Once you have your start up business idea, have tested the market and are ready to embark on your business journey, there are several things you need to make sure you get right at the start. Below is a summary of 7 of the elements that when implemented correctly will ensure you keep more of your business’s profits in your hands.
1. Do you need to set up a separate structure to run your business?
Understanding the difference between the different business structures, such as companies, trusts, partnerships and sole traders, will help you decide which is most suitable for your business and your personal situation. Getting this right can have a huge impact your taxation, both ongoing and when you come to sell your business, asset protection and if you are in business with someone else, how easy it is to unwind the structure, without too much pain. You need to consider your structure from your industry standards and regulations. Another consideration is that some Government Grants are available are only available to Companies.
2. Setting up your Accounting/ Book keeping system.
Selecting the right system to prepare your accounts, that will streamline and automate the process for you, can save you literally hundreds of hours (and headaches). The likes of Xero and MYOB Online make this process so much easier and efficient, and while I am a great believer of putting your time into what you do best, I also understand that when you are starting out you need to be Jill of all trades, so while your start up business maybe worlds away from the exciting book keeping world 😊, its important to make sure you implement a system that works for you. And it’s worth investing a little time in understanding the numbers and what they mean for your business.
Well this is a biggie, and I will only skim over here, but you need understand the different types of taxes that may apply to your business, how they work, how you register for them and how you report on them. You also want to make sure that you are in a position where you are not paying any more tax than you need to.
4. Budgeting and Cashflow.
Two very scary words right there! But they don’t need to be, there are simple ways to put these together to help you measure where you are at. With the great accounting software we know have, it’s never been easier to put together meaningful reports that measure where you are at now, rather than leaving it until the end of the tax year. This will enable you to be nimble with your decision making. Also understanding the difference between cash flow and profit is critical for any business in a growth phase, you may be making great profits, but if you are continually reinvesting you may be hampered by lack of cashf low.
5. Funding your business
How will you fund your business? What are the different options available? Will you need EFTPOS facilities, overseas trade facilities – the costs of these can vary dramatically so it’s important to look at what will look at what will work best for you. It is also worth looking at Traditional bank loans vs emerging funding options. What Grants, might be available to help you grow your business?
6 Employing your first team member
This can be both an exciting and daunting time, and depending on your industry, you will have options on how this might look, whether it is an employee or a contractor. You will need to understand the different taxation, superannuation and Workcover obligations around this.
7. Payments and Invoicing
Ok so we all want your business to flourish right? So, you need make sure your invoices and payment methods are set up, to meet your needs and, to make sure you get paid on time every time. Invoicing terms, payment agreements and trade terms will
While this is no means an exhaustive or detailed list, I hope you have found it helpful, and it has given you insight into some of the things you should consider when setting up your business.
Please note this is general information only and you should seek specific advice in relation to your personal situation.
- The Wealth Genie
Michele Purvis is an advisor with over 30 years experience working in the accounting and financial services industry helping clients to define and create their wealth.