Prior to starting a business there are many factors you need to think about. Its an exciting time and we forget about the financial side of the business and how it is all going to be funded. This is the time to think logically and have a plan in place and a start up budget to cover your costs. These may be from very basic to much more complicated if a lot more assets and supplies are needed. You do not want to leave yourself short so you can’t afford to pay for anything and end up in debt. Below are a few expenses to think about that you will incur on start-up of your business.
· What software am I going to pay for to do the bookkeeping
· How much are my accounting fees going to be
· How much will it cost to set up the entity that suits my personal lifestyle and business.
· How much money do I need to buy assets (equipment, inventory) and pay for supplies etc.
· How am I going to fund purchasing these assets
· How much of my own money do I have available to put into the business
· What marketing do I need to do
· What will my brand look like
· How do I work out what to charge customers
· How do I invoice my customers/clients, what will be my terms of payment
· How much tax do I put aside
· Should I register for GST
· Am I going to hire premises to work from
· What insurance do I need
· Am I going to hire staff straight away or contractors
· Do I need to pay super for myself, staff or contractors
· What are my employer obligations
· Will I have legal fees
The list goes on and on depending on your type of business.
After you have worked out if you can afford to start a business here are the steps to take to get started.
1. The first thing you need to do is to decide if you are going to trade as a Sole Trader, Company, Family Trust or Partnership.
2. Once you have made this decision (hopefully after getting some professional advice) you can go ahead and set up the entity you have chosen or ask an experienced public accountant to prepare this for you. FYI …A sole trader is just you and there is nothing to set up only to apply for an ABN and a business name if not using your own.
3. Once the entity is set up you may proceed to apply for an Australian Business Number (ABN). This identifies your business and it is registered on the Australian Business Register (ABR) where anyone can do a search for your ABN, check that you are a legitimate business, see when you registered the business and if there is a business name linked to the ABN, also if you are registered for GST. The ABR does not show your personal details to the public but has them on file. To register your ABN go to abr.gov.au, at the same time you can register for Goods and Services Tax (GST) if you will have a turnover higher than $75,000 pa and a Tax File Number (TFN) (as a sole trader as you should already have your own TFN under your name)
4. When you have received your ABN you can apply and register a business name under the entity you have chosen at assicconnect.asic.gov.au
5. Once all your registrations are complete it is time to open up a business bank account. YAY finally… Take all your documentation with you to the bank. For a Company (Pty Ltd) these will be the company documents that you would have signed on setup. For a Family Trust, this will be the Trust Deed, for Partnerships, this will be the registration of the name, and for a Sole Trader, it will just be the ABN. If you would like your bank account to include the business name in it would be a good idea to bring the business registration certificate.
6. So in summary: Bring the following documents below to the bank, if you forget anything there will be delays.
a) Entity documents
b) Business Registration Name
c) ABN
d) TFN
e) Personal ID (Drivers license, Medicare Card)
7. I would also advise you to open a business savings account to transfer the GST (if registered) and Income Tax you will need to pay. If you are going to have employees this is also a good idea for super and their PAYG tax withheld.
8. You are now set up and ready to go, all the required government documents and registrations have been completed.
9. How are you going to do your bookkeeping, this means tracking your business income, expenses, assets, liabilities and equity. Creating sales invoices and tracking who owes you money.
10. Are you going to have the training and learn the basics yourself or hire a bookkeeper. This needs to be factored into your budget. Gone are the days of manual cashbooks, spreadsheets and shoeboxes filled with receipts. To look professional, be able to produce a business report with the click of a button is to be proactive in your business and have a hands-on approach so you know how the business is performing.
The ATO requires a lot of electronic lodgements to be Govt. compliant and will shortly disallow paper lodgements of any kind.
We would love to talk to you about your new business idea. We offer a free 1-hour consult to make sure you are starting on the right track because once you start it is very hard to go backward. Fixing & changing anything can be very costly. Especially if buying an established business. Paying for professional fees can save you a lot of money in the long run, we can give you an estimate on the scope of work you require.
Stay excited for your new Venture and just ask for a little guidance.
😊 Happy Business Planning
Your Biz Accounting & Bookkeeping