The focus for this month is on looking at what achieves business profitability. On the surface it seems simple. You’re in business to generate profits because without profits you’ll go out of business. Simple.
If you sell labour or your products and services have a labour component, then our Employee Profit Calculator will help you find out how much your employees really cost which then leads on to what you have to charge your customers.
Next we offer you a simple formula for finding your breakeven point. Based on your existing overheads and gross margin, we show you how to calculate your break-even point. Then using the same formula, calculate what your profit will be by changing the overhead and gross margin.
Employee Charge Out Rate Calculator: Now Free!
Want to know just how much to charge your employees out at?
Our Employee Profit Calculator, that we developed for use by the trades, is now being adopted by many business owners who charge out on an hourly rate. The real hourly cost of employees can come as a shock when all the cost factors are fully accounted for.
Check out the explainer video below and then email us if you’d like to use the calculator for your business.
Know Your Breakeven Point
How easy is this: BE = FC / GPM?
The breakeven point (BEP) of your business is as critical as it sounds. You make a loss if you’re below your BEP. You make no money if you reach your BEP. You make money if you exceed your BEP.
FC = Fixed Costs. GPM = Gross Percentage Margin.
Try this simple example.
Breakeven = $20,000/.40
Breakeven = $50,000
If you sell, deliver and collect $50,000 per month, you have neither lost nor made money. You broke even.
If you lowered your monthly fixed costs to say $17,000 and increased your gross margin to 42%, your breakeven drops to $40,476 and you suddenly make $9523 profit for the month.
Your BEP is critical. Now you can see why.
Clever Business Uses for Smartphone Cameras
7 Helpful Tips from Debbie Mayo-Smith
Grumpy With Your Accountant?
About this time of the year, business owners get frustrated with the slow turnaround of their annual accounting work and tax returns. And many are on high alert for unexpected invoices.
At e3, we guarantee a delivery date and we lock in a fee so there are no invoice surprises.
If you’re grumpy with your accountant, click here and let’s sit down for a chat to compare what we can offer with what you currently get.
We regularly publish the Step Up Business and Tax Tips Newsletter.
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Welcome to Glenn and Goodbye to Melanie
We might be sad to see Melanie go after so many years but we’re delighted to welcome Glenn Hansen to our team.
"Follow you heart... but take your brain with you."
Tax Tip - Credit Card Fees
GST Applies on Premiums Charged.
If you charge a premium to customers and clients for using a credit card to pay for what you sell them, the extra amount you get is subject to GST.
Similarly, that premium is part of taxable inputs for the purchaser.
"Everything happens for a reason. But sometimes the reason is that we're stupid and we make bad decisions."
Donations from Family Trusts
When and What to Claim
Companies can claim charitable donations as a business expense, so long as the company has made a profit.
Individuals can claim donations so long as the donations do not exceed their gross income before tax.
Trusts cannot claim donations as an expense against their income. However, provided charities are included as beneficiaries of the trust, they can receive a distribution from income.
"I hate it when I'm singing a song and the artist gets the words wrong."
Book a free forty minutes with Jamie (one on one or via Skype) to discuss any aspect of your business, issues you are having or your plans for growth.