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A Business Owner’s Guide to Credit Cards

No matter how well-established your business is, readily available and unsecured capital is integral to its success and longevity. Even with a positive cashflow, why not look at other means to quickly access funds? With 2 out of 3 business owners using credit cards, here’s a business owner’s guide to credit cards and how they can be the ideal financial buffer.

 When to go cashless

With so many different types of cards on the market, choosing the most suitable credit card can be a real headache for business owners. This is especially true in the early stages of starting a business. However, as your business grows, so will your expenses – which may mean leaning on a credit card from time to time, or using a credit card to take advantage of lucrative rewards schemes.

When it’s time to start thinking about using a credit card for business expenses, firstly look at the current stage of your business and purchasing patterns.

Here are some questions you may want to consider:

  • What are your monthly business expenses? (Rent, office supplies, utilities)
  • Do you need to set aside a budget for significant investments or costs? (Office equipment and technology, marketing and advertising, tax bills, insurance)
  • Do you or your employees frequently travel for business purposes?
  • Are employees often required to make business purchases?

Advantages of using a Credit Card

Credit cards not only offer short term access to funds, they also offer long term benefits for your business. These benefits can include:

  • Ability to manage monthly variable costs, improving and controlling cash flow.
  • Boost credit rating and purchasing power.
  • Credit can be unsecured (secured without a deposit)
  • Ability to separate personal and business expenses – making it easier to distinguish what is tax deductible.
  • Easier bookkeeping – especially when it comes to tax time!
  • Gain credit card rewards – Using a credit card to pay business expenses can offer rewards and loyalty points programs that are not only incentivize but help your business grow.

Use B2Bpay and maximize Credit Card rewards

Whilst credit cards may offer credit reward points on business expenses, there are still billers who will not accept credit card payments.

B2Bpay is a centralised online portal that allows you to pay business expenses – including one-off, scheduled and future dated payments – with your existing credit card. Regardless of whether the biller actually accepts credit cards, through B2Bpay billers receive payment by EFT or BPAY. Billers receive payment within 3 days and there is no extra cost to them.

With B2Bpay, you can earn Qantas points as well as credit card reward points on all business expenses. Even when paying tax, government, insurance, telcos and insurance bills through B2Bpay, business owners will earn full card points.

Beyond the simplicity and reliability using B2Bpay, the unique advantage for business owners is profitability through payments.

The Deloitte ‘SME Digital Payments – New opportunities to optimise’ White Paper 2018 featured B2Bpay as a case study, stating that “by utilising the B2Bpay platform, SMEs could attract significant value, potentially at a level of approximately 7% of expense paid”

Furthermore, the White Paper confirmed that alongside efficient and accurate cash flow management, B2Bpay’s features are:

  • Improved visibility and reporting
  • Automatic bill reminder alerts
  • Alerts through SMS and email (for successful and failed payments)
  • Low cost processing fee (which is also tax deductible)
  • Secure payment mechanism through tokenisation (and no storage of card numbers)
  • Reporting capabilities and centralised expense management

While credit cards can guarantee working capital for your business, B2Bpay can ensure your business payments count in profitability., making you miles ahead of your competitors.

To set up a B2Bpay account, click here.

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GST and Commercial Property Guide

Issues regarding GST and commercial property in Australia can often be confusing. However, through diligent research, working out the process of GST claims can reap substantial returns for your business during tax time.

Renting commercial property as a tenant

Renting commercial space can be a feasible option for a start-up or new business as it allows flexibility for change and growth. As initial costs in purchasing commercial property are high, being a tenant allows funds to be better utilised in other business areas such as recruitment or equipment upgrades.

One of the biggest advantages is that rent is tax deductible.

Do tenants pay GST on rent?

Tenants may be required to pay GST on their rent.  As business owners can claim rent as a tax deduction, a tenant renting commercial property can submit claims for most business and office related expenses. In addition, the GST component of rent costs can be claimed as a GST credit (also known as an input tax credit).

GST on commercial rental bond

As part of a lease agreement, tenants may be required to also pay a bond. A bond is a form of financial security for the lease. It is usually paid at the start of the lease and returned when vacating a commercial premises.

A tenant does not pay GST on a commercial rental bond unless the amount is forfeited or part is withheld for damage to the premises or goods.

SECTION 1: Owning a commercial property

Diving into the world of commercial property can be a lucrative and exciting business decision.

Whether you’re a commercial landlord or looking to sell or buy commercial property, it’s prudent to take a close look at the GST implications around your specific business circumstances.

Registering for GST

 The Australian Tax Office (ATO) requires businesses and enterprises to register for GST if the GST turnover (gross income minus GST) is $75,000 or more.

When it comes to commercial property, the GST turnover is considered to be the rental income.

Most commercial property transactions fall under the ATO’s definition of “carrying on an enterprise”

The Australian Government states, “An enterprise includes activities done in the form of a business”, such activities include renting or leasing property.

As such, investors of commercial property are placed under the same taxation rules as other businesses.

You are required to register for GST, if you’re leasing out commercial property that has a GST turnover of over $75,000.

You may be able to remain unregistered if the total rental income of your commercial real estate investment is under the $75,000 per annum threshold.

How to register for GST

 Before registering for the GST, an Australian business number (ABN) is required. This process can be done online through the Australian Business Register website.

Once you have an ABN, you can register for the GST online through the ATO Business Portal. Your registered tax agent or BAS agent can also help with the process.

  1. Selling a commercial property – paying GST

If you are in the position of selling commercial property and registered for GST, take into consideration the additional GST value to your selling price.

Vendors are usually liable to pay 10% to the ATO after the sales transaction. By adding GST in the price of your property, you are able to pass this amount onto the ATO without losing value to the initial sales price offered to your buyer.

  1. Buying a commercial property – paying GST

There’s some good news for those looking to purchase commercial real estate – you are eligible to claim a GST credit that was included in the purchase price.

There are, however, certain conditions that must be met in the process for claiming back GST on your recently bought property.

These include:

–       Both seller and buyer are GST registered

–       The purchased property is legally defined as “carrying on an enterprise”

–       The seller issues a tax invoice for the purchased property

–       The seller has not applied the margin scheme to work out the GST included in the price of the property

–       The property was not purchased as a GST-free supply

Commercial property sales transactions usually deal with significantly large figures and therefore the GST claim will also be substantial.

Buyers should be prepared for a possibly long process in receiving GST credit.  The ATO will often pay extra attention when investigating and verifying larger claims. Therefore, the GST credit may not necessarily be received within the tax quarter that the GST claim was submitted.

  1. Leasing a commercial property and GST

As mentioned earlier, those who own and lease commercial property are required by the ATO to register for GST if rental income is over the $75,000 per annum threshold.

Under ATO’s regulations, property that is already tenanted or partially tenanted can be sold as “supply of going concern” in which case, the buyer may be exempted from GST.

Again, certain conditions and requirements may apply, including:

–       The buyer is registered (or required to be registered) for GST

–       Payment has been made for the supply

–       The buyer and vendor have written agreement that the sale is of a going concern

–       The supplier supplies all things necessary for the continued operation of the business

–       The supplier carries on the business until the day of supply

The GST issues involved in commercial property can be wide and varied, even complicated.

Whether you’re a tenant of commercial space or investing in commercial property as a landlord or vendor, due diligence is key.

Disclaimer:

Any information provided in this article is provided as general information and to be used as general information purposes only.

For specific details and advice regarding GST and commercial property, please contact the ATO or consult your registered tax professional.

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Christmas Survival Guide for Business Owners

Eat, drink and be merry. If only Christmas were that simple.

When you run a business, Christmas can be a stressful time of the year. You may need to juggle sluggish cash flow, staff going on holidays and, like everyone else, a multitude of personal commitments.

So what can you do to get through the Christmas period without turning into the Grinch?

Up the exercise

We all know exercise is great for reducing stress. But don’t wait until the New Year to up the ante at the gym or dust off the bike helmet. Use the Christmas holiday period as a chance to do more of something you enjoy.

Not only will this help you relax and take your mind off work, it will counter some of the excess indulgence that tends to happen this time of year – helping you feel healthier, happier and more energised for 2020.

Boost cash flow 

If the holiday period is stressful because there’s less revenue coming in, do what you can to boost your cash flow until you’re likely to be busy again.

Are there any outstanding debts you can call to be paid before Christmas? Do you any have insurances or membership fees you could pay by the month instead of annually? Could you use your credit card more than you currently do for large business expenses – like your ATO Tax Bills?

Using a third party payment system like B2Bpay  can help you keep cash in your account longer. You also get the added benefit of earning credit card reward points, which could help you pay for next year’s Christmas holiday!

Take a (proper) break

Business owners are notoriously bad at switching off from work. It’s one of the reasons your customers love you, but it’s also a common cause of stress because you rarely take a real break.

The Christmas period is a good chance to take a time out when most of your customers are doing the same.

If you can’t shut down completely, why not entrust one of your staff to take the reins for a week or two? Who knows, you may even find that leaving someone else in charge works out fine – which will make you more comfortable to do it again.

Put family first

If you spend the year having to say no to family functions and other social engagements because of work commitments, use the holiday period as a chance to make up for lost time.

By prioritising your family and encouraging your employees to do the same, it helps build a healthy work-life balance that everyone in your workplace will appreciate – which in turn will help you attract and retain valued people.

Be Santa

It always feels good to do something nice for someone else. So why not treat your staff or customers to a surprise gift or get together? It can be a great way to build relationships and shows your appreciation for the people who are important to your business.   

If you’re not sure what an appropriate gift might be, consider a prepaid credit card  that lets your recipient buy whatever they want. You can even personalise the card with your own brand so they think of you (in a good way!) when they open their wallet.

What will you do?

Whatever strategy sounds right for you, now is the time to do something that might help de-stress over the Christmas period. Get it right and it could be a gift that keeps on giving for many years to come!

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Innovative Ways to Manage Cashflow

If cash is king for any small business, a positive cash flow is the backbone to survival and success. Being nimble is a major advantage for small business. However, this can also result in fast turnover and sudden short falls. Keeping on top of financial incomings and outgoings can be a daily challenge. Here are some innovative ways to manage your cash flow:

Constantly Forecast and Monitor Your Cash Flow

 Although, forecasting for projected earnings and losses can be as fun as watching paint dry, it is absolutely crucial. A forecast allows you to make informed decisions on which business areas have potential revenue growth as well as where to cut costs.

The fast-paced dynamics of a small businesses can make monitoring cash flow a fickle task. Yet, it’s the constant changes that require a close and frequent analysis of your business income and expenditure. Smart small business owners will even track their cash flow on a weekly basis.

B2Bpay is a secure online portal where you can check on all your payments one-off, automatic and future dated. Become a B2Bpay Biller and track your accounts receivable at anytime from anywhere.

Collect receivables immediately

 Generating revenue can be an unpredictable game. However, keeping on top of invoicing and payment receivables will help maintain a positive cash flow. Here are some suggestions to streamline and efficiently collect money owing to your business:

  • Issue and send invoice efficiently and follow up overdue payments
  • Offer a convenient and secure online payment option on your invoice
  • Offer discounts or incentives to encourage customers to pay early
  • Secure a customer’s booking by requesting partial payment
  • Make deposit payments mandatory when taking a customer’s order

 Extend your payables

The key to a successful business is to keep cash coming in as quick as possible while holding back on expenses for as long as possible. Easier said than done? Here are some useful tips:

  • Work closely and build strong, trusting relationships with suppliers who can offer flexible payment terms.
  • Negotiate and maximise payment terms. If a payment is due in 30 days, see if you can extend it to 45 and don’t pay any earlier.
  • Electronic funds transfer allows you to make payments on the last day they are due. This will help you retain funds for as long as possible without facing the stress of late fees.
  • Streamline your accounts payable process and make payments digitally.
  • Don’t leave it to the last minute to request an extension on payment. Look ahead at upcoming bills. Make a conservative decision whether you can make payment or not. If not, contact your supplier immediately and explain the situation.

B2Bpay Benefits

B2Bpay allows you to pay all your invoices using existing credit cards, whether or not your biller accepts credit cards. B2Bpay accepts all major credit cards.

Pay your invoices through B2Bpay and you will:

  • Boost cash flow by taking advantage of your credit card’s up to 55 day’s interest free period
  • Earn Qantas Points
  • Earn credit card reward points
  • Earn full credit card points when paying ATO, insurance and telco bills
  • Eliminate mundane admin and accounting tasks so you can go back to doing what you do best – building a business

According to a recent Wakefield Research study, within the 500 Australian small businesses that were surveyed, 50 percent have lost $10,000 or more by foregoing a project or sale specifically due to insufficient cash flow issues. Having a positive cash flow not only lets you sleep well at night but allows you to financially expand your business.

Whether you’re looking to tighten expenses or need efficient payment methods, B2Bpay allows you to streamline the constant movement of your business funds. Think of all the additional revenue and extra business opportunities that come along with it.

To register, click HERE. Setting up is easy and at no cost!

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Is it better to rent or buy your business premises?

Setting up a business involves a lot of decision-making. While most people focus on customers, products and pricing, one key decision you need to make is whether you choose to buy or rent your business premises.

There are pros and cons of either approach. But here are some of the key questions you need to ask yourself before you sign on any dotted lines.

What can I afford?

Just like buying a home, buying a commercial property requires a lot of cash. In fact, you generally need to put down a bigger deposit to buy a commercial property – often around 25-50% of the property’s value (plus stamp duty and often GST).

This could turn out to be a great investment if the market works for you. It could also work against you if the market drops and you need to sell to access that money. You also need to factor in the ongoing costs of building maintenance, council rates and other levies that you wouldn’t need to pay if you weren’t the property owner.

Renting is obviously much less of an upfront financial commitment – which can free up more cash to spend on your business. But the downside is you’re helping someone else pay off their mortgage. Likewise, if you invest in renovating your premises, you’re adding value for someone else.

How much space am I going to need (now and later)?

You need to think about the future growth of your business. Being the owner of your premises gives you more flexibility to reconfigure your existing premises (without having to ask your landlord for permission – more on that later). But it also means you’re ‘locked in’ to one site that may not suit you forever.

If you change your business model, shift your focus interstate or simply need a bigger premises, it’s much faster and less costly to make a move when you’re renting.

Am I OK with having a landlord?

One big downside of renting is you don’t have the freedom to make all of your own decisions. You generally have to ask your landlord for permission if you want to make changes to the floorplan, put in a skylight or even paint – which could hold you back from creating the workspace you really want.

Also, if your landlord decides to end your lease or sell the property, you may be forced to vacate the premises and find somewhere else at short notice. Or they may increase your rent each year to the point you can no longer afford to stay.

When you buy, you’re more in control of your own destiny.

Do I want to earn rewards points?

Many business owners are rapid accumulators of rewards points because of the ability to pay business bills on credit card.

While you can’t generally earn rewards points on mortgage repayments, you can use a third-party payment service like B2Bpay to pay your rent – and earn full credit card points (including Amex).

If you paid $240,000 per year in rent and other business expenses using B2Bpay, you could earn:

  • 240,000 Qantas Points (or credit card points) every year, plus
  • 2,400 Qantas Points for your business every year (or even more by paying B2Bpay Bonus Billers).

That’s enough points for 2 x return Business class flights from Sydney or Melbourne to London every year, including approximately $1,517 in taxes, fees and carrier charges.

If you’re renting and looking to boost your rewards points, join B2Bpay free below or click here to find out more.

So what’s the verdict – rent or buy?

Every business owner has their own pros and cons to weigh up, and a hairdresser will have very different requirements to a motor mechanic. The important thing is to do your homework so you can make a decision with confidence, then get on with running your business.

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Connect to MYOB

You now have your own branded Payment Page set up with B2Bpay, where you can easily accept credit card payments online. What’s more,  both you and your customers will be rewarded with Qantas Points when payments are made through this page.

And if you use Xero to invoice your customers – the great news is you can set B2Bpay up as a payment option and your customers can simply click ‘Pay Now’ from your invoice and be taken to your Payment Page with the amount and reference already pre-populated.  Simply follow the instructions below to set this up.

Instructions

Step 1

Log in to Xero

Step 2

Click on your Company Name drop down on the top left hand side, then click on ‘Payment Services’ and select ‘Add Payment Service’

Step 3

Select ‘Use a custom URL’, and enter the following details and then press ‘Save’

  1. For Name – type ‘B2Bpay’
  2. For Your Custom URL – cut and past this URL into the field:
    https://pay.b2bpay.com.au/BUSINESS?paymentamount=[AMOUNTDUE]&customerreference=[INVOICENUMBER]
  3. Once pasted, replace the word ‘BUSINESS’ in the above URL with your merchant code. For example if your payment page address is pay.b2bpay.com.au/ABCBusiness, then replace ‘BUSINESS’ in the URL with ‘ABCBusiness’
  4. For Pay Now Text – enter what you would like for the text on your invoice. For example “Pay now by Credit Card

Step 4

Once this has saved, go back to ‘Settings’, then ‘Invoice Settings’ and in ‘Options’, select ‘Edit’

Step 5

In the field ‘Payment Services (Credit Card)’ on the right hand side, select ‘B2Bpay’

You’re done!

Your invoices will now include a link for customers to:  View and pay online now  using B2Bpay.

This link will bring them to an online version of the invoice with a payment link.

The amount and invoice number will be pre-populated.

Instructional Video

We’ve also put together a short video which takes you through the above steps

Need further help?

Email us info@b2bpay.com.au  or  call: 1300 205 575

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How to Pay Your ATO Tax Bills With Credit Card and Earn Points

Tax bills are one of the biggest expenses for any business. So wouldn’t it be nice if you could earn frequent flyer points on your payments to the ATO?

If done correctly, it is possible to pay your pay your ATO tax bill using your credit card and earn maximum rewards points.

This article will explore your options for paying the ATO via credit card, the fees associated with paying via credit card, and the best way to maximise the rewards points you receive from paying your tax bill (including a great hack for earning extra Qantas Points!).

Can you pay the ATO by credit card?

Yes, you can pay the ATO using your credit card – including Visa, MasterCard or Amex. The fees associated with paying the ATO vary based on which card you use, so make sure you use the chart below to identify exactly how much you’ll be charged in credit card fees.

Does the ATO accept Amex payments?

Yes, the ATO accepts payments from Amex cards. However, the fee for paying the ATO with an Amex card is 1.45%, which is significantly higher than other domestic credit cards.

What are the benefits of paying the ATO by credit card?

There are some good reasons why paying your tax bills by credit card makes sense:

Cash flow

Paying the ATO by credit card means the money doesn’t leave your bank account straight away. Instead you can hold onto your cash during the interest-free period on your credit card, and it won’t cost you any interest if you pay your credit card bill on time^. It can also help you avoid any late payment fees or interest charges if you don’t have the cash available on the due date.

Credit card fees may be tax-deductible

You may be able to claim your credit card processing fee as a tax deduction for your business, which helps offset the additional cost of paying ATO bills by credit card. However, any interest you pay for late credit card payments is generally not tax-deductible.

Credit history

Paying your bills by credit card can be good for your credit history, provided you always pay your credit card bills on time.

Reward points

You may be able to earn rewards points on your tax payments, which wouldn’t be possible if you pay the ATO straight out of your own pocket.

What should I watch out for when paying the ATO by credit card?

Reduced or zero rewards points earned

Traditionally, the big downside of paying ATO and government bills – and other bills such as insurance, rates and utilities – on credit card is that these billers are often categorised by your card issuer to earn reduced or ZERO credit card rewards points.

In other words, they’ll let you pay these bills using your credit card (and charge you a credit card processing fee), but you won’t get the full benefit of rewards points.

ATO credit card payment fees

Another downside of paying by credit card is that you’ll pay a card payment fee that wouldn’t apply if you were paying by direct debit.

The ATO charges the following card payment fees:

 Card  Fee
 American Express  1.45%
 MasterCard – International  2.70%
 MasterCard – Domestic Debit  0.15%
 MasterCard – Domestic Credit  0.70%
 Visa – International  2.70%
 Visa – Domestic Debit  0.15%
 Visa – Domestic Credit    0.78%

 

The trade off with card payment fees is that higher fee cards often earn more reward points per dollar than lower fee cards, so the extra benefit may outweigh the extra cost.

Interest if you don’t pay your card off

If you don’t pay off your credit card bill by the due date, you could end up paying additional interest to your card issuer on top of your ATO tax bills and card payment fees.

Some credit cards charge as much as 20% p.a. interest on overdue amounts, which could mean a significant penalty if you’ve put a large tax bill on your card. Again, any interest you pay for late credit card payments is generally not tax-deductible.

How do I get the most rewards point when I pay the ATO by credit card?

While card issuers will give you reduced or zero credit card reward points when you pay the ATO, you can increase the reward points you earn by using a third-party payment service like B2Bpay.

What is B2Bpay and how does it work?

B2Bpay is a third-party payment service that allows you to pay all your business expenses* online using your credit card.

Unlike using credit cards directly, B2Bpay allows you to pay the ATO while earning FULL credit card points (including Amex).

That means you can earn at least double the credit card points^ than if you paid directly, without paying double the credit card processing fee. Plus you can receive additional bonus Qantas Points on top of that, helping your reward points stack up even faster.

How many points can I earn (and what can I do with them)?

If you paid $240,000 per year in BAS, payroll taxes and other business expenses using B2Bpay, you could earn:

    • 240,000 Qantas Points (or credit card points) every year*, plus
    • 2,400 Qantas Points for your business every year (or even more by paying B2Bpay Bonus Billers).

That’s enough points for 2 x return Business class flights from Sydney or Melbourne to London every year, including approximately $1,517 in taxes, fees and carrier charges.

How much does it cost to use B2Bpay?

The only fee for using B2Bpay is a card processing fee – which ranges from 1.2% to 2.4% excl. GST (or 0.84% to 1.64% after eligible company tax deduction) depending on your card type.

This fee is outweighed by the value of the credit card and Qantas Points you can earn, plus the cash flow benefits of holding onto your cash longer.

Get started now

Paying your ATO bills by credit card offers a number of potential benefits for business owners, including credit card reward points. And if you’re disciplined about paying your credit card off each month, these benefits can easily outweigh the additional costs.

To start turning your tax bills into rewards points, join B2Bpay free below or click here to find out more.

^ Credit card reward points and interest free days are subject to the terms of your credit card and linked rewards program.
# A business must be a Qantas Business Rewards Member to earn Qantas Points. A one-off join fee of $89.50 including GST normally applies, however this will be waived for B2Bpay customers using this link. Membership and Qantas Points are subject to the Qantas Business Rewards Terms and Conditions. Qantas Points for business are offered under the B2Bpay Customer Terms and Conditions. Members will earn 1 Qantas Point for every $100 paid and up to 3 Qantas Points per $1.50 paid to B2Bpay Bonus Billers. See B2Bpay website for a list of current B2Bpay Bonus Billers. Qantas Points earned using B2Bpay will be automatically credited to your linked Qantas Business Rewards account within 90 days of your eligible spend as outlined in the B2Bpay Customer Terms and Conditions. Any claims in relation to Qantas Points under this offer must be made directly to B2Bpay by emailing help@b2bpay.com.au. Businesses must ensure the ABN registered with Qantas Business Rewards is saved in the B2Bpay customer profile or entered online when paying in order to earn Qantas Points. 
* Use a Qantas Points earning credit card to earn points on every payment. Card products referred to are not issued by Qantas but by the relevant Card partners. The applicable Card Partner is the credit provider and credit licensee under the National Consumer Credit laws. Points are offered by the relevant Card partner and partner reward program and can only be earned on eligible purchases. Contact the relevant Card Partner for terms and conditions or enquiries. Bank issued points earned by using your credit card are estimated to be 1 Qantas Point or alternative credit card reward point per dollar spent. Credit card reward points are subject to the terms of your credit card and linked rewards program. Qantas Points quoted are accurate as at 1 August 2017 but may vary at the time of booking. Classic Flight Rewards are available on Qantas, Jetstar and partner airlines. Classic Flight Reward seats are subject to capacity controls, availability is limited and some flights may not have any Classic Flight Rewards available. Taxes, fees and carrier charges are payable by an Accepted Payment Card in addition to the points required on Classic Flight Rewards. These are quoted at the time of booking and are subject to change. See Classic Flight Rewards for more details.