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Year End – using ACC to improve your bottom line

It’s that time of the year again, year-end… wondering where the profit is.

You and your accountant will be reviewing the profit and loss statement looking for ways expenses can be managed in the future.  At the top of the list is ACC (for no other reason than it starts with an ‘a’. 
ACC it’s a tax, it’s compulsory so it must be right, no point looking at that expense, right?
Not quite.
You are right, it is a tax and yes, it is compulsory.  Most employers look at their ACC levies the same way.  They take what they are given and pay accordingly.  Great for ACC, not so good for you.
The average ACC saving we create is 41% and this has been true for the 7 years we have been doing this gig.  This tells us that employers really do not understand ACC levies very well… and overpay as a result.
In all honesty, I don’t blame them.  The invoices have changed at least 4 times over the last 6 years; the way levies are calculated seems convoluted; most folk have at least one war story with ACC; and lastly, ACC is a government agency which doesn’t give us much confidence and the best of times. 
ACC for business is an insurance, it is there to cover a risk.  Sure, it is compulsory however it is still an insurance.  This means that we should look at it like all our other insurances… do we know the risk it covers?
Once we do, then we guarantee you there are savings available and quite substantial at times. 
ACC covers two key areas – the shareholders and the workers.
As a shareholder, do you need ACC and if you do, how much would you need at claim time?  If you do not need ACC either because you will still get paid or you happen to have income protection insurance, then you can actually pay a lot less.  Similarly, if you are like most business owners and never take any time off, what are you actually paying ACC for?  You are basically gifting ACC your money.  Nice for ACC.
As a business owner, what do you actually do in the business? 
At seminars I always like to shake everyone’s hands.  Why?  Because it allows me to see if they have clean fingernails and soft hands.  Ok, humour me on this one.  if a bloke has clean fingernails and they have a scaffolding business… then there is a good chance they are not on the tools.  This means we can potentially move them to a better suited levy code.  Scaffolding is $2.26 per $100 of income.  A management code by comparison is $0.14!  So, my question to you is, what is your risk?
For your workers, what business risk is being covered and is this even accurate for you?  There are that many levy codes to choose from that 1 in 5 businesses is on the wrong code.  Did you know we can back date this type of change 4 years?
We encourage you to look at ACC with a cynical view as with any insurance, it is meant to be there if there is a need.  So, what is the need or in other words, what is your risk that is being covered?
As the only ACC brokers in NZ, it is our job to advise you of these changes.  Like all brokers, we work on commission so no upfront fees for you.  If we do not create savings there is no charge.

Debbie Welsh