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Income Protection – Tax Deductible for the Business, is there GST and is it Taxable when Paid?

Income Protection – Tax Deductible for the Business, is there GST and is it taxable when paid?

Income Protection – Tax Deductible for the Business, is there GST and is it Taxable when Paid?

For many small to medium business it is crucial to take their central role as the main source of income seriously and protect it. Income protection insurance premiums are generally tax deductible for the business, but payments paid are taxable in the hands of the receiver when paid. There is NO GST on Income Protection premiums (nor on life insurance or private health premiums, as they are classed as financial services – GST is included in general insurances such as home and car insurance).

Income protection pays you a lump sum benefit of up to 75% of your gross income if you have become unable to work due to an illness or accident. It is to pay or provide a steady income every month so that you can focus more on the most important thing – your fast recovery.

Income protection can help you pay for many things including:

  • Mortgage and other debt repayments;
  • Basic household lifestyle;
  • Daily expenses, such as bills and food;
  • Rent or costs of maintenance costs.

As to how much income protection you need, depends on your current income – you can receive regular monthly payments of around 75 to 80 percent of your average salary before you became incapacitated, which should be enough to see you through until you can return to work. Another consideration is how long you want the benefits to be paid, which is unknown of course. You also need to consider the  (or company or business) you are entitled to, because after that, the income protection insurance can take over, and you want that to be as long as you can afford. So a quote on the payments (premiums) for different lengths of time is required. Income protection cover is usually only available from providers until you are aged 65, depending on the company.

Why not get a quote and know your options? It is FREE and there are no obligations you will be able to compare several offers and the premium prices. Call us and we can refer you to independent brokers in our trusted network who would be happy to assist you. Call today and be prepared! Ph 0407 361 596

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MYOB – Changing date format in latest versions 2011 onwards

MYOB – Changing date format in latest versions 2011 onwards

MYOB – Changing date format in latest versions 2011 onwards

When writing dates, do you prefer dots 21.11.2012 or typing slashes 21/11/2012? The date format draws from the Windows settings. But note this will apply to all applications on your computer also. But note an update to AccountRight is now available (v2012.9) which allows the dot separator to be used in dates without modifying the Windows settings.

For Windows Vista or Windows 7

  1. Click the Windows logo (the Start button) in the bottom-left corner of your screen and choose Control Panel.
  2. Click Region and Language.
  3. On the Formats tab, click Additional settings.
  4. Click the Date tab.
  5. In the Short date field, click the dropdown arrow and select the preferred short date format.
  6. If you prefer to use a dot (.) as the date separator, replace the “/” characters with dots as shown in the following example.

Note: Clicking Apply will provide an example of your specified date format in the Example section of the window as shown above.

  1. Click OK.
  2. If AccountRight was open, close and re-open it. Dates will now be displayed and can be entered with a dot separator.

For Windows XP

  1. Click the Windows Start button and choose Control Panel.
  2. Click Regional and Language Options.
  3. On the Regional Options tab, click Customize.
  4. In the Short date format field, click the dropdown arrow and select the preferred short date format.
  5. If you prefer to use a dot (.) as the date separator, select the dot (.) in the Date separator field as shown in the following example.

Note: Clicking Apply will provide an example of your specified date format in the Short date sample field as shown above.

  1. Click OK.
  2. If AccountRight was open, close and re-open it. Dates will now be displayed and can be entered with a dot separator.


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New Business Laws – Directors now accountable for Superannuation Guarantee Charge (SGC) and other liabilities

Superannuation Guarantee Fund

Directors now accountable for Superannuation Guarantee Charge (SGC) and other liabilities

Business owners beware – directors are now to be accountable for their company’s Superannuation Guarantee Charge (SGC) left outstanding, under new laws. According to the Australian Taxation Office (ATO), companies have two weeks to ensure their super guarantee obligations are up-to-date for the June quarter – otherwise directors could end up paying the guarantee themselves.  “These new laws protect people’s retirement incomes from employers who deliberately try to avoid their superannuation obligations,” Tax Commissioner Michael D’Ascenzo said. And further on he encourages companies that are having difficulties in meeting their super obligations to contact the ATO and make a plan to get up to date. Consider also that under the Director Penalty Regime, if a company is unable to fund its obligations, the director may be required to place the company into liquidation or voluntary administration. READ MORE at Money Management. For more generally at the ATO web site, GO HERE and further details with a summary table covering PAYG etc is HERE.


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Quickbooks – Can I back up the programme in case I lose the disk?

 

Quickbooks – Can I back up the programme in case I lose the disk?

Quickbooks – Can I back up the programme in case I lose the disk?

Ensure you have a good spot in your files for your latest Quickbooks disks and login details, registration, etc.

It is not possible to just copy the software from your computer as the installation installs parts of the software in different areas, not just in the programme folder under programmes. So best to keep disks safe, but if disaster happens, call your local country office and they will be able to help with a link to get a download

Downloads of recent versions are available from the websites:

Aust: http://estore.reckon.com.au/businesssolutions.aspx

USA/International: support.quickbooks.intuit.com/support/Articles/INF12417

If you have Advantage cover you will have a log-in to access other benefits, so call and find out what you are entitled to.

Aust 1300 784 253 

USA (888) 859-4056             


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Super to be Paid for the Self Employed?

Super to be paid for the Self Employed?

Super to be paid for the Self Employed?

Do the sole traders and self employed, that do not have a company where super is compulsory even when directors pay themselves, have an obligation to pay super?

The ATO website guidance is “If you’re self-employed, you don’t have to make super contributions to a super fund for yourself. However, you may wish to consider super as a way of saving for your retirement.”  SEE HERE

It would be wise to be putting super away just as if you were employed, otherwise if you hope that selling your business will be your super, you take several risks – all your “eggs” are in one basket, your industry may not be viable when you want to sell, you may not be able to build the business to the value you want to sell for.

You will also miss out on the very generous tax concessions of super, such as tax free pension after 60 YO (or reaching preservation age), see details in this article HERE.

When is super due, the ATO states –

“You need to pay a minimum of 9% of each employee’s earnings base at least once every quarter, by the cut-off date (28 October, 28 January, 28 April and 28 July).

You can choose to pay more often if it suits you, for example – on a monthly basis.”

For more obligations, go to the ATO site HERE.


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MYOB – 2011 – Eliminate Zeros printed on Invoice for Lines with Description/Text (Service Invoice layout)

MYOB 2011 Eliminate Zeros printed on Invoice for Lines with Description/Text

Eliminate Zeros printed on Invoice for Lines with Description/Text

I visited a local client whose electrician husband did not want all the zeros printed on the invoice on the lines where details about the job, materials and labour were written. They are using Service Invoice layout.

Solution – Instead of starting a new line in the invoice so that what was written could be seen, I showed the client that hitting the enter button started a new line in the same field and expanded the line into a box. Yes the writing “disappears” as it moves up but once you tab to the next field, all the writing in the box shows. Fill in the account and $ and tax code. And when the invoice is printed, only the $ typed will appear, and no zeros.

Another option is to insert a “Blank Line” – click > Edit in top menu > Insert Blank Line. Then you can type the info you want in the Description, and when you tab, it will not go across to the account and $ as they are not being used in a “Blank” line. The cursor will jump to the next line to start again on a new line.


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Markups and Margins – What is the Difference?

Markups and Margins – What is the Difference?

Markups and Margins – What is the Difference?

A common misunderstanding that business and employees encounter is the difference between markups and margins. This is part of the costing of goods and services, and are not the same.

We usually start with a cost base of quantities for materials and labor, let’s say $1000. If we markup we add to the cost, let’s say 30%, then $300 is added and the sell price is $1300. But the $300 (the markup) is actually  a margin of 23% of $1300 ((300/1300) x 100), therefore the 30% margin is not achieved.

So if a manager says the margin target is 30%, just adding 30% to the cost is incorrect.

Working backwards from the final sale price to the cost price:

To show 30% margin on $1300 sell price, the result  is $390 (30% is 0.3 times $1300 gives $390).

The $390 from $1300 leaves $910 cost price to obtain a 30% margin.

$390 is 42.8% of $910.

(The calculation to achieve 30% margin is $x x 1.428 = $x)

So if costs are $910 the calculation to achieve 30% margin is $910 x 1.428 = $1299.48, round up to $1300.

If costs are $1000 the calculation to achieve 30% margin is $1000 x 1.428 = $1428.00.

Many businesses wonder why they don’t get the profit they expect, and sometimes this is the reason. So check your figures and see if your margins and markups are what you were expecting.