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  1. #12111
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    Small start-up businesses have a common feature, most of them fail in the first two years. That is not my opinion, it is reality. If you go down the track of government support for such enterprise you will increase the number of start-ups and the average time it takes them to fail may increase by a few months. The place is full of dreamers but it's not just a NZ problem. Watch a few episodes of Dragons Den and see for yourself.

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    Quote Originally Posted by craic View Post
    You may work in the health sector but so does the tea lady. I have the best cholesterol reading of any patient in a large practice and a doctor told me several years ago that testing my cholesterol was a waste of time because of genetic factors it would never be high. I eat at least two fried eggs with my bacon every morning. My wife takes pills for cholesterol but all the experts now seem to be moving towards the idea that diet has little to do with it. Back to the point - What do you think the Labour Party should eat to improve their chances in the next election?QUOTE=fungus pudding;663752]A silly assumption there Sgt. There is absolutely no way you could know.
    [/QUOTE]

    You are a marvel Craic, to improve their chances they could perhaps try a few fungus puddings ?

    westerly

  3. #12113
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    You are a marvel Craic, to improve their chances they could perhaps try a few fungus puddings ?

    westerly[/QUOTE]

    They're not edible.

  4. #12114
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    Quote Originally Posted by craic View Post
    Small start-up businesses have a common feature, most of them fail in the first two years. That is not my opinion, it is reality. If you go down the track of government support for such enterprise you will increase the number of start-ups and the average time it takes them to fail may increase by a few months. The place is full of dreamers but it's not just a NZ problem. Watch a few episodes of Dragons Den and see for yourself.
    Craic, I think your figure of well over 50% of startups failing in the first two years, is a bit high. Here are the stats from 2015 backwards. About 25% of SMEs survive for ten years or more, which implies the rest of them last between 1-9 years, and I think the benchmark is that for a business to reach the five-year stage, that's a good indicator. It's the sort of criteria MBIE look for - you don't get to apply for useful R&D grants until you can show 3-5 years of trading. And even then, the paperwork for an SME is pretty horrendous. A few years ago you could phone the govt agent locally, they'd help you do the writeup, you'd have the undergrad student sorted. Now the funded undergrad positions are gone in just a few days, because there are less of them, and more students not getting a spot.

    Note that in the years 2006, 2007, 2008 there were more enterprises being started than we have seen since. They fell back by about a third for many of the years National held power. I would guess the immigration-fuelled building boom has started up some new operators.
    Last edited by elZorro; 25-04-2017 at 09:56 PM.

  5. #12115
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    I very much doubt that all sole or small traders are included in the definition of 'enterprise' as many will not meet the criteria especially in the early years.
    Last edited by artemis; 26-04-2017 at 06:14 AM.

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    Quote Originally Posted by artemis View Post
    I very much doubt that all sole or small traders are included in the definition of 'enterprise' as many will not meet the criteria especially in the early years.
    I'm not so sure, as a sole trader still has to tell a govt department what they're up to, legally. If they operate under the table, that might be different.

    The number of enterprise births dropped back in the 2016 year, it's still higher than the deaths level. 22% of the new births are in the "Rental, hiring and real estate" section. That's consistent over the years, would that be people trying their hand at selling property, and those around the fringes of that?

    On average, around 19-22% of new enterprises fail within the first year, that hasn't changed much. Assuming that less fail in the second year, and it's some sort of a parabola that applies to failure rate, you'd expect something like 30% to 40% of new enterprises could fail in their first two years.

    Reminds me of a guy I knew who started a trade business, did some good sized jobs and promptly spent the residual cash (and a bit more) on a fairly new car from a yard. Then he got into trouble with the IRD down the track, and they wound him up.

  7. #12117
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    Quote Originally Posted by elZorro View Post
    I'm not so sure, as a sole trader still has to tell a govt department what they're up to, legally.
    That's interesting. Which department?

  8. #12118
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    Quote Originally Posted by elZorro View Post
    I'm not so sure, as a sole trader still has to tell a govt department what they're up to, legally. If they operate under the table, that might be different.
    .
    I'm a sole trader but I do not tell any govt department what I'm up to. What are you smoking today ElZorro?

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    Sole traders have to complete an IR10 and I think (not 100% sure) that is what Stats use for the birth/deaths measure. However, whether sole traders or not, not all IR10 filers are included in that measure as they do not meet the criteria.

    So they come and go under the Stats radar. There will be very many of them.

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    Quote Originally Posted by blackcap View Post
    I'm a sole trader but I do not tell any govt department what I'm up to. What are you smoking today ElZorro?
    But you have to tell the IRD what you're up to, Blackcap.

    Here's an IR10 form for you, and IRD have helpfully spelt it out:

    Find out about: Tax rates and codes

    Sole traders

    A sole trader is a person trading on their own. They control, manage and own the business.
    How does being a sole trader work?

    A sole trader usually has no formal or legal processes to set up the business. The owner/manager is personally entitled to all profits, but is also personally liable for all business taxes and debts.
    What are "drawings"?

    If you are a sole trader you're probably not paying yourself a wage, but simply taking money from the business when you need it for personal use. These takings are called drawings. They are:

    • a part of your profit and taxed accordingly
    • not a deductible business expense when calculating your profit.

    Record your drawings in your cashbook so that you can reconcile your cashbook with your bank statements, ensuring that there is enough money in the business to cover any bills owing.
    What are the tax rates for sole traders?

    A sole trader is taxed at the individual tax rates.
    Example
    Sales $177,000
    less all deductible expenses $108,500
    Net profit (taxable income) $68,500
    So even if you're selling stuff repeatedly on Trademe or similar, that's a business, as you're in it to generate a profit. I'm not sure how this works practically, as just about everything I buy on Trademe, even the stuff that has been indented, doesn't come with a tax invoice of any kind.

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