MYOB How To: Account Names Instead of Numbers

An important MYOB preference you can change is the choice of listing and selecting accounts by either the name of the account or the account number.

Altering the default settings and listing your accounts by name is a quick and simple procedure.

From the top menu click set up and then scroll to preferences. The preference settings will open and you should select the "windows" tab.

As you can see above, the fourth option is "Select and Display Account Name, Not Account Number."

To activite this preference simply place a tick in the box. When the tick is removed, the accounts will be listed by account number.

Terms of endearment # 3

The ATO can send two different forms to certain taxpayers each quarter, both of which can cause confusion to those who receive them.

Business Activity Statement (BAS): The BAS is a composite form collecting figures on a variety of different taxes and rebates. This form is sent to companies, trusts, partnerships and individuals who operate a business in Australia.

The return obtains details regarding:

• Goods and Service Tax (GST)
• Pay As You Go Withholding Tax (PAYGW) - this is employee group tax
• Pay As You Go Tax (PAYG) - this is personal or company tax instalments
• Fringe Benefits Tax (FBT)
• Wine Equalisation Tax
• Luxury Car Tax
• Fuel Tax Credits

As you can see it covers a wide assortment of taxes primarily related to business activities of which an entity may have three or four at any one time.

Income Activity Statement (IAS): The IAS is sent to anyone receiving taxable income that does not have tax withdrawn through the year (either through PAYGW amounts from wages or PAYG instalments on BAS statements).

IAS statements are primarily sent to individual partners of a partnership, trust beneficiaries, sole traders who aren't registered for GST or employ anyone, self managed superannuation funds and individuals who receive income such as dividends, interest or positively-geared rental receipts.

Therefore partners of a partnership may receive a BAS in regard to the partnership if they are registered for GST or employ someone, and also each receive an IAS to obtain PAYG instalments for themselves personally.

Terms of endearment # 2

Let's see if we can unravel another one of those 'not-so-clear' terminologies that the ATO love to throw at us. These two sound the same but are vastly different.

Imputation credits: These are credits that are raised from franked dividends that a person or entity may receive.

Basically, a dividend is a distribution of profits held within a company to the shareholders (the owners of the company). If the dividend is paid from profits that have not been taxed, it will be an unfranked dividend which is simply added to the person/entity's income (much the same as interest).

If the dividend is paid from profits that have been taxed, it will be a franked dividend. Franked dividends have imputation credits attached that allow a tax credit of 30% of the dividend amount to be used. The reason for this is as the company has already paid tax on the profit at the 30% company tax rate, it would be unfair that the shareholder be slugged with tax again on the same amount. Therefore the imputation credit allows the shareholder to claw back the company tax amount in their own return.

Input tax credits: When calculating a person's Goods and Service Tax (GST) position, input tax credits are the amount of GST paid on goods and services that have been purchased by the client in relation to the business they are operating. Therefore they can claim those amounts as credits against the GST they have collected from the business income.

Sometimes a person/entity may have more input tax credits than GST collected which will generate a refund for that period.

More definitions coming soon!

Business Boo-Boo: Competing on Price

According to customer service consultant Paul Levesque in this month's CEO Refresher journal, competing on price makes the list of The Five Biggest Customer Service Blunders of all Time.

If "cheapest price" is not your market niche, competing on price can actually be damaging to your business. Market research confirms time and again that price is typically not even in the top three things a customer is looking for - in fact, quality is number one.

Paul Levenesque explains:

"It's one of the most common (and most costly) mistakes in business. Price becomes the deciding factor in purchasing decisions only when everything else is equal - and everything else is almost never equal.

Businesses compete on the perception of value, and this includes more than price. It's shaped by the total customer experience - and aspects such as "helpfulness," "friendliness," and "the personal touch" often give the competitive advantage to businesses that actually charge slightly more for their basic goods and services.

Those businesses that deliver a superior total experience from the inside out (that is, as a product of a strongly customer-focused culture) are typically those that enjoy a long-term competitive advantage - along with virtual immunity from the kinds of headaches that plague everybody else."

The bottom line is this: customers go elsewhere when you don't satisfy them. The solution to customer retention is not always to drop your prices. The secret is to deliver better service than your competitors.

MYOB Tip: Unsure of Tax Code

Most business transactions recorded in MYOB will use either a GST tax code or the N-T tax code.

If you are entering data yourself there may be times when you are unsure of the exact tax code to use. It is a good idea to have a specific tax code set up just for such an occassion. In the following example I have used a tax code called QUE (to represent question mark).

Here's how it is done:

1. With your MYOB data file open, select 'Lists' from the top menu and scroll down to 'tax codes.' The tax code list will display on your screen with all the tax codes listed.

2. From the bottom of the page select "new" to add your unique tax code.

3. You can call it anything you like but be sure it is something you will remember or recognise when you need it. I suggest you use your usual linked accounts but set the tax rate at 0% for this code, although ultimately the accountant will fix it up when they apply the correct codes.

4. Save the new code and your screen should something like this.

The next time you are unsure of the correct tax code to use when recording a transaction, you can use your new (question mark) code. This can be assigned correctly by you or the accountant at BAS time.

Knowing your business

During my searching the web recently I stumbled upon several small business sites. I was struck by the realisation that many of these businesses do not know what their business is.

A fine example of this was the 'bookkeeping specialist' offering secretarial services, web design and maintenance, resume writing, marketing advice, business analysis and yoga training! I'm serious.

While there is something to be said for offering a variety of services and having multiple income streams, tossing random services on a single webpage together is clearly not the way to convince prospects you are a 'specialist' in anything.

If you don't have a clear business niche, you risk standing for nothing. This makes you vulnerable to competitors. Give serious thought to what it is you want your business known for. Whatever that may be, be sure you KNOW IT and that you clearly COMMUNICATE IT.

June Lodgement Dates

14 June:

Reasonable benefit limits (RBL) reporting – all RBL reportable benefits paid in May 2007 must be reported to the Tax Office on or before this date.

21 June:

May 2007 monthly activity statements: final date for lodgment and payment.

30 June:

End of financial year.