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Starting up and Centrelink

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Old 22-11-11
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Default Starting up and Centrelink

Hi there. Iíve been reading this forum for a while but am now at a stage where Iím ready to post.

I have been making childrenís garments at home and selling them at markets. I have one niche item and several other general ones. Itís aimed at kids under 5. I am not a registered business as I am carrying on a hobby at present.

However, Iím starting to make some real headway but am still what someone would call a small (micro) producer. Still, the money I am making is covering more than expenses now and Iím at a point where I have to consider my options.

I am aware of the ins and outs of starting a business inasmuch as I have read plenty, have a little business plan, understand the mechanics of setting up a company (which is what I would prefer to do as opposed to being a sole trader).

My main obstacle at the moment is Centrelink.

I am in receipt of benefits (parenting payment) at present and have notified them of my hobby but do you think I can get a clear answer out of them regarding a business? As soon as the word ďbusinessĒ is mentioned, thereís an immediate demand for a balance sheet. When I advise that I want to set up a business I get all sorts of convoluted and conflicting answers. Bottom line is: Iím not a welfare cheat. I want to do the right thing but the waters are very muddied here. Youíd think that theyíd assist me with getting work or NEIS but ah noÖthatís a different story for another time

Has anyone here set up a business while on welfare payments? Or is anyone in a position to briefly advise as to what I can do about solidifying my position? Yes I do realise the importance of having an accountant onside but I simply do not have the funds at present to finance one hence the question.

I appreciate your assistance.

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Old 22-11-11
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Default Re: Starting up and Centrelink

NEIS is a program generally run by a 3rd party. Why not search and apply for a position in the program?

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Old 22-11-11
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Default Re: Starting up and Centrelink

What's wrong with a profit and loss statement?

I know a relative on Newstart who just couldn't find a job anywhere so she started her own business as a potter. It started out as a hobby and to keep her from going insane from lack of work - but as she started making money from it she then kept balance sheet as advised by Centrelink.

Centrelink allowed her to keep her Newstart allowance without having the two- weekly reporting thing which really made her life easier. Now she is self supporting and off Newstart. Be persistant until you can find someone who can answer your questions. And keep detailed notes of who said what (this saved my relative when yet another Centrelink employee gave her a 15th opinion...)

She didn't qualify for NEIS. Everybody seems to think that's a magic bullet but it's not.

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Old 22-11-11
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Default Re: Starting up and Centrelink

Hi Tulip,

In my last job I worked for a private college handling Government funded students. In that job I dealt regularly with Centrelink and Job Service Agencies. I often had to explain to Centrelink and JSA employees what they were required to do under funding programs they were supposed to be offering to eligible applicants.

Even with that experience, I got a major run-around when it came time to work out my options as a customer. They will not give you a straight answer unless you ask the right questions, often because they don't actually know what the answers are.

What you need to ask them for is a "MOD F" form. If you don't ask for it by name, you won't get it. Say MOD F and you'll at least get a form to complete, if not an explanation.

According to the form itself, "you must complete this form if:
- you are self employed or involved in a sole-trader business or partnership, OR
- you were involved in a business prior to claiming Newstart Allowance or Youth Allowance".

This is the form you use to declare the earnings you make through your business. You will also need to provide Profit/Loss statements and I am of the understanding that only your profits impact on your fortnightly payments (as opposed to the total income received). I have also been told that these forms are due every 3 months, though you should check with them on that.

The rest of the post is about NEIS and my experiences trying to apply for it.

There are a few criteria you need to meet to be eligible for NEIS.
- You need to be unemployed and receiving a benefit from Centrelink (not sure if this means you need to be on Newstart or if parenting payment is ok).
- It should be a new business. You may not be eligible if you've already been trading under your business name.
- must be able to demonstrate that there's a demand for your products/services in the market.

There are other criteria but I think those are the main ones.

In order to actually apply for NEIS funding you need to contact the 'NEIS provider', which is one of those great vague terms that doesn't actually tell you who to contact. You need to get in touch with the college that is running the course. You may be invited to an information session where you can ask questions but if you deal with the same college I did (they appear to be the main provider in Sydney), you won't get any help over the phone.

You will need to be approved by the provider to get NEIS funding, but it's a Catch 22 situation:

In order to get approved for funding, you need to provide a Business Plan and demonstrate market demand (amongst other things). Of course learning to create a business plan and do market research is part of what most people are hoping to learn in the Small Business Cert IV, which is part of the NEIS program!

To get around this, they may offer you a 'bridging course' which is 3 modules from the Cert IV Small Business Management which gives you information on business plans, market research/marketing and some financials, and which should be free for the student (it is Government subsidised).

If you manage to get approved for NEIS, you will begin the Cert IV Small Business Management. While you are doing the course you are still being funded by Centrelink and (if you're on Newstart) are still required to look for jobs. Once you complete the course, you are assessed again. If the provider approves your business idea, they will take you on and the provider will provide funding equivalent to Centrelink funding for up to 52 weeks (hence why they don't make it easy for people to just waltz into the program anymore).

Once you have completed the Cert IV and are approved for the next part of the program, you are expected to begin trading. You will need to meet monthly financial projections, or else you may have your funding cut off.

On the up-side, once you're actually receiving this funding you're no longer required to look for jobs and can earn up to twice your fortnightly payment on top of what you're receiving from the provider, without it impacting those payments.

That's about the extent of my knowledge of NEIS. As JaneB says, it's no magic bullet.

Hope that helps.


Last edited by LMarcatili; 22-11-11 at 05:24 PM.
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Old 22-11-11
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Default Re: Starting up and Centrelink

Hi Tulip,

The form mentioned by LMarcatili is a really good place to start and can be downloaded here.
If you start a company you will need to review the assets and income tests info here.
be very careful about claiming bills from your residence for the company as this could turn your house into an assessable asset and could effect your rate of payment. Remembering that equipment like your phone (registered to the company not you), computer (registered to the company not you), sowing machine and material will add asset value to the company; although there ongoing costs will minimize your income your assessable assets will increase.

hope that helps

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Old 22-11-11
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Default Re: Starting up and Centrelink

Hi Tulip,

What a wonderful attitude you have towards improving your life and situation!!

If you are interested at all in the Cert IV Small Business Management course please let me know. I have the entire course on CD (don't ask me how I got it lol) which I would be more than happy to give to you.

Good luck with your business venture.

Wendy

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Old 23-11-11
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Default Re: Starting up and Centrelink

Quote:
NEIS is a program generally run by a 3rd party. Why not search and apply for a position in the program?
Centrelink govern the programme and outsource it via third parties. I have been advised by Centrelink that I am not eligible for NEIS.

There are very different criteria between the types of payment on offer. As I am not on Newstart but on a parenting payment, I am not under any obligation to look for work, take part in activity tests and I am at the bottom stream category in terms of what training and assistance is available to me (which is bugger all). Basically speaking, because Centrelink have put me in the "don't have to do anything" basket, I am just not a priority. I have been through all this with Centrelink and have their advice in writing.

CoupleIt, I am kicking myself I didn't make smarter choices BEFORE I had my baby. Before motherhood, I was cruising through life not really thinking about the future. I didn't realise how easy it was to become tangled in the welfare web and my attitude stems from the cold, hard fact that if I don't find an outlet through which to earn an income, I will not get ahead and will forever be beholden to the government. I don't want my child to see this. I don't want my child to live it either.

Thanks for all of your responses. They've been a huge help and I am grateful. I will certainly be looking into them.

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Old 27-11-11
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Default Re: Starting up and Centrelink

Update.

I had a "Complex Assessor" from C'link contact me and we ran through the Company scenario while in receipt of benefits.

Oh dear god. What. A. Flaming. Hassle. *lol*

The assessor was great. Very proficient and I understood everything he was explaining. But the paperwork is mammoth, the in depth information required is monumental. I inquired about sole trader as opposed to setting up a company thinking that perhaps this process would be simpler and less taxing.

But as he advised, even if I was declaring income as a sole trader I'd still have to provide previous tax returns, profit & loss statements, balance sheets etc and was advised it was best to get an accountant to do this as C'link would need to check the veracity of the information provided anyway.

There were a number of other things I'd be obligated to do if I went down this path and I thought, you know what, I'm starting to paddle in some very deep water here and is that worth it right now?

So, for now I'm going to continue as a hobby, get as far ahead in my rent and expenses as I can, set up some goals and then make the transition.

One of those goals is to hire the services a good accountant who specialises in micro businesses.

I'll think about the rest next week.

I have markets to prepare for!

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