For all those going into business for the first time, it can be a very daunting process establishing yourself, winning work and running the daily operations, let alone managing the administrative back-end on top of this.
That's why it's important to speak with an accountant before you start your business as they can advise you on what needs to be considered when establishing your businesses back-end, to ensure you are not only compliant with the requirements of the ATO, but doing so in the most efficient manner possible.
Beyond the administrative and compliance side of things, they can also help you establish long-term business goals to work towards that motivate and inspire business performance, and also keep you thinking about what the next step is for your business, ensuring you are continuing to move forward.
Listed below are the more common considerations that we suggest for our clients when they are setting up a business for the first time:
Registrations
When starting a small business, you are required to apply/register an Australian Business Number (ABN) in order to run your business.
There are additional registrations that may be required depending on your situation and need to be considered carefully before starting your business. These can include:
Goods and Services Tax (GST)
A GST registration is required where you expect to turnover $75,000 or more in any given 12-month period. It requires you to charge an extra 10% as the GST on top of your prices for your services.
It can be a costly mistake if you do not register when you are meant to, as the ATO can back date your GST registration, causing you to have to pay GST on income you may not have originally on charged to your clients.
Pay As You Go (PAYG) Withholding
Fuel Tax Credits
Business Bank Account
This is a requirement for trading entities such as companies and trusts, and we strongly recommend it for sole traders.
Having a business account allows you to separate your business and personal transactions, making it a much cleaner process when recording your business income and expenses for compliance purposes.
Although you may transfer funds from your business account to your personal account, this is only one transaction compared to potentially many individual personal spend transactions that can clog up your bookkeeping software and make the process needlessly tedious.
Bookkeeping, Invoicing & Payroll
It's important to consider how you are going to manage your bookkeeping, invoicing and payroll when you start a business as faults can result in compliance issues, and inefficiencies can result in you spending a lot of unnecessary time on these, rather than actually working on your business.
Bookkeeping
Records of your books will need to be well kept in order to comply with ATO submissions on time and with accurate data, as well as being able to provide evidence in the case of an audit (This includes having copies of invoices/receipts and proof of payment available).
The volume of transactions you are working with needs to be considered and whether manually tracking these is practical. The alternative to manually tracking these would be to spend money on an accounting software to automate the process (allowing for more time to be spent on the business).
In addition to compliance, well kept books that are up to date are critical in allowing you to understand how your business is performing. Without solid books, you are essentially flying blind.
Invoicing
Payroll
Business Structure
Different business structures result in varying tax consequences and compliance requirements, so it's important to understand which structure is the most beneficial and cost effective to you.
Please refer to our previous article linked here for more information on each structure available (The article targeted medical professionals, but each entity summary is universally applicable): Choosing the RIGHT BUSINESS STRUCTURE - MEDICAL PROFESSIONALS (jetaa.com.au)
Long and Short Term Business Goals and Budgets
Another very important consideration when starting a business is setting goals for the business both in the short and long term to work towards. It may be difficult at the very start if you're unsure as to how well the business will perform, however it shouldn't take long for you to be able to establish some expectations for the future.
An accountant can assist you in preparing budgets and setting realistic business goals for you to strive towards. Beyond that, they can help establish what actions will be required along the way in order for those goals to be achieved.
Once set, these can act as valuable tools for you to track your business progress against, and also to help motivate you to push for those results.
If you would like to enquire with myself or my business partner Benjamin Audino about how we can assist you in getting your business started and the other services we offer, you may do so from the contact page of our website or by emailing your enquiry to enquiries@jetaa.com.au.
Written by Jayden Hamer
