Tutbury Associates LtdTutbury Associates Ltd

By Kelly Tutbury

Hobby or business? How to turn your hobby into a business

Thinking about turning your hobby into a money generating business? These steps will help you avoid some common mistakes as you set out to earn an income from your favorite pastime.

Do you have what it takes?

Unless you’ve run a business before, it’s easy to get carried away with the idea of how perfect it will be to get paid for doing what you love. Reality check: the stress of needing to earn an income from your hobby can quickly take all the pleasure out of it.

Running a successful business isn’t all hobby indulgence. Unless you can afford to hire someone to take care of the bookkeeping, marketing and sales, expect to spend a lot of hours on necessary tasks completely unrelated to your true passion.

Before you start investing in your hobby-to-business idea, take this online quiz to see if running a business is right for you.  If its right check out www.business.govt.nz for help with getting started and then contact us www.tutburyassociates.co.nz

Do your market research

If you’ve been gifted with the entrepreneurial spirit, you’re ahead of the game. It’s definitely a plus to be able to combine business know-how with your passion.

The question is, will people pay you for your great idea. If you love to garden, for instance, who will buy your herb garden kids, custom flower arrangements, or green thumb e-books?

One of the biggest mistakes home-based solopreneurs make is not doing their market research.

In a nutshell, market research is the process of:

  • identifying potential markets
  • understanding what your customers most want and need
  • matching up your products and services to those needs
  • examining the competition and
  • creating a marketing plan.

As a pro tip, focus your efforts on a niche that isn’t currently being filled to increase your chances of success. You’ll minimize the competition and cut out unprofitable possibilities by creating a must-have solution designed for a highly specific customer.

Strategic marketing ideas

If you’re just starting up, odds are you’ll be running your business on a shoestring. You’ll need to be very selective about how you spend your marketing dollars—which is why it’s so important to know exactly who your customers are off the bat. Then it’s all a matter of making it as easy as possible for those people to find you.

A website and social media presence are essential for any small business. Consider craft fairs and trade shows, sponsoring a community event, joining a local business association, or partnering up with a compatible business as low-cost ways to get the word out.

Final thoughts

If turning your hobby into a business seems right for you, test the waters for six months to a year before diving in. Running a small, no-pressure side business at first will show you whether your idea has the potential to become a sustainable full time business—before you quit your day job and invest all your savings.

Drafting a simple one page business plan before early on is a great way to help you think through and evaluate your idea, step by step, as you set goals and identify strategies to achieve them.

Business planning may seem like a lot of work for a small part time business venture, but unless you have a plan, how will you know when you’ve achieved your benchmark for success?

 

By Kelly Tutbury

So you’ve launched your business – now what?

Good news for small business owners: according to the US Small Business Administration, nearly 80% of small businesses survive their first year.

However, that number begins to drop as time rolls on. Only half of small businesses pass the five year mark, and a mere third celebrate their tenth anniversary.

Taking steps to create a good foundation in the early days of your business is essential for a sustainable and profitable future. Here’s how.

Keep your eyes on the numbers

If you’re just starting out, you may be surprised by just how quickly those day to day expenses add up. It’s important to make sure, right from day one, that you consistently track your spending, file your receipts, and monitor your income and expenses with an easy, reliable accounting system.

Cloud based accounting software (like www.xero.co.nz ) can help you know exactly where your finances stand in real time—with secure access to accurate, up to date financial data anywhere, anytime.

In addition to being able to collaborate more efficiently with your bookkeeper and accountant so you can get advice whenever you need it, you’ll avoid the stress and hassle come tax time—and be empowered every day to make better, smarter business decisions.

Don’t neglect marketing
All entrepreneurs are incredibly busy, and it can be a real challenge to find the time to promote your business. The other challenge for new businesses is money—but every small business needs to invest in marketing activities that will bring in more sales and keep the cash flow flowing.

It’s wise to be wary of costly large-scale marketing strategies when you’re just starting out. The best use of your time in the early days is to really get to know your customers and how they tick, so you can design (or hire an expert to mastermind) highly appealing, cost-effective campaigns.

And don’t turn a blind eye to what you’re competitors are up to. Monitor how they attract new customers and think about how you can improve on what they’re doing—or take a completely different approach to promoting your business that will help your young brand stand apart.

Touch base with a business advisor
Every successful entrepreneur learns from experience—not to mention failure, which can be the greatest of all teachers.

While it’s true that “you don’t know what you don’t know”, you can shrink your learning curve by reaching out to experienced mentors for guidance.

Consider working with a small business consultant who can provide personalized advice to help you make it through the first year—and an ongoing objective perspective on your business, industry, and market going forward.

 

Final thoughts
It’s been said many times that a business is like a baby—and it can be incredibly difficult for entrepreneurs to trust someone enough to hand over any aspect of it. Many business owners work themselves to exhaustion because they can’t let themselves to take a weekend off. They neglect their most important relationships and never get to enjoy their successes because there’s always more to do.  Contact www.tutburyassociates.co.nz/contact for some advice on way to streamline to save you time.

The most successful entrepreneurs know they can’t do it all—nor should they—and build in time for rest so they can be more productive at work. Train someone early on to run the business in your absence so you can take a rejuvenating vacation, and enjoy the freedom you likely dreamed off when you first imagined going into business for yourself.

By Kelly Tutbury

Tax, GST – IRD Obligations Simplified

Are you aware of your tax obligations with Inland Revenue (IRD)?

Do you understand how the tax system works in New Zealand?

GST – Are you monthly, bi-monthly or 6 monthly? Are you invoice, payments or hybrid? Are you aware of the difference or what best suits your business and cashflow?

How are you filing that GST? – with a software system like Xero you can streamline or even eradicate your paperwork. This saves you a lot of time and money, and with the new roll out with Xero you can now file your GST straight from there to Inland Revenue (IRD) with your IR log on. Here are the tips on Xero  – https://help.xero.com/NZ/GSTFileOnline

Note though that this isn’t the only software option it’s just our preferred option.

Terminal Tax – this is always due on the 7th April and is based on your last year’s profit.

Provisional Tax – If you’re GST registered bi-monthly or not GST registered (note 6 monthly GSTs are different dates) your dates are always: 28 August, 15 January and 7 May. Your tax is based on the last year’s accounts filed with the Inland Revenue (IRD) + 5% or 10%. The new changes to Prov Tax don’t come into effect till 1 April 2018. So you really need to be working closely with your Accountant to avoid those huge and unexpected tax bills.

Did you also know you can buy your tax at a better rate than the 8.27% interest Inland Revenue (IRD) is currently charging? Tax Management (TMNZ) www.tmnz.co.nz offer a service to reduce your interest costs. Ask your Accountant how this works.

At Tutbury’s we are happy to help in any way. If you would like a 1-hour free consultation, please contact us. Whether it’s to discuss tax, software systems or pointing you in the right direction.

 

 

By Kelly Tutbury

Employee V Contractor. Whats the difference?

There are a lot of business owners that are unsure whether they should hire employees or a contractor. Below we’ve tried to simplify the difference between the two.

So what defines a contractor? And how is this different to an employee?

The basics are:

What is an independent contractor?

Independent contractors are self-employed people who control what work they do and how it’s done and are responsible for their own tax payments.

  • They decide how they do the work
    –       When they take their holidays
    –       When, where and what hours they work
    –       How much they get paid and how
  • They are responsible for:
    –       GST returns and payment if applicable
    –       Terminal and Provisional Tax and filing their own tax returns, ACC and Professional Indemnity Insurance
  • They are responsible for getting the work done
    –       Can get other people to fill in for them. Potentially without permission.
    –       Pay those people from their own funds
    –       Are free to work for other people
    –       Advertise their own business
    –       If they can’t do the job (e.g. sick) then they can organise a replacement
    –       Must correct unsatisfactory work in their own time at their own expense.

How is this different to an employee?

An employee:

–       Does the work themselves
–       Can be told at any time what to do on the job, or when and how to do it
–       Is paid at a set rate (for example, hourly weekly, monthly)
–       Can get overtime pay
–       Works set hours, or a given number of hours a week or month
–       Has someone else who sets the standards for the amount and quality of their sales or output
–       Works at the premises of the employer they are working for, or somewhere that employer decides
–       Does the same sort of job as other people who are treated as employees
–       Is under an employment contract, or any law that says how their relationship with their “employer” should be run
–       Is prevented from doing work for anyone else
–       Has to follow the rules or procedures of the employer they are working for.

However there is nothing totally black and white and the lines can be blurred between employee and contractor.

Inland Revenue publishes guidelines in this area so have a look at www.ird.govt.nz or feel free to contact the office www.tutburyassociates.co.nz/contact

Your responsibility when using contractors

Your self-employed contractors are responsible for their own tax so you don’t usually have to worry about PAYE and other deductions.

However, in some circumstances you are required to deduct ‘tax on schedular payments’ from payments to contractors and pay these amounts to

Inland Revenue unless they hold a Certificate of Exemption.

Self-employed contractors are not covered by the Employment Relations Act (2000) or the Holidays Act (2003), which deals with annual leave,

public holidays, sick leave or bereavement leave.

They are however protected by the terms of their signed contract – meaning you can still be legally liable if you break the terms of any of the contracts signed.

The above is a brief rundown on the differences. If you want to find out what category you fall into or what the advantages/disadvantages are more in detail.

Please contact us  www.tutburyassociates.co.nz/contact

 

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Hobby or business? How to turn your hobby into a business
So you’ve launched your business – now what?
Tax, GST – IRD Obligations Simplified
Employee V Contractor. Whats the difference?