How to Prepare Your Business for Christmas

Christmas is less than a month away. In this article, Mark Gwilliam shares some practical advice to help you prepare your business for the festive and summer holiday breaks.

“Twas the Friday before Christmas. The photocopier has stopped humming and the ‘phones have stopped ringing. Staff have left to spend Christmas with loved ones. We’ve emailed our last few invoices. Fingers crossed our customers read our emails and pay on time.”

It’s not quite something Ebenezer Scrooge said in Dickens’ Christmas Carol. But if you’re a small business entrepreneur, you’ll probably understand the analogy!

2018 is quickly fading. Christmas is rapidly approaching and will hopefully grant you quality time with loved ones.

It’s an opportunity to take a well-earned break, re-charge, and review 2018’s highs and lows and plan 2019. But if you’ve left your business in a state of disarray you might struggle to relax.

Tie up loose ends to reduce chaos and prevent cracks appearing by the time you get back. Here are some of my tips to help you manage your business over the coming weeks.

Manage Your Cash Flow
Christmas and New Year is often very demanding for small businesses. Many generate little income during this time. But staff salaries and holiday pay must be paid, and loan and rent payments don’t stop. It’s important that you plan well ahead to avoid being paralysed by a shortage of funds.

• Mail November’s invoices within the next twenty-four hours and then invoice December’s ones as soon as practical. Your chances of being paid before Christmas diminishes every day you delay. Delays might mean you’ll wait until February to be paid.
• Review your current terms and conditions. Consider reducing your payment terms to seven days, rather than the 20th of the following month. Follow-up invoices as soon as they become overdue.
• If you think you’ll need access to more funds, approach your bank. Ask for a temporary overdraft.

Tax Deductibility on Christmas Expenses
December is when many businesses spend the most on entertaining client and staff. Tax legislation sets out certain rules on which entertainment expenses are tax deductible:

• Money you spend on your Christmas party or lunch, such as food, drink, room hire, and entertainment is 50% deductible. It’s the same if you take your customers out for lunch.
• Small gifts you give your suppliers and customers are typically fully deductible, unless they are for food and beverages. Sorry, you can only claim half of the cost for the sherry and mince pies!
• Gifts you provide your staff are typically 100% tax deductible for income tax. However, they might be subject to fringe benefit tax and PAYE, depending on their value and type of gift.
• Donations to registered charities, including food parcels and money are all fully tax deductible.

Pay Attention to Tax Due Dates
You’ll probably have tax returns to file and pay next month. Make note, and schedule them to avoid late filing and late payment penalties, which can be severe. If you’re going away, schedule your payments before you go.

• GST for the period ended 30 November 2018 must be filed and paid by 15 January 2019.
• If you file GST either monthly or two-monthly, or aren’t GST registered you must file and pay it by 15 January 2019.
• Your employer monthly schedules (IR345) and payments are due by 21 January 2019.

Other Important Considerations
The guy with the long white beard and red suit shouldn’t be the only one who’s organised this month. Let your customers, clients and suppliers know what days you’ll be closed. Update your website and out-of-office messages if necessary.

• Review your security measures and insurance policies to ensure you’re adequately covered – especially if you’ll have higher than normal stock levels and if you’ll leave premises unattended.
• If you’re going to make New Year’s resolutions, don’t forget some for your business too! After the hustle and bustle has settled, complete a health check on your business to lay the foundation for next year.

The countdown to Christmas is on. And as exciting as it can be, take time to ensure you and your business are ready. You’ll then be able to enjoy time with family and friends. I wish you and your families a healthy and safe festive season and prosperous 2019.

Mark can be contacted on (09) 449 417 or email markg@bizadvice.co.nz