ACC unfortunately is something a profitable small business owner is unlikely to be able to avoid.
Levies can go up and down depending on the type of year you’ve had. And just like provisional tax, if you have a profitable first year, you can end up being lumbered with two years of levies to pay after your first year of business. For salary and wage earners who pay their levies via PAYE, if they have an accident and get their claim accepted, ACC pay out based on 80% of their wage or salary after they are off work for more than a week.
But what happens to small business owners when they have an accident and are off work for more than a week?
The first problem is that although ACC may have accepted your claim, if you’re on a standard ACC policy, ACC will ask for last year’s financial reports along with your financials for the year up to the date of your injury. If you’ve run at a loss for the year to date, ACC will most likely say “well, 80% of nothing, is nothing”. So you won’t be receiving any weekly compensation from them.
Sounds a bit rough, huh? Well, that’s just the way it works. Unfortunately, this leaves many small business owners in a tight spot. Not only do you still have the mortgage to pay, household bills to cover and a family to support, you haven’t got any funds coming in and a business still to run while you’re possibly just needing time to heal and recover from your injury. So what are your options?
The first option is to keep your financials up to date and one of the best ways to do this is by using an online accounting package to keep your business records. By doing this, when ACC ask for your reports, your accountant is able to look into your accounts and assist you with providing ACC the reports they require much quicker than if you’re not keeping records throughout the year or are using a desktop accounting package. This could still leave you in a position of not being eligible for weekly compensation if your business hasn’t been profitable for the year due to a downturn in your market, or perhaps because you’ve been putting more funds in than you’ve been getting out due to expansion.
Is there a way around this then?
Well, yes there is. ACC have a policy called Cover Plus Extra. Cover Plus Extra works similar to an insurance policy. You elect the level of cover you’ll require if you were to have an accident and be off work for more than a week. If ACC approves your application for Cover Plus Extra and you pay their invoice, it will mean that if you are injured and your claim is accepted, then they will pay out based on that policy. No providing financial reports, delays in waiting for them to process your application and decide if (or how much) they will pay out. So not only do you have a rough idea of how much your levies will be from year to year, you will also have that peace of mind of knowing you will still be able to pay the mortgage, support your family or pay someone else to run your business while you recover.
If you would like to know more about how ACC levies work or help applying for Cover Plus Extra, don’t hesitate to give us a call.