You have a great idea and you’re ready to jump feet first into the business world. Congratulations! Before you take that leap, here are 5 important steps we recommend you take to give your new business the best chance of success.
Step One: Legal Structure
Should you be trading as a sole trader, a company, or some other legal entity? What is the right structure for you and your business? It is extremely important to understand the implications from a taxation and legal perspective. Getting it wrong could mean paying more tax than is necessary and/or exposing yourself to financial risk.
Step Two: Know your cashflow
Cashflow is critical in every business. Make sure you are aware of your regular and extraordinary expenses. Ensure you plan for expenses such as PAYG, GST, Superannuation, Insurance and Tax. Budget for large expenses and create realistic income goals.
Step Three: Savings plan – separate bank account
In the excitement of a successful new business, it can be difficult to remember to put money aside for annual taxation obligations. To prevent this from occurring, set-up separate bank accounts for your Everyday Business Transactions and transfer a regular amount to a separate account for your Taxation Obligations. Also, transfer funds from your business account to a separate account for personal expenses.
Step Four: Register your business
The Australian Tax Office requires each business to hold an Australian Business Number, commonly known as an ABN, whether you are required to register for GST or not. If this is not done, it is a requirement that your customers withhold 45% of your payment and pay it to the tax office.
Step Five: Engage an accountant
This should, in fact, be the first step, because we can help get everything right the first time. We can discuss business structure, organise registrations with the ATO, connect you with other essential service providers, such as lawyers, insurers and bankers, give you a thorough understanding of your future cash flow predictions based on industry averages.
To schedule your initial consultation, contact us here.