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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 [email protected]  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 [email protected]. 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.