So you have your dream business idea and are ready to start planning, it’s very exciting, but there are a few items though, that are often overlooked and can add thousands of dollars to your start up budget.
1. Bank Fees – not only do you need to take into account your regular account keeping fees, you will need to allow for EFTPOS fees and if you are dealing in international currency for instance in buying your stock you will really open a can of worms:
So today for instance, opening a business account with one of the big banks, will cost you from $10 per month, but if you get EFTPOS facilities they will generously waive the fee.
We will need an EFTPOS machine which will set us back $60 per month, this will include the first $3,000 of transactions for free. So on a business with say $200,000 in sales, our EFTPOS fees will be $3,180 per year!!!
Now in today’s global world it is likely that you will be purchasing some stock from overseas, and there are layers of costs here. Firstly the Foreign Exchange Rate you see quoted in the media will not be what you pay. And then there are transfer fees and then you may also pay for the privilege of sending it through to your supplier’s bank.
If we want to pay our US supplier for $5,000 AUD stock, today looking again at the same big bank website it would cost us as follows:
Exchange Rate quoted on sending money: $0.7869 AUD vs todays actual Exchange Rate $0.750556, this would cost us $6,968, as opposed to $6,662 at today’s actual rate: An additional $306 or 6%. On top of that you will have the transfer fees which start at $11 per transfer and then a fee for the bank receiving the funds of in our case the USA, which would be $37. So on one transaction of $5,000 you would pay an additional $354 in fees.
2. Retail Shop Lease – In QLD you are required to obtain both a Legal Advice Report and a Financial Advice Report before you enter into the Lease of a retail premises. The cost of these reports will vary but you would be looking at upwards of $1,000. In other states you may need provide a copy of your business plan, cash flow or Profit and Loss to prove you can pay the rent. In addition the lease may stipulate different levels of insurance, that you may not have been aware of.
By keeping in mind these things when setting up your business, you will avoid some unnecessary stress and financial burden.
This article is intended as a source of general information only and no reader should act on any matter without first obtaining professional advice.
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.