Important changes that will affect you from 1 July

02/07/2018

Could your business be hiding something? Stephen Sudbury discusses how to unlock the hidden asset in your business that’s not on the balance sheet but creates up to 88% of your business value.

It’s no secret the global business world is rapidly shrinking as technology advances. Despite that being the case, there is still a fixation by business owners and their lenders on ‘bricks and mortar’ assets. The impact of this actually stifles growth and limits access to capital.

A 2017 study of Fortune 500 companies found 88% of the value in those companies could be attributed to their intellectual property (IP).

What is IP? Simply put, intellectual property is the often intangible aspects of your business that set you apart. Think systems, branding, processes, trademarks and copyright. They’re often factors that are hard to ascribe a value to but without them, you have little chance of attracting a premium on sale.

Most business owners don’t know what IP they own or understand its value. It could be 15 years of client sales history, a plan library, branding. These assets could be hiding under your nose!

It’s important to understand IP, know the extent of the risk that comes with it and insure against data loss that could sink your business.

Visiting a manufacturing client recently, I commented on the number of product templates on the wall of their warehouse. The templates made production runs easier but the issue was that in the event of a fire 15 years of intellectual property would go up in smoke.

The simple solution? Those templates are now being digitised and stored online in the cloud. This process creates IP, adding value to the firm that could one day help fetch a premium sale price for my client.

The greater IP and less reliance on owner ‘head’ knowledge the higher the business value and while bankers don’t value it directly, they do take into account good systems and processes when they are doing cash flow lends.

Some food for thought…

Do you know what you own?

Do you know the extent of your risk? For example, could a staff member resign and take your customer list with them?

What steps can you take to minimise risk?

How do you maximise the value of your IP?

At Sudburys we can help you answer these questions and more. Email us to find out how we can help unlock the value in your business. It could be hiding in plain sight!

Important changes from 1 July

From 1 July there are some key pieces of legislation coming into effect that you may need to know about.

1. Anti-money laundering regulations

From 1 July, by law, businesses are required to put preventative measures in place to help tackle money laundering and counter the financing of terrorism. The legislation extends the current law to include lawyers, conveyancers, accountants, real estate agents, sports and race betting and businesses that deal in high value goods.

What does this mean for you?

While we may know a lot about you already, the new legislation specifies what information we need to gather from our clients to complete ‘customer due diligence’ (CDD). This includes holding proof of ID on file and verification of your physical address. In certain circumstances we will also be required to obtain evidence of your source of wealth or the source of funds used to settle a transaction.

Before your next appointment we’ll give you a reminder to bring your passport or drivers licence with you as well as other documents such as a bank statement or utility bill addressed to your usual residential address. Your information, as always, will be stored securely and held on file for audit purposes.

2. Automatic Exchange of Information

New Zealand has committed to new global standards on the automatic exchange of financial account information. Essentially this means that financial institutions around the world are required by law to exchange information with tax authorities to ensure everyone pays the right amount of tax.

How could you be affected?

These new rules apply to all companies and trusts including family, charitable, foreign and unit trusts if they can be classified as a reporting NZ financial institution. Our client managers will be in contact with you if your business or trust falls into this category. You may be required to sign documents relating to where your business/trust was established, the residency of the trustees and the source of your gross income.

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