As another day passes, it seems that there is yet more doom and gloom in the economy. It’s hard to avoid hearing about businesses doing it tough. And more bad news begets more bad news. It’s like we’ve got compounding bad news!
But, historically speaking, how tough are we really doing?
Well colour me shocked, actually not all that bad. Let’s start with one that’s presently causing ‘a little discomfort’; interest rates. While comparatively high when viewed against what we have experienced for the last decade or so, current rates are lower than what we endured from September 2004 all the way through to the depths of the GFC 4 years later!
But you might argue that there have been a number of high-profile liquidations of late, and surely that must indicate that businesses are really doing it tough. Somewhere north of 2/3of liquidations in NZ are initiated by IRD due to the company not meeting its tax obligations. During the Covid period, IRD greatly pulled back from such activity, and this means that there is a backlog to get through. Despite this backlog, up until March – which are when the latest stats are available –liquidations numbers were just back to where they were pre-Covid.
Of course, you could point to business confidence being down, and the results of the ANZ Business Outlook survey would support this -it has been in negative territory since early 2021. And if we all feel negative, then surely this is an accurate predicter of business fortunes, right? No. Since the turn of the millennium more than 20 years ago, business confidence has, according to the ANZ survey, spent most of its time in negative territory. Don’t believe me? Check out the 25-year graph from trading economics. Geez, we are a pessimistic lot!
The purpose of this rant isn’t to say that everything is rosy – if anything we are more pessimistic! The purpose of this rant is to encourage you not to allow your thinking to be disproportionately influenced by sensationalised headlines. Instead, focus on what you can manage – your sales, costs and cashflow. And if you’re concerned about the state of your business at present, please get in contact.
For many people and businesses who pay tax provisionally, the 7th of May (the 8th of May this year as the 7th falls on a Sunday) is a big Tax Day. On top of provisional tax payments, there is also GST due, very big Tax Day!
If you’ve got a tax payment due and don’t have the funds to pay it, please let us know. While we can’t make it disappear, we can often provide alternatives. But the sooner we know, the more options we can consider.