As a goal setter and always wanting to strive to become a better person I can understand how now is the time to reflect on starting your new business, venture or knowing that your ‘hobby’ is becoming nearly a full time job!

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When beginning a business – you start with a great idea however at ELS Accountants we can assist you turn this idea into a plan to succeed! The best way to climb the mountain of ‘to-do lists’ is to have a clear and easy plan to follow, step by step

 

Step 1 – Correctly Structuring your business. There are multiple options and combinations of entities (trusts, companies, sole trading) that can be used to ensure the following;

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1. Tax minimization – tax effect structures ensure that you are paying less tax now as well as in future years

2. Asset protection – you may already own your house, share portfolio or built wealth. You will need to ensure your new business venture does not put this built wealth at risk of law suits or unforeseen circumstances

3. Future Planning – do you want to bring on a business partner? Want to include family members (spouse, siblings or children) ?

 

Ensuring your business is correctly structured or knowing your options available can ensure you are making an informed choice that best fits you, your business and personal circumstances

 

Step 2 – Know your Obligations, The first couple of years for a business can be stressful when mentioning the ATO, Tax and GST

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1. Should you be registered for GST – will your sales accumulate more than $75,000 in a year? Are you going to be an Uber Driver? If you answered yes to either question than you will need to be registered for GST

2. Get a good Accounting software – cloud based programs such as Xero will be your best friend! These programs are built for small business and makes all GST, tax and bookkeeping incredibly easy and will start good business practices from day one

3. Keep all receipts and invoices – receipts no matter how small can amount to a material different in the amount of GST and/or tax so keep all receipts. Software such as Receiptbank or Hubdoc again can make record keeping easier, paper free and only require the use of your mobile

 

Step 3 – Start good cash practices from day 1! When the business is starting to make money and the bank balance is rising, it takes restraint and control to not spend the money

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1. After your structure is finalized and TFN/ABNs have been received – head  to the bank. Australia have some great banks who support small business. If you feel that you are not receiving great service from your personal bank – go else where

2. Setup at least 2 bank accounts

   1. 1 main trading account – this is for your day to day transactions, bill paying and receiving funds from clients

   2. 1 savings account – this account will be for saving for GST, super, wages tax and income tax

3. (If you are registered for GST) As soon as you are banking sales revenue transfer 10% of your invoice from the trading account to the savings account

4. If you have employees, each payroll pay your employees and move superannuation and wages withholding tax to the savings account

 

These practices will always ensure you will always have the money ready to pay the ATO and Superannuation clearing houses on time and in full – this can be a main stressor on many businesses

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1. Pay yourself a wage – and make this payment the only payment to yourself for personal funds and the business can pay your wages withholding tax and super.

 

This practice will allow you to watch the business’s funds grow and allow you to reinvest into your business

 

Step 4 – Surround yourself with experts and people you trust. Having experts such as

1. Mortgage Broker – get the best deal on asset purchases, commercial or residential property

2. Insurance Broker – ensure you have the correct insurance coverage, best premiums and someone who will review and ensure the policies are current each year

3. Accountant – Not only for your end of year tax, but your Accountant can also assist and support your business in the following

• Quarterly business advisory meetings to set financial and non-financial goals and assist you to track them

• Budgeting – to help you hit new sales goals, move towards buying your own home or commercial premise

• Find ways to ensure you are spending less time record or bookkeeping so you can spend the  time working on your business

• They should also offer tax planning before 30 June each year to minimize tax

• Ensure there is no tax or ATO surprises