Wednesday, July 30, 2008

It's Tax Time - Amway Distributors, is your "business" really a business?

Well it's that time of year again.....the preparation and lodgment of the 07/08 Financial Year Tax Return. One of the "benefits" of joining the "business" that sometimes gets touted to potential distributors is the "tax benefits" that can be gained, which by the way, is in violation of Amway's rules.

Let's be clear here, the ATO (Australian Taxation Office) has laid down in no uncertain terms as to when an Amway "business" is actually considered a business. It also clearly spells out when expenses can be claimed and what percentages apply. No matter what any sponsor or upline tells you regarding the "business" expenses and so forth, it means jack squat (not to mention it's misleading) if it does not accurately reflect the ATO's position. So do your homework and seek independant taxation and/or financial advice.


We highly recommend any potential and in fact, any new distributors that have joined this last financial year to read the ATO's position on the Amway "business". It is a lengthy read, but probably one of the most important documents that should be read before anyone decides to join or who has recently joined Amway. It is found on the ATO website:




From reading through the document, it's evident that the vast majority of the Amway "businesses" here in Australia would not be classed as businesses at all, as the ATO specifically states:
"You are not carrying on a business if you:

*purchase goods predominantly for your own self consumption
*are not actively sponsoring downline IBOs or otherwise building your Amway activities, or
*have minimal retail sales and insignificant sales to downline IBOs"

If you believe or have been told that you "don't have to sell" but simply just purchase and self consume products from your own "business", get others to do the same and you'll make significant money (we were told $50k within 12-18 months) then your deluding yourself that your running a "business". You may be able to kid yourself, but the ATO ain't gonna be buying it.

Now, if you are making a profit, and we should say, NET profit after all expenses (and this includes tools), then great, no really, we congratulate you. But if your not making a NET profit after a reasonable period of time and effort, then we think you should seriously evaluate your "business". Worse still, if your not keeping a regular track of your expenses and income to begin with, then in the real world, you are not and will never be considered a real business owner. Simply having the moniker of "independant business owner" certainly does not make you one, especially if you can't or don't run your Amway "business" like real businesses do.

If you believe or have been told that you "don't have to sell" but simply just purchase and self consume products from your own "business" and get others to do the same then as you can see, this does not constitute carrying on a business. Don't kid yourself by thinking otherwise and certainly don't let your sponsor/upline kid you either, especially if they tell you that you will make significant money by doing so (we were told $50k pa within 12-18 months). It's absolute baloney if they do not provide the data/evidence to back up thier claims.
If you have joined or are thinking about joining the Amway "business" to make money, and heck ain't this the primary reason people go into business for? then for god's sake, treat it and run it like a business, like real business people do. Real business owners understand the taxation laws that pertains to their business, and as an Amway "business owner" or a potential one, so should you!


Saturday, July 12, 2008

A New IBO Shares His Story

Hi!

I just wanted to contribute to your blog/website by sharing my story so far.

First of all, I am an IBO. However, my reasons for joining weren't strictly in line with Amway's BFYTODS spoon-fed garbage.

I'm a brand new IBO whose goals are the following:

1. Learn a new perspective on doing business, and see how exactly a MLM organisation works.

2. Help a friend see why Amway is a waste of time.

Amway Australia (from what I've seen) is touting itself as being part of the "Business with a System" quadrant of Robert Kiyosaki's Cash Flow Quadrant. While this is not entirely incorrect, the Diamond speakers at the workshops I've attended are emphasizing that MLM organisations are only what make up that quadrant: they fail to recognise that the "Business with a System" methodology can be achieved through other endeavours (such as franchising). They also completely disregard the Investor quadrant as being too risky; while the stock market has been affected by the economy recently, rising interests rates in Australia have made savings accounts a lucrative investment opportunity.

The most misleading statement I've heard is "setup your business once and then live your life how you want." While an Amway business, in theory, does provide an endless passive income it is far from once-only. The biggest bonuses are only obtained when your immediate downline has a bonus level below your own level. For example, consider the following...
(Note: This part is not included as the table as in the original email, it was all skewiff)

What this means is that the only way to maintain a substantial passive income is to ensure you've got several distributors (with a substantial distribution level - BV) with only people with lower bonus levels as your downlines. Essentially this alone makes it difficult to maintain a steady income, and means that you need to keep replenishing the people in your downline (as people will eventually give up if they're not receiving a substantial income) to ensure that your distribution amount (or Group BV) stays stable.

While Amway does produce some interesting products (eg. Glister Mouth Rinse concentrate), these are not the type of products you want to purchase on a monthly basis. In fact, the only product I think is worthwhile is the XS energy drink range. They're competitively priced with Red Bull, taste fairly good, and have a decent PV value. However, I'd be only buying them for the sake of buying them for the PV (I don't drink Red Bull all that often - a 2 litre bottle of cordial is far cheaper and will last a lot longer), which is absolutely ridiculous. It makes me wonder how the frivolous spending of IBOs affects our inflation.

I think I am done ranting, so if you have any questions please just email me so we can formulate a more structured article/blog post.

Regards,
(name removed)
We have indeed emailed this IBO with further questions but to date have not heard back....ah well, perhaps he achieved his goal of getting his friend out much quicker than he thought!

Trevor Chatham - Former Amway Australia EDC

Trevor Chatham was a former Executive Diamond in Amway Australia until Amway terminated his business in 2006. Rather than us tell you his story, you can read it for yourself here:
As you can probably see, Trevor is pretty pissed at how Amway Australia have treated him and he says that he will make his story public so his truth gets told. Now if you really want to read about the nitty gritty details of this dispute between Trevor and Amway Australia (ie, the letters/emails Trevor could not publish as ordered by the Federal Court) then read a copy of the Federal Court documents (dated March 2008) relating to this dispute.

It's a long read being 48 pages worth, but well worth reading. Some damming stuff indeed.

Now we must admit, that the thought had crossed our minds that Trevor could have been the "Anonymous Amway Transparency Guy" that has been posted some extremely interesting comments over the last month or so over at Orrin Woodward's blog. But apparently this is not the case.
In any case, with Amway Transparency Guy (who we believe was as high as a Sapphire) coming out of the woods and sharing his views about Amway Australia plus Trevor Chatham, who will no doubt unleash his truth and inform the Australian public about his Amway experience (once he is cleared to do so), it does not look good for Amway Australia.
We often get criticised for not understanding "the business" and for being ignorant in many facets of it. We do not nor have ever claimed to be all knowing about this "business", we are indeed outsiders looking in, but for all you staunch IBO's who tell us we don't know what we're talking about, what do you say to these former high level IBO's who are now blowing the whistle on your "business"?
Ah, don't ya just love whistleblowers?