FAQ

Do I have what it takes to own/manage a small business?

You will be your own most important employee, so an objective appraisal of your strengths and weaknesses is essential. Some questions to ask yourself are:

  • Am I a self-starter?
    How well do I get along with a variety of Personalities?
    How good am I at making decisions?
    Do I have the physical and emotional stamina to run a business?How well do I plan and organise?
    Are my attitudes and drive strong enough to maintain motivation?
    How will the business affect my family?
    We run a Business Start-Up service and Starting Your Own Business courses to help you assess your business idea.

What things should I consider before getting into a new business?

If your goal involves building a financial vehicle for yourself; it is a good idea to make sure that you are on the right road and travelling in the correct direction. Some things to consider are: Remember that if you fail to plan, you plan to fail.

Have you explored your options? Make sure you have several options before selecting the business to go into. Don?t just go into the first business opportunity that comes along. Are your family, close friends, banker, lawyer, accountant and coach/mentor supportive of this venture? They may not always be right, but listen carefully to their feedback.

Study or even apprentice before you commit yourself to hours of day to day activity that may not be satisfying. Do you have excellent products and services? Start Your Own Business courses and evening Business Skills Courses cover specialist topics.

 

Do I need a solicitor?

Most people know they need a solicitor to check through the lease on their business premises, but a good solicitor is aware of the economic, legal and financial environment affecting your business

How do I choose a solicitor?

There is no single way of choosing a solicitor, but you may want to ask for recommendations from friends or business contacts or from your bank manager. The Law Society also can help you by recommending solicitors with particular areas of expertise or in a particular suburb. At the initial meeting you should establish their experience with businesses similar to yours, what special skills they can offer you, how you will be charged and who your point of contact will be.

What is a contract?

A contract is a binding legal agreement, which is created when there has been an offer; an acceptance of the offer; consideration (usually the price of goods or services supplied) and an intention by the parties to enter into a legal relationship

What types of contracts will apply to my business?

There are many types of contracts that will affect your business. Not only will you contract with your customers but you will also enter into agreements concerning:

Contract for the supply of telephone services Contracts of employment with your employees Contract (lease) for premises Contracts for the supply of financial services such as an overdraft Contracts with suppliers

Contracts for the supply of trade services such as photocopying fax and e-mail Contracts with professional services providers such as accountants and lawyers

What is a lease?

A lease is a special type of contract between the Lessor (the owner) and the lessee to use the property of the owner. A lease can relate to land, or to personal property such as motor vehicles, photocopiers and telephone systems. Where the lease relates to land the owner is called the “landlord” and the lessee is called the “tenant.”

What is a restraint of trade clause?
When you sell or buy a business the agreement will usually contain a restraint of trade clause, which will restrict the seller of a business from opening a competing business within a certain area for a specified time. Such clauses can also be included in a contract of employment with your employees to prevent them from approaching your customers or starting a similar business to yours in your area.

What types of records do I need to keep?
A cash book which will record all cash receipts and cash payments, a bank deposit book, a cheque book, bank statements, a car log book (if claiming a car deduction), a wages book. Under tax law, a person carrying on a business must keep records that record and explain all transactions. These records include any documents that are relevant for the purpose of ascertaining the person’s income and expenditure. The person must keep the records in writing in the English language, or enable the records to be readily accessible and convertible into writing in the English language.

Do I need an accounting system or an accountant?

In business it is advisable to have both an accountant and an accounting system which suits your needs. The accounting system you have should reflect the type of business you’re in. If you have a low volume of sales the basic bookkeeping can be done manually. If you have a high volume of sales (especially credit sales) it would be advisable to look at a computer based accounting system. In any case, with the increased demands for accurate record keeping and reporting under the new tax system, most businesses should consider a computerised accounting system. Your accountant should be able to guide and advise you an your accounting needs, and even if your accountant is providing a full accounting service, it is important that you understand the basis of the system and the significance of the information it provides. Barefoot Accounting Group is part of CSBEC and our accountants can be contacted on bfa@csbec.org.nz

Do I need to keep all my receipts?
If you are self employed not all receipts are accepted by the IRD as proof of your deductions. To be a valid receipt for tax purposes it must show- the date of the receipt, the date of the expense, the name of the supplier, the amount and the description of what you bought.

What is intellectual property?
Intellectual property (IP) represents the property of your mind or intellect. In business terms, this means proprietary knowledge. IP is a business asset and like other business assets it should be identified and an appropriate value placed on it. Valuing your IP may help you obtain better access to finance and will almost certainly increase the value of your business. Confidential information, patents, registered designs, trade marks, copyright, circuit layout rights, and plant breeders right are all legally classified as IP rights. Ownership of those rights means you can sell licence or bequeath IP in much the same way as property

What is a trade mark?

A trademark can be a letter, number, word, phrase, sound, smell, shape, logo, picture, aspect of packaging or any combination of these. It is a sign which is used to distinguish goods and services of one trade from another and therefore must not be a sign that other traders may wish to use to promote or describe their goods or services. This means you cannot register a trademark which directly describes your goods or services.