters

19

Early advice could save you big bucks Accounting changes A surge in property development in Mahurangi has led to warnings about the importance of getting professional advice early in the process. Warkworth accountant Darren Knight says he has noticed a huge increase in building and subdivision in the Warkworth area, as developers rush to take advantage of low interest rates and pent-up demand. But he is also concerned that inexperienced developers, such as farmers, are not doing their homework first. “A lot of stuff that was stalled because of the GFC [global financial crisis] is going ahead now,” he says. “But it’s a double-edged sword because people like farmers have started chopping up land without getting accounting advice with regard to GST.” The way the Income Tax Act is structured means that developers can save a huge amount of money if they arrange their affairs correctly, says Darren. “But a lot of them don’t. They just go gung-ho into it, and by then it’s already too late — they’ve done the damage.” He recently discovered one client had gone ahead and got resource consent for a subdivision without informing him. “They didn’t realise some of the rules regarding minor versus major expenditure and all this type of thing, and it’s had a huge tax effect — we’re talking hundreds of thousands of dollars. The moral — if you’re looking at it from an accounting point of view — is ‘talk to your accountant first’.” Another issue Darren has noticed with the recent increase in activity is businesses expanding too fast. “A lot of people who were previously waged people or small businesses have gotten big quite quickly, so their accounting requirements have become a lot greater. They need to get their structures right and make sure they don’t buy too much equipment, for example, that they’re paying huge HP payments on.” A business downturn can hit quite rapidly, he warns.

shouldn’t be ignored

“It could go bang. I’ve seen it happen before — you get these guys who are left with all this equipment that they financed, and they go under.” It is also vital to make sure you’re doing everything by the book, such as having proper employment contracts, he says. “You wouldn’t believe how many people think people should be taxed in a certain way because that’s what their mate tells them down at the pub.” Before you jump in and do the wrong thing, it’s sensible to talk to your lawyer, engineer and accountant, and just let them know what you’re thinking, he says. “It’s good to sit down and have a plan of what you’re wanting to achieve and then let the professionals help you out.”

Accountants are urging businesses in the Mahurangi region to get up to speed with a new law that comes into effect on April 1. The new law means that small and medium-sized businesses will no longer have to produce detailed financial accounts — a move that is likely to save them time and money. However, many businesses appear to be unaware of the changes. The new accounting requirements will affect 95% of NZ businesses, yet research shows that over half of small- to medium-sized businesses do not know about the changes. And an overwhelming majority (83%) do not know what they will mean for their business. The new law, passed by Parliament in November last year, means most small and medium-sized businesses will still have to produce accounts for the IRD and the bank. However, they won’t have to produce the same type of detailed accounts as larger companies. “It’s quite natural that many businesses will be unaware of the changes,” says Graeme Mitchell, incoming chairman of the External Reporting Board (XRB), which has overall responsibility for setting accounting standards. “They typically only focus on reporting when they need to, but it is time for them to get professional advice to understand how the changes will impact them.” Mr Mitchell says the new law and accounting standards give businesses a greater choice to do what’s best for them, and for many this will help reduce time and compliance costs. “While it is difficult to quantify the extent of the savings, in a competitive business environment, we think this will be welcome news to any company director looking to streamline processes and make efficiencies where they can,” he says. Info: xrb.govt.nz

EMPLOYERS ... with business growth opportunities now knocking at your door are you considering adding employees? The impact of just one new employee joining a small to medium business can be significant. With no room for error, you need to ensure you make the right hiring decision and choose someone who can hit the ground running. • Prioritize the skills and experience - don’t deviate once you get to the interview stage. • Ensure the employee will fit the team - watch for the person who puts their needs ahead of yours. • Take it slowly. Follow a trusted proven hiring plan. • Check references meticulously. Don’t hire until you have all the information.

Ground Floor 51 Morrison Drive, Warkworth Phone 09 425 9833 Email info@darrenknight.co.nz www.darrenknight.co.nz

Do you need employment services or human resource advice? • • • •

Hiring & termination processes? Health & Safety programs and audits? Growing or downsizing your business? Training and development?

• • • •

Restructures and Redundancies? Employment conflict or issues? HR Policies and Documentation? Managing Change?

Contact Joy Paxton on 422-2290 or 0274 815 155 joy@peoplepluspeople.co.nz • www.peoplepluspeople.co.nz


20

Mahurangi Matters

LET U

S DO Y O

financeFeature feature

March 5, 2014

UR WAS

NIN O R I & HING

G

• Linen • Picnic rugs • Sleeping bags • Beach towels

Kowhai Laundry

Dry Cleaning Agents Hours - Mon-Fri 8am-5pm • Sat 9am-1pm 13 Neville St, Warkworth Phone 09 425 9775

Is that legal??

Not sure how to

deal with a dispute? Citizens Advice Bureau Wellsford Ask Us A hive of information Dispute Tribunals Seminar Open for General Public on

Consumers Rights?

Tuesday, 25th March 2014 at 10.00am - 12.30pm Interested? Please contact us at:

I need someone to talk to

Email: Cab.wells@xtra.co.nz www.cab.org.nz Opening hours: Mon-Fri 10am-3pm

Wellsford Community Centre 1 Matheson Rd, Wellsford | Ph 09 423 7333 | 0800 FOR CAB

Warkworth BPW - WOW! Warkworth Business and Professional Women’s Club

invites all Women Of Warkworth

to join our dinner meetings and enjoy great company and fascinating speakers. We meet on the 2nd Wednesday of every month at 6:00pm, from April onwards at the

Salty Dog Inn, Snells Beach $25 per head Call or Text Sally 021 425 407 or email sally.smith@clear.net.nz to book

MoneyMatters Grant Clifton, Countrywise Financial www.countrywise.co.nz

Sorting out your bills

At the start of a new year it always seems like the expenses are never-ending. Those with school-age children will know the bills come in thick and fast: stationery, uniforms and school fees, and then there is always the credit card bill timed to arrive right at the end of January to remind you of the indulgences of Christmas. I met with some clients last week who really needed some good old-fashioned advice. They had recently gone back to work after a good long summer break. The bills had all arrived at once and they were feeling quite overwhelmed. Sitting down and working through a simple budget with a good financial advisor can uncover lots of areas where savings can be made and costs reduced. With the husband being self-employed and relying on irregular income, it always pays to have a Plan “B” to get you through the lean times. By looking at what current loans and payments they had, we were able to determine where some savings could be made. They were paying a number of high-interest loans and credit cards which are designed to be paid off over relatively short terms. They had been paying a credit card with an $8000 balance for nearly three years and not really making any headway into clearing it. They had last year taken out a hire purchase for a new fridge and washing machine and the interest-free terms were nearly expiring and about to be charged at 22.95%. The payments of these two loans alone were nearly $500 per month. After living expenses and paying the mortgage and other loans, they had no money left each month and so when the extra expenses like school uniforms and stationery arrived, they weren’t sure how to cope. By looking at their overall situation and arranging a consolidation loan, repaying the hire purchase, and reducing the credit card to a manageable level of $1,000 we were able to reduce their monthly outgoings considerably which left them with a cash surplus of over $600 per month. We did this by increasing and re-negotiating their home loan, getting a really good fixed rate and repaying some short term debt, thereby improving their monthly cashflow. So if you are feeling a little overwhelmed financially seek out some good advice. It really does pay to regularly review your finances — there are savings to be made.

Withers & Co Ltd CHARTERED ACCOUNTANTS Practising in Warkworth since 1969

Specialists in Accounting & Taxation for all Businesses

That’s what we do!

Our long established firm has three partners and nine staff, all of whom are experienced and ready to take on new clients immediately. Come in for a free interview and see how we can take the workload and worry off you while minimizing your tax. Pictured (L-R): Grant Dixon, Simon Withers & Grant Blackbourn

23 Neville Street, PO Box 113, Warkworth Phone: (09) 425 8599 Fax: (09) 425 7565 admin@withersco.co.nz www.withersco.co.nz

~ Serving the community for over 40 years ~

SeniorNet Warkworth

the place where you acquire computer skills We offer courses for PCs, Apple Mac, IPads and Tablets from absolute beginners to advanced users.

Come to our Open Day

Tuesday 11th March 2014 at 2.30pm 3 Matakana Road, Warkworth and learn more about us

If you cannot attend but wish to get further information contact our course co-ordinator on 422 3728 www.seniornetwarkworth.org.nz


Mmfinancefeat2014