Useful tips for Small Business

What is a trust?

Trust is not an entity; it is just a relationship between the settlor and the trustee. There are three important parties in a trust. They are settlor, trustee and beneficiary. Settlor is the person who set up the trust. Trustee is a representative of settlor who manages the trust and is the legal ‘face’ of the trust. The Trustee is liable for the trust’s tax and legal obligations. The Beneficiary is the person who is benefits from the trust income.

One of the important elements of a trust is that the trustee looks after the property (assets) for the benefit of beneficiary. The Trust can be started with a sum of $100, and later family home, investments, and other assets can be gifted to the trust. A trust, other than a charitable trust has a maximum life span of 80 years. The rationale is to promote the liquidity of assets in the society, otherwise assets can always be locked into trust and the general public may not have access to that.

In a fast paced environment of this cutting edge business world, do you find yourself trapped into multiple things? Is your business doing financially better but you have a no time for leisure activities, if your answer is yes then you are suffering from Money Rich but Time Poor Syndrome.

Business owners, especially small business owners do well with making money but at a cost of devoting their personal leisure time into the business. They are actually ‘Money-rich, time-poor’. If you are a business owner, ask yourself:

1. Do you constantly feel rushed?
2. Do you take few breaks or holidays?
3. Do you feel stressed all the time?
4. Do you feel that your days fly so quickly

It is now easier for overseas businesses to operate in New Zealand. New financial reporting standards simplify audit requirements for overseas companies.

Currently if New Zealand business is owned by the Overseas Shareholders (company incorporated outside of New Zealand) the financial statements of the company must be prepared, audited and filed with the NZ Companies office. The auditing of financial statements does add financial burden especially on a small business, and this could be up to $8,000. The law itself had been quite stringent on all overseas investors so regardless of size of the business all financial statements must be audited with the exception of non-active status of the business.
However, from 01-04-2014 these requirements have been changed, and the new requirements making it simple for Overseas Companies to operate in New Zealand. For example, A New Zealand business which is owned by overseas shareholders will benefit from this exemption. The benefit would be mainly for businesses small in size i.e. less than $10 million in revenue or $20 million in assets.