Not another canned response.
After a bit of overnight thought, the team has banded together and answered some of the questions we have received, (or are expecting to receive), regarding COVID-19 and the impact on business. We understand it may be a stressful time and that’s ok. It’s also important to stress on what you can control, remain positive, focused and take deliberate actions in your business. Communicate your worries and concerns, whether that be with your partners, business partners, management, family, or us so you can gain perspective, make decisions and take action.
Quality information is key, so here is some general information to get started:
It’s important to look after yourself first, so you can look after your family and friends, the community you live in, and the local businesses that are part of that community.
All result in cash flow issues.
If you’re worried, yes. Communication early is easiest. Ask your banker about:
Cash is a stopgap, temporary solution that can help weather storms. It alone won’t solve problems and needs multiple strategies behind it. Plan and forecast cashflow so you know what actions are required when. We can help with this.
Subsidy for wages paid to the employer as a lump sum to help mitigate laying off staff or reducing their paid hours. Calculated as:
Maximum of $150,000 per business. If you calculate your entitlement to be more, then you can deal directly on a case-by-case.
Have a read of the MSD factsheet for more information.
The application for the wage subsidy references this as criteria and considers this to be implementing a business continuity plan alongside:
The wage subsidy is to support you if you face laying off staff or reducing their hours due to COVID-19. It is a one-off payment and a business can only apply/receive once.
The leave payment is to support people who need to self-isolate or cannot work because they’re sick with COVID-19. The payment will be available for 8 weeks from 17 March 2020. Employers receive the leave payment in lump sum and pass on to their employee. Employers can apply on behalf of employees more than once on an “as needed” basis. Also applies to sole traders, contractors, self-employed and shareholder-employees.
Leave payments are lump sum amounts at the same rates as the wage subsidy above ($585.50/$350) but for a period of 2 weeks only.
The subsidy states you have to make the best efforts to retain employees and pay them a minimum of 80% of their normal income for the 12 week subsidised period.
Yes. However, you can enter into a payment arrangement with Inland Revenue. For payments due from 14 February 2020 Inland Revenue has the ability to remit (waive) use of money interest in these arrangements. There are no further late payment penalties once an arrangement is reached and upheld. As above, action is key to take advantage of this.
The Government have announced four more tax changes to help businesses:
None of these will have an immediate affect on your cash, but the trickle-down will help with tax relief over time.
If you’re going to be without an income, it’s best to apply for financial assistance as soon as possible. Click here for more information.
To make an employee redundant you are required to go through the full restructure process. The process isn’t prescribed exactly, but case law has helped to establish best practice. The steps and suggested time frames are outlined here.
You can call the Government Employer Line on 0800 778 008 or visit a WINZ office for free, confidential support around redundancy.
Review your existing cost structure – what is contributing to business purpose/goal? Justify expenditure at a line-by-line level and lean up where possible.
Bottom-up budgeting is a good technique – we can help you with this.
Action is the most important thing. Sitting and waiting won’t help your business. Multiple strategies will have the best success and a brainstorm with us, management, advisors etc will help immensely to create direction. Quick things to consider:
Plan, and contemplate a contingency – write it down or draw a picture.
There are a few different possibilities here, all of which we’d suggest seeking further advice on:
It’s important to consider all options, where risk, value, and opportunities lie, and you should consult others on this. Consider obligations such as limited guarantees, personal guarantees, GSA’s held, PPSR registrations.
Communicate early and ask questions. Work together, the relationship is entirely interdependent.
We’re here to help, so please don’t hesitate to get in touch with us.
Email: hey@outsideaccounting.co.nz
Phone: 04 889 2975
For the straight facts, head here: Covid-19: Information for businesses.
Keep your heads up and stay well,
Your Outside team and, of course, Ruby!
Address: Level 2, 182 Vivian Street, Te Aro, Wellington 6011, New Zealand
Mail: PO Box 24-457, Wellington 6142
Phone: 04 889 2975
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