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Why Will You Open Your Child A RRSP?

If your child in his/her teen with a job and an income in the previous tax year, it is possible to open a RRSP in his/her name.

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RRSP for child
The image courtesy is theglobeandmail.com

Should you open a RRSP for your child? Find out why you should.

When parents consider saving for their children, they typically think of getting their money in a RESP (Registered Education Savings Plan) or a TFSA (Tax-Free Savings Account). The RESP helps to create an education fund for the child whereas the TFSA is a flexible and tax-sheltered way of saving money for the future.

While both are excellent options, what about RRSP (Registered Retirement Savings Plan)? A child RRSP is often ignored in financial discussions, but this plan can be an excellent way to save for the child’s future. Read on to know why you should open a RRSP for child.

Can I open a child RRSP?

Yes, you can.

A minor can open a RRSP by getting the consent of his/her parent or legal guardian. There is no minimum age for a child to open a RRSP, provided they have some legitimate income. Things like mowing lawns, lifeguarding, babysitting, etc. can add up to significant RRSP room over the years.

But then, if your child is still in his/her diapers, a RRSP is not the likely option.

Why open a RRSP for my kid?

There are plenty of good reasons:

1. To promote a healthy saving habit: If you want your kid to make a good saving habit, RRSP is an excellent choice.

2. To purchase a house: With home prices soaring, burying a house can be a hurdle for the next generation. Your child can get a head start by contributing the very minimal amount to RRSP and take advantage of the Home Buyer’s Plan at a later stage of his/her life.

3. Early investment and the magic of compound interest: Your child can take maximum advantage of the magic of compound interest by his/her early investment. For example, if your kid invests $100 from the age of 14, s/he will end up with a substantially large nest egg when s/he reaches 65 compared to someone starting with the same amount at 30.

The below chart throws more light on the matter.

Age 14Age 30
Per month investment amount$100$100
Total Interest Earned$342,111$100,471
Total Value of Investment at 65 years old$403,311*$142,471*

**This calculation is based on an interest rate of 6% compounded monthly.

Can I use my RRSP money for my child’s education?

Certain plans allow you to withdraw up to $10,000/year tax-free. There is also a lifetime maximum of $20,000/person. You will have to repay the money over a period of 15 years. Any amount you cannot repay will be subjected to income tax.

This program is available only to you and your spouse – not your kids. So, if you want to use your RRSP to pay for your child’s education, you will have to withdraw the required amount and pay tax on it.

How can you open child RRSP?

If you have decided to open a RRSP for your child, here is what your child’s going to need:

Income: Your kid must have earned some income and have been issued a T4 by the employer in the previous year (unfortunately, an allowance does not count). Your child should have also filed an income tax return in the previous year. 

Letter of consent: Your child must have a letter of consent from a parent of a legal guardian.

The rest of the process is more or less similar to opening a RRSP for yourself, including the process of deciding what you can do with the contributions.

Finally, we would like to say,

If your child in his/her teen with a job and an income in the previous tax year, it is possible to open a RRSP in his/her name. It can be a good option to establish a good saving habit. But then, if your child plans to use the money to pay for tuition, or debt, there are other appropriate investment options like RESP or TFSA. Talk to our financial advisors to know more about how to open an RRSP. The consultation is free with zero obligations!

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Finance

Deductions That Small Business Owners Face

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Tax-Deductions-2021

In Australia, as the tax time approaches every year, small business owners start worrying about taxation. This is due to the additional tax they need to pay after lodging their Small Business Tax in Australia. Hopefully, as a taxpayer you certainly don’t wish to get affected by this hassle, right? Then, what’s the sole solution to this problem? The answer is simple, by considering the remunerative tax deductions offered by the ATO. Rest assured that you don’t have to face this issue from the subsequent taxing years.

Who can help?

So, the best professional who can help you competently is a tax agent Perth in Australia. Your tax accountant will assist you in filling your pertinent tax returns in an effective manner. So, is your small business requiring paying those unsolicited taxes during every taxing year? Do you feel that your small business’s bottom line is getting affected as a result of that? If yes, then here are some notable tax deductions which you should consider imperatively. These tax deductions are encountered by most of the small business owners while submitting tax returns all by themselves.

Tax deductions which you can claim

So, there are certain tax deductions that you can claim from the ATO while lodging your Small Business Tax Return effectively. Some of them can be considered below.

Maintenance and Repairs:

These are tax deductions that small business owners can claim on the repairing and maintenance costs of their organizations. A few of them include the following:

·       Any type of machine servicing if there is any

·       Maintenance of the various electrical components

·       Maintenance of the pipes for the sake of plumbing

·       Conditioning of the gutters and

·       Painting of the office building

The number of these deductions will vary somewhat according to the size and type of your business.

Deductions on Car Expenses: 

These include deductions that you can claim on the costs of running an owned or leased car. However, you should use this car merely for the sake of your business and not for anything else. It might be the case that your business operates on a partnership business. In that case, one of the partners can claim a portion of the deductions according to the pertinent substantiation protocol.

Business Travel Expenses:

Certain business travels also come under the category of being considered as tax-deductible. These business travel deductions can be claimed according to the legal rules as imposed by the Australian Taxation Office. So, here are some business travel deductions which apply both to you as well as your employees.

·       Any sort of costs related to food and the arranged accommodation in case you’re traveling all through the day.

·       Costs related to taxi travel bills, bus, and that of train fares and airfares

In case, your employees are availing of these privileges, the pertinent fringe benefits would apply.

Telephone deductions:

These include expenses related to the usage costs of satellite office phones and that of mobile phones etc. Again, these expenses should be solely related to your office and not anything else. As stated by the ATO, you can claim a substantial sum of deductions from the same. These tax deductions are furthermore divided into two separate aspects. These include the following:

·       You need to have an adequate sum of records for substantiating your claims and 

·       You should have paid all the telephone bills to the pertinent operators to claim your deductions

These two aspects will be considered by the ATO related to your work-oriented costs only. If you have a home office, it might happen that you have used the phones for personal or familial purposes. In that case, you need to specify the office usage percentage to the Australian Taxation Office.

Wages and Salary:

Deductions that are directly related to the payment of salaries to your workers are also considered tax-deductible. These emoluments should however be paid against tasks and duties which solely pertain to your business. Sole traders however cannot claim these deductions in connection to the salaries they’re saying to themselves. They also cannot claim the said deductions against monies required for some private reasons. Again, if your business is a partnership, then you claim on your employees’ salaries partially and not fully.

So, do you also feel that you can claim any of the tax deductions stated above? Then, the best option would be to hire a registered tax agent in Perth to get the job done impeccably.

Deductions which you cannot claim

Some of the cost and expenses which are not considered tax-deductible include the following:

·       Costs related to entertainment

·       Private and domestic expenses

·       GST credit deductions in case you carrying the same individuals on the activity statement of the Company

Tax issues are inevitable when you staying somewhere in Perth, Australia, and running a small business. A Tax Agent Perth is the only person who can help you lodge your small business tax returns faultlessly. Besides, your tax agent will also ensure that you’re able to claim your potential tax deductions in an effective manner.

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Finance

Applying For Personal Loan Online? Here are Required Documents

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Personal loan nowadays has become a lifesaver for individuals who need funds urgently. In a matter of a few hours, your loan is processed and disbursed into your account. However, both borrowers and lenders have to take care of a few important steps before loan processing.

The first step to get a loan is to look for the best lender offering loan terms based on your requirements. The next step is to apply for a personal loan. With a personal loan app, you can now fill the personal, professional details and banking details, and upload required documents on the go. 

Documents Required for Personal Loan

There are various lenders available online. After choosing a lender based on your needs and other factors, you have to visit their website or download the personal loan app. Besides submitting your relevant details, you will have to upload some documents: 

  • Proof of Identity

The proof of identity has to be submitted with your application form. It can either be your birth certificate, passport, driving license, voter identity card, PAN card or Aadhaar card. Any of these can be used as your proof of identity.

  • Proof of Address

The lenders also need to verify the place of residence for various future communications if required. You can submit your utility bills, passport, bank account statement or passbook and Aadhaar card for address proof.

  • Proof of Employment

As the personal loan is unsecured, no collateral is required. To mitigate the risk of issuing a loan without security, lenders ask for proof of your employment. It ensures that you will be able to repay the loan amount easily and will not default. For Proof of employment, you can upload your previous 3-6 month salary slips.

An employment proof from a good MNC or Fortune 500 company also creates an impact. The procedure for a loan becomes smoother, and you can easily avail the loan. For self-employed individuals, lenders typically verify the income source proof to determine annual profit margins based on their industry/ line of business.

  • Duration of Employment

If you have just passed out of college, then getting a personal loan might be difficult for you. The lenders ask for proof of the duration of employment of the applicant. Generally, lenders do not accept an application for such a short job duration. Most look for at least a year or more of employment.

  • Work Experience

While employment details and employment duration are important, the work experience also plays a major role in personal loan. The lenders may ask for proof of work experience to be sure that the applicant is a steady employee and not switching jobs frequently.

  • Credit History

Though there is no specific document for credit history, it is an important factor that matters while applying for a personal loan. If in the past you have defaulted, this does not reflect very good on your application. Your credit history is an indicator of your creditworthiness. The credit history is provided by an eminent credit bureau in the country, such as CIBIL or Experian. For example, many lenders expect a CIBIL score of 750 or above before issuing a loan. In a few cases, the applicant may also need to present your Form 16 of the current year and previous year.

Once the application with all the above documents has been submitted and verified, you will be granted the loan amount that the lender deems perfect based on your repaying capacity.

Conclusion

While the entire process for a personal loan is digital and hassle-free, the applicant must take care of the document submission carefully. The documents help the lenders in trusting you and helps to keep your credit history clean. With Insta loan apps, the e-KYC documentation process has become completely hassle-free. You can easily avail of a personal loan to meet a wide range of financial contingencies.

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Finance

Business Case study- A Case Study of Microsoft

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Microsoft pestle analysis + swot analysis case study

Microsoft Corporation is a multinational technology company based at Redmond, Washington. This company develops, manufactures, supports, licenses and sells computer software, personal computers and consumer electronics along with its related services. The name of company “Microsoft” has been named after by merging the two words “microcomputer” and “software”. According to Ricky, a senior consultant at My Assignment Help, During the year 2016, it has been ranked as the largest software maker of the world as per revenue”. It was basically formed to dominate the operating system of the personal computer with MS-DOS during the period of 1980s, followed by Microsoft Windows.

Background of the Microsoft

Name of company: Microsoft CorporationYear of Formation: 1975CEO: Steve BallmerProducts of the company: Windows, Servers, Office, Skype, Dynamics, Visual Studio, Surface Mobile, Xbox and list of softwareAnnual revenue: US$ 125.8 billionCountries in which it operate: Operates in 210 countries like in India, Canada, China, Australia, Germany, Japan, UK, Singapore, Ireland, Netherlands.Net operating cost: US$ 43.0 billionAd Expenditure: US$ 13.7 billionNet Sales volume: US$ 125.8 billionMain competitors: Apple, Google, Facebook, Oracle, IBM, SAP, Salesforce, Okta, Proofpoint

Background of Microsoft product

            The products of software can be segregated into different categories. These categories are explained with the help of a chart below-

WindowsOfficeBusinessDevices & MoreDeveloper & ITAppsMore
Internet ExplorerExcel  Skype for Business ServerXboxHardware DevelopmentSkypeMicrosoft store
Windows 7WordSkype for Business OnlineMobile DevicesVisual StudioYammerMicrosoft Account
Windows 8.1PowerPointSurface for BusinessSurfaceMicrosoft Exchange ServerSkype for BusinessSecurity
Windows RT 8.1Office for HomeMicrosoft IntuneDevice Service and RepairMicrosoft Sharepoint ServerSwayPrivacy
Windows 10OutlookMicrosoft AzureMicrosoft keyboards, mouse, LifeCam, LifeChatMicrosoft SQL ServerMicrosoft Edge for iOS and AndroidBing
Windows 10 MobileOffice 365 for BusinessMicrosoft Dynamics GP Microsoft .NET FrameworkDelvePC Gaming
Windows ServerOffice for AndroidMicrosoft Dynamics AX System CenterYour PhoneMicrosoft Ads
Windows UpdateOffice for iPhone & iPadMicrosoft Partner Centre Support  SwayMSN.com and Apps
Windows Insider ProgramOneNotePower BI   Microsoft Lifecycle Policy
Windows Mixed RealityAccessOther Microsoft Dynamics Business Solution    
Windows AccessibilityMicrosoft Teams     
Windows IT AdministratorOutlook 2016 for Mac     
 Publisher     
 OneDrive     

SWOT analysis of Microsoft

Strengths- The Internal Strategic Factors

It is the leading software company. It is the market leader of the technology of software especially in cloud computing. It has been considered as the largest developer of the Windows Operating System as well as the largest cloud player. According to Ana, a financial advisor at Myassignmenthelp, “During the year 2018 its annual revenue was $23.2 billion. It also ranks fourth in the list of world’s largest company in the year 2018 with market value of $750.6 billion”. This company has shown constant and strong growth in the cloud business. At the same time, it has the base of greatest loyal customer and it has been ranked 4th as the world’s most valuable brand. It is basically known for its hi-tech quality products.

Weaknesses- The internal Strategic Factors

            There has been often fall in the PC shipments due to the rising prices of the vendors and fluctuations of currency and therefore it has landed Microsoft in a vulnerable position. The increasing rate of cybercrime have also left Microsoft in a vulnerable state. There is lack of innovation and advanced technology in the hardware products of Microsoft in the products like computers, phones and surface pro. On the other hand, Google, Apple and Amazon are rapidly innovating their advanced technologies.

Opportunities- The External Strategic Factors

            During the recent years the cloud-based services of Microsoft has gained immense growth as well as success and hence the opportunity has been expanded to the cloud business of Microsoft. There are various innovative areas like AI and game technology where the Microsoft has massive opportunity and therefore, investing in such areas will give positive results in future. The company is able to gain high market share if it enters into new partnerships and acquisitions. Microsoft can go for acquiring hi-tech firms as this will provide a profitable opportunity for Microsoft. At the same time, the rapid growing market for the smartphones and tablets offer a wonderful opportunity for this company.

Threats- The External Strategic Factors

            There has been an imbalance in the recruited workforce during the time period of 2018 as shown by the Microsoft workforce diversity statistics with a low number of women employees. On the other hand, it has faced many criticism for its Xbox Live- the gaming service and the companies like Google and Apple stand as threats for Microsoft. It has a market of modest market shares in terms of smartphones, notepads and laptops.

PESTLE Analysis of Microsoft

Political

            The company of Microsoft has been running into several political issues during the last couple of years. China has an issue with the sales and distributions of Microsoft products and there was an amicable relationship between China and the United States and still U.S heavily relies on China and any sort of disturbance can affect Microsoft. During the year 2013, the European Union had also hit Microsoft for the violation of trust regulations. There will be shift in the laws in the international countries which may benefit the company as the political environment largely affects the business and profitability of any active businesses. During this recent times, the Microsoft is in a favorable position politically and the company has provided more than $10 million for the formation of the political environments in the last 2 years. Thus, it clearly indicates that Microsoft wants to be on the good side of the environment.

Economic

            The current state of the economy has largely affected Microsoft and there has been imbalances in the profit with taxation rates and change in the labor law and also because of poor and unfriendly relationship with the internal companies. All these have also affected the import and export of Microsoft. During the time of recession in the year 2017 the company was forced to lay off employees of over 5000 and it is still recovering from such mishap. Furthermore, during the year 2015 the revenues and expenses of Microsoft have been reduced in the international operations. Thus, it is needed for Microsoft to act accordingly for getting accustomed with the changes which are likely to impact the operations of the company.

Social

            The social factors along with the economic factors affect the revenues and profits of Microsoft. It is important for every business to understand the social as well as cultural factors of the business. These can be challenging for the businesses which has operations in the multiple countries. They need to study several customs and cultural changes but Microsoft has not put much effort for doing the same. There has been massive increase in the use of mobile devices but Microsoft is mostly concerned for the products of computers and put little focus on the mobile users. Therefore, for acquiring more success in the business it needs to shift their thinking and include smartphones as a big part of their campaigns.

Technological

            Microsoft is basically a technology based company which is engaged with the developing and distributing of digital software as a result any changes in the industry of technology is bound to affect the corporation. It is important to keep a pace with the technological breakthroughs as a new technology is developed the old one is thrown away. It has two major rivals- Apple and Google which keep Microsoft on their toes. It can result into business loss if Microsoft do not put much attention in the funding of innovation, investments and research. Similarly, it has experienced growth and success after adopting the cloud based services. The only loophole is that it does not keep pace with the mobile phones as mentioned earlier and buying of Nokia was not profitable for Microsoft.

Problems Microsoft is facing

            The recent economic meltdown has hit the world had a severe implication on the economies as well as most of the companies worldwide and Microsoft is not an exceptional but it has still managed to be among the big players of the market even after the financial crisis. However, there are some key challenges which are being faced by Microsoft and it has been unidentified after conducting SWOT and PEST analysis. One of those key challenges has been explained below-

Lack of Innovation

            It has been already identified in the SWOT analysis that Microsoft lacks in innovation and most of the products which have been launched by Microsoft are influenced by the existing products of other competitors. Therefore, for instances the very own browser of Microsoft, the Internet Explorer is similar to the Netscape. According to some employees of the company, since Microsoft lacks in innovation their employees are busy upgrading their products.

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