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Ho ho ho! Merry Christmas.
Holy smoke we can't believe how quickly this year has flown by. We hope it has been a good profitable year for you. There seems to be a real positive vibe out there - let's hope it continues into the New Year.
Christmas is a great time to enjoy a few extra days off and have a good break. We hope you have something special planned with family and friends.
The Equation Team will be taking a short break this year. Our offices will be closed from the 24th December until the 5th January.

However if you require us urgently over this period please email Nicole. 


Accounting Lingo...Part two of the Profit and Loss

In our last newsletter we covered the top half of your Profit and Loss statement. In this edition we would like to walk you through the second half of it. To recap the top section covers the Gross Profit:

Sales less Cost of Goods Sold and Direct Costs = Gross Profit/ GP

Part Two


Net Profit

Net Profit is often referred to as the bottom line and can also be called Net Income or Net Earnings. Net Profit is calculated by starting with a company's total revenue. From this, the cost of sales, along with any other expenses that the company incurred during the period is removed to reach earnings before tax. It is found on the last line of the Income Statement, showing what the company has earned (or lost) in a given period of time (usually one year).

Expenses - these are the second category of expenses following the Cost of Goods Sold/ COGS in Part One. These expenses are sometimes referred to as fixed expenses because these expenses represent the relatively fixed costs of running your office and business premises - your overheads.
Whether you manufacture one chair or 1000 chairs, you still have the costs of keeping your business open. Separating out the fixed expenses also allows you quickly to see if there have been any unusual increases.
Examples of business expenses are rent, stationary, insurance, bank fees. These figures are usually excluding GST. 

Net Profit normally refers to the profit figure before the deduction of company tax, in which case the term is often extended to 'Net Profit before tax'
One of the most important accounting concepts is that Net Profit is not a measure of how much cash your business earned during a given period. This is because the income statement includes a lot of non cash expenses such as depreciation.

Sales less Cost of Goods Sold and Direct Costs = Gross Profit/ GP
Gross Profit less Expenses = Net Profit


Profit and Loss Report

Have you had a look at the comparative Profit and Loss report in Xero? This clever report  compares your Profit and Loss from one period to another. It's a great way to check out how you are tracking compared with the previous year.
To check your profit against previous years go to:-

Reports> Profit and Loss> Show Date Range

To and From Field - Enter the date that you want to compare the information to.
Compare - Select Previous Year.
Compare Periods - Select the number of years you'd like to compare.

Getting Prepared for the Silly Season

Entertainment expenses

Just a reminder that there are a few scenarios where you can only claim 50% of the expenses as business.

Corporate boxes, corporate marquees or tents, and similar exclusive 
areas (whether permanent or temporary) at sporting, cultural or other 
recreational activities that take place away from your business premises. 
This includes tickets or other rights of entry. 
If you are sneaking away remember this one...
Accommodation in a holiday home, time-share apartment or similar, but 
not accommodation incidental to business activities or employment duties. 
Pleasure-craft, eg, a corporate yacht
Food and drink provided or consumed:
   – incidentally at any of the three types of entertainment above, eg, alcohol and food
      provided in a corporate box
   – away from your business premises, eg, a business lunch at a restaurant
   – At your business premises at a party, reception, celebration meal, or other similar
      social function, eg, a Christmas party for all staff, held on your premises
      (excluding everyday meals provided at a staff cafeteria)
   – at any event or function, on or away from your business premises for the 
      purpose of staff morale or goodwill, eg, Friday night “shout” at the pub
   – in an area of the business premises reserved for use at the time by senior staff
      and not open to other staff, eg, an executive dining rooom used to entertain clients.

When you code these expenses in Xero, split the expense and code 50% to Entertainment with GST and 50% Entertainment Non Deductible with No GST.


Arrghh Tax

There are a few tax commitments looming at this time of year and it is easy to forget about them when you are out of your routine and on holidays.
GST is due 15th January 2015 for period ending Oct/ Nov 2014, Provisional Tax is also due on that same day. If you can get this filed before you head away on your holiday, setting up a payment online for the due date, you'll be able to relax while you're away.

Don't forget also, the old PAYE is due on the 20th January.


Screen Shots

When we do support calls sometimes we need to get a screen shot of something on your page.
The Windows Snipping Tool is great just to capture a particular part of your screen. It is much quicker than opening a Word Doc and pasting the screen shot in then having to edit it.
Check it out...
Click on the Windows start icon on the bottom left, select Snipping Tool>New> Click on the down arrow and select the shape that you want>Drag your cursor over the area you want to capture> File> Save As.

If you can't locate it under the start icon try  Start > All Programs > Accessories > Snipping Tool 

Back in Sept 2013 .nz domains launched. It is now possible to register a domain such as
If you have a domain name you have until 1.00pm on 30th March 2015 to register or reserve these domains. After this time they will become available to everyone.

Some benefits are
Protect your brand
More choice in .nz domain names
Shorter address

Click here to find out more
Equation is proud to be partners with...
We hope you have a safe and happy Christmas. Thank you again for your support. We really do value your business and appreciate the referrals that you send our way. We look forward to sharing with you a prosperous 2015.
Happy Holidays!

Nicole and Bonnie



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