NetSuite to Take on Xero, MYOB, Reckon in the Small Business Market / Australia & New Zealand

Sholto MacPhearson for BoxIT writes:

• inShare8

• Accounting-only version to launch with payroll, bank feeds, local support
• JCurve Solutions has merged with a public company to drive growth
• Costs $49 a month per user  

NetSuite, an enterprise business management program used by global companies, will soon relaunch a simplified version for small business customers in Australia and New Zealand through Australian partner JCurve Solutions.

The entry-level program, due within two weeks, would include a free online trial, automated bank feeds, payroll and an Australian 24/7 support centre. The program would be marketed as JCurve Go to businesses that wanted to expand their business from a handful of employees to 100 or more (see JCurve’s TV commercial at the bottom of this post).

Businesses that outgrew JCurve could move invisibly to the full NetSuite program. “The biggest differentiator for JCurve and NetSuite is that  seamless transition from one or two people to 100,000,” said Mark Troselj, NetSuite vice president for Asia Pacific.

This was the second attempt by JCurve to crack the lower end of the market. JCurve Solutions acquired an exclusive licence in 2009 to promote a small business version of NetSuite in Australia and New Zealand. The company had spent the first four years “learning to walk” by simplifying the NetSuite interface to suit small businesses, said Graham Baillie, managing director of JCurve Solutions.

JCurve’s initial approach was to build a software “wizard” to help businesses move across from their accounting program to JCurve, an enterprise resource planning (ERP) application which included a customer database, inventory and e-commerce portal as well as an accounting engine.

However, JCurve underestimated the resistance to change by business owners who baulked at the complexity of an ERP, Baillie said. Businesses preferred to trial software before committing and were put off by the lack of a free trial.

“The big difference now is that we match Xero in features and price,” Baillie said. JCurve was modifying the program to encourage a stepped implementation from a basic accounting program to fully fledged ERP.

“It’s like when people get an iPhone. First they just make phone calls, then they send some emails, and then they start looking up things on the web. It’s a staged use of the tool,” Baillie said.

JCurve Solutions had merged with a publicly listed developer of phone expense software, Stratatel, to acquire “more horsepower and profile” to achieve its ambitions, Baillie said. The combined company had 65 staff and was led by Baillie, founder of outsourcing company Converga, and chairman Nihal Gupta, an entrepreneur with 30 years’ experience in consumer electronics and IT innovation industries.

While Xero had validated the market for cloud accounting software, Xero and rivals MYOB AccountRight Live, Saasu and Reckon One were too limited to help growing companies, Baillie said. “Accounting is only one part of a small business’ life. While they can add bolt-on applications, they’re not owned by the same company. Is the reporting the same? Who supports it?” Baillie said.

“This is a transitionary period. Eventually small business will wake up and realise they have an application that only does half the work. Those businesses that do it early enough are going to be the most dynamic in the years to come,” Baillie said.

JCurve had released a television commercial for the new program.

Do we have a tech bubble? / "Xero has risen in value by 436 per cent in the past 12 months and is worth nearly $4 billion on revenue of only $30 million for the first six months of this year"

Liam Dann for NZ Herald writes: Does New Zealand have a tech bubble? It's not an unreasonable question. High-flying tech stock Xero has risen in value by 436 per cent in the past 12 months and is worth nearly $4 billion on revenue of only $30 million for the first six months of this year. Listed biotech company Pacific Edge has soared 210 per cent in the past year and has market capitalisation of nearly $350 million but reported revenue of less than $1 million last year.

Last week another tech hopeful, GeoOp, listed on the NZAX. The initial public offer valued GeoOp shares at $1 each. By Friday they were already trading at $2.50.

Off market we also have a bunch of tech companies that are doing very well raising private capital for expansion right now. Our tech sector is hot.

Perhaps we need to pinch ourselves and remember that the hot bit isn't actually making money.

The top five technology stocks in the country by revenue are a pretty unsexy bunch. However, Fisher & Paykel Appliances, Datacom Group, Fisher & Paykel Healthcare, Tait Radio, and Gallagher Group pulled in combined revenue of nearly $3 billion.

But the hot stocks are where the growth is. Last month's TIN100 report noted that the software development sector saw revenue growth of 20 per cent versus growth of just 3.7 per cent across the industry as a whole.

New Zealand software companies, thanks in a large part to the trail blazed by Xero, have certainly caught the attention of US investors and that is helping drive the boom.

Let's call it a boom. The trouble with calling it a bubble is that it implies the companies themselves are full of hot air. And that's not fair.

The bubble, if there is one, is on the market. It is driven by too many investors getting carried away, not just about the prospects of the companies but about the chance of making quick gains on soaring stock prices.

By and large, what happens on the market isn't something the companies can control.

Genesis Research and Development is an example of a good New Zealand tech company, with good people involved, that just didn't work out. It got caught up in the tech bubble of 2000 and was briefly one of the hottest stocks on the NZX. It had shares that peaked at $8.48 in 2000. Last year the company ground to a halt with shares trading at 1.8c.

Genesis was a biotech company that had some promising science around the treatment of psoriasis. It had other technologies, too, but this was the one identified as the real commercial prospect.

When it listed, Genesis was entering the US Food and Drug Administration Phase II clinical trials for PVAC, a potential cure for the skin disease.

Unfortunately, the Phase II trial turned out to be make or break for Genesis. And the result was break. Despite a lot of effort to salvage some value from the remaining science it never recovered from the trial failure.

Xero is no Genesis Research. It has a product and customers, for starters. It is the quality of that product that has ignited the initial interest, and well done to those Kiwis who have been rewarded for backing it from the start.

But budding tech investors need to really understand what they are investing in and what the risks are. They also need to understand that the US investors driving local prices are often sophisticated investment funds with portfolios full of tech darlings from around the world. They can afford to see one or two go bust - in fact they expect that some will go bust and factor that in.

The cause for concern is that we will see New Zealand investors caught up and inadvertently perpetuating hype that they aren't really geared to cope with.

In the US right now there are conditions that aren't too dissimilar to the conditions during the tech bubble of 1999 and 2000.

The economy is emerging from a downturn and monetary policy settings are stimulatory - interest rates are low and borrowing is cheap.

But as conditions improve, investors start looking for good returns and need something to do with their money. If the bank is only offering 2 or 3 per cent interest then many will look to more aggressive growth funds, including tech-focused funds.

We're seeing high-profile players like Facebook and Twitter list on Wall St. While these businesses are more mature than some of the contenders at the turn of the millennium, they still have a way to go to justify their market value.

It is extremely cool that New Zealand's tech sector is on the radar as US investors get back into growth mode. The capital investment heading our way is good news for local companies and it is creating jobs.

But it has a side-effect of making things go a bit crazy on the market. We just need to keep it all in perspective and hold on tight for the ride, because there is every chance this boom is just getting started.

Don’t give up extra income for fear of change in taxes

Niel Brown for The State writes: Have you ever heard someone say, “I don’t want to make any more money because it will put me in a higher tax bracket”? I have and just shake my head because most people don’t understand this concept. They mistakenly think that moving to a higher tax bracket will subject all of their income during the year to this higher rate.

Read more here: http://www.thestate.com/2013/11/03/3073974/dont-give-up-extra-income-for.html#storylink=cpy

Your marginal income tax rate is the rate at which you would pay tax on your next dollar of taxable income. It’s also the rate at which your last dollar of taxable income was taxed. Your marginal tax rate depends on your filing status and on the level of your taxable income.

It’s important to remember that the marginal tax rate is not the rate at which all of your dollars are taxed. If you enter a higher tax bracket, only the portion of your income that has crossed the new threshold will be taxed at the higher marginal income tax rate. The rest of your income will be taxed at the lower rates applicable at those thresholds.

For example: Assume Mark is unmarried and has $40,000 in taxable income in 2013. That will put him in the 25 percent marginal income tax bracket (see table below). That means that the first $8,925 of his taxable income will be taxed at 10 percent, the next $27,325 will be taxed at 15 percent, and only the remaining $3,750 will be taxed at 25 percent.

Generally speaking, a marginal income tax bracket is the income tax rate at which you’re taxed for a certain range of income. Brackets are expressed by their marginal tax rate. Currently, there are seven marginal tax rates, as follows. The income brackets to which each rate applies depend upon your filing status: married filing separately, married filing jointly or qualifying widow(er), head of household, or unmarried.

A sample of the marginal tax rate schedules for 2013 are as follows:

10%

Single: $0 to $8,925

Married (filing jointly): $0 to $17,850

15%

Single: $8,925 to $36,250

Married: $17,850 to $72,500

25%

Single: $36,250 to $87,850

Married: $72,500 to $146,400

28%

Single: $87,850 to $183,250,

Married: from $146,400 to $223,050,

33%

Single: $183,250 to $398,350

Married: $223,050 to $398,350

35%

Single: $398,350 to $400,000

Married: $398,350 to $450,000

39.6%

Single: From $400,000

Married: From $450,000

Your marginal income tax rate is useful for calculating the income tax on additional income, such as the tax on a windfall or a year-end bonus. It’s also important for future tax planning. For instance, if you expect to be in a lower income tax bracket next year than you’re in this year, you might want to defer the recognition of some income until next year.

Although your marginal tax rate is a useful figure, your effective tax rate gives you a more complete picture of how much you’ll pay in income taxes over the course of a year. That’s because the effective tax rate takes into consideration any additional taxes you must pay (which increase your tax bite) and any income tax credits you’re entitled to (which lower your overall income tax liability). In contrast, your marginal tax rate involves only the specific income tax on your taxable income.

Your effective tax rate reveals the average rate of taxation for all of your dollars. It’s calculated as your total tax liability divided by your taxable income.

Example: Assume Mark is an unmarried taxpayer whose 2013 taxable income is $50,000. Mark is in the 25 percent marginal income tax bracket. His total tax owed is $6,608 (assuming no other variables). Therefore, Mark’s effective tax rate is approximately 13.2 percent ($6,608 divided by $50,000).

Taxes are not a fun part of life but bypassing income to save on taxes just seems like a bad financial plan.

Life is a journey; plan for it.

Read more here: http://www.thestate.com/2013/11/03/3073974/dont-give-up-extra-income-for.html#storylink=cpy

Roth IRA: Possibly the best tax advantaged investment ever

Scott Webb writes: Can you imagine an investment where Uncle Sam doesn’t tax you on your earnings? That is what the Roth IRA can do for you.

If you hold money in a Roth IRA investment for five years or until age 59½, whichever is longer, your principal and your earnings can be withdrawn tax-free.

Withdrawals of earnings made before age 59½ (and if the account is owned less than five years) will be subject to ordinary income tax plus a 10 percent federal tax penalty. Contributions to a Roth IRA are made with after-tax money.

If you and your spouse combined make less than $178,000 per year, you can each contribute $5,500 into a Roth IRA for tax year 2013. (For people age 50 or older, the contribution amount is $6,500 each for 2013.) You can still contribute to your 2013 Roth IRA until April 15, 2014.

If you have any investments that are giving you a large 1099 each February, talk with your certified public accountant or financialadviser about how to shelter more of those taxable gains. The Roth IRA is one way you can do this with earned income.

A little Roth IRAs 101:

If you and your spouse make more than $188,000 a year, there is one way you can convert traditional IRA money into a Roth.

You could start a nondeductible IRA for both of you for tax year 2013. You can then convert your traditional IRA to a Roth with no income limitations. You will have to pay only the tax on the investment earnings.

That conversion could be done in the same week, thus providing a great way for couples older than 50 to stash $13,000 in a Roth IRA.

Married couples who make less than $178,000 a year have a fantastic opportunity right now to put money in Roth IRAs. Single people making less than $112,000 are eligible for a Roth IRA also. Caution: Married couples filing separate might not be eligible.

Although we cannot predict the future, we do know tax rates are currently some of the lowest ever. That makes the Roth IRA even more attractive when you consider that tax rates will most likely go up in the future. The higher the tax rates, the better tax-free is going to be.

Let’s look at three wealth building examples using a contribution amount of $416 per month for 30 years, total contribution of $150,000. (That is the 2012 Roth IRA contribution limit).

After 30 years, your investment earning a 5 percent rate of return will grow to $347,000. If you earn an 8 percent rate, it will grow to $624,000, and a 9 percent rate will allow your investment of $416 per month to grow to $767,000.

Just imagine what you could do for your family with tax-free money. Remember, those are hypothetical examples. Investment returns and principal will fluctuate based on market conditions and investment decisions.

If you already have a Roth IRA, keep making monthly contributions. If you don’t have one yet, talk with a financial adviser about setting one up. Most will allow $50 per month through automatic withdrawal. Even small monthly contributions will add up.

Don’t spend your tax refund. Invest it in a Roth IRA to help you pursue the goal of retiring earlier. Begin taking charge of your retirement by starting a Roth IRA.