We start our own business for many reasons. Some of us start one because we are frustrated with our current working environment and feel we can do better. Some start one because they have always dreamed of being a business owner. No matter why you start a business, it can be quite a stressful and scary time.
Now there is lots of advice out there on the internet, about starting your own business and I’m not claiming to be an expert, I started my own business in 1998 because I wanted my own business and I needed something that I could work around my 3 young children. But I wanted to cover this subject with you to give you a basic understanding of what needs to happen at a minimum to start your business.
Why are you going into business?
This is the first thing you need to look at. Are you buying/creating a job? Or are you buying/creating a business. Yes there is a difference. If you are buying/creating a job for yourself then you will make different decisions compared to if you were buying/creating a business. When I ask you if you are buying/creating yourself a job what I am meaning is will you be subcontracting or contracting to businesses for an hourly rate? If you are buying/creating a business then you will probably employ staff, or have contractors yourself or a shop or office etc. Get it clear in your mind why you are doing this and what you want to achieve.
What Business Structure are you going to have?
When I ask this I am meaning for tax and legal reasons. You have a number of choices here and you need to consider them careful, either talk to you Accountant, Bookkeeper or Business Advisor before making the decision. Some options you have are:
- Sole Trader – you as the individual own the business and all profits and losses are included on your tax return each year
- Partnership – you and one or more other persons (up to 20) go into business together – you will need to do a partnership tax return each financial year and profits maybe shared among the partners
- Company – shareholders own the business and directors run it, but you may also be a one person company and the sole director and member.
There are other options, but I strongly advise that you talk to your accountant before making the decision to use other structures.
Business and Marketing Plan
Now to be totally honest, I have never done a business plan or marketing plan, well not an official one anyway. I always found it hard to ‘predict’ the future like a business plan requires. I have spent a lot of time researching marketing and finding how to effectively market, but I have never written out an official marketing plan.
How much will it cost to set up?
Now this is an area that you need to sit down and be serious about, it is important to work out exactly how much money you will need to set up and keep your business going until funds start flowing. Cash flow, or lack of it, will have you out of business in no time flat.
So how much will it cost to set your business up? What do you need to take into consideration?
- All necessary equipment, i.e. tools, computers etc.
- Premises costs – set up, renovations, fit out etc
- Compliance costs – licenses – certificates – insurance etc
- Marketing costs – branding, advertising, website etc
- Staff – recruitment, uniforms, training etc
- Operating costs – utilities, telephone, internet etc
- Working capital – this is important, you need to try and work out what your expenses will be for a period of time and have the money to cover them so that until the cash starts flowing you can pay for all your expenses.
Do you need a business name?
Are you going to use your personal name as the business name? or are you going to use another name? If you are using your personal name there is no need to register with the Australian Business Register, but if you are planning to have another name then you will need to register it. I would suggest that you spend some time with your Graphic Designer before deciding on a business name and work out with him your business name and your branding at the same time.
Get your Australian Business Number (ABN) and Register for GST.
You need to do this ASAP. You can not start trading unless you do. Either get your Accountant, Bookkeeper or Business Advisor to do it for you or do it yourself, its quite easy, here is the link to go to so that you can apply for one online. There are options to fill in forms and send them off as well. Just choose to do it anyway you are comfortable doing it.
While registering for your ABN one of the questions will be if you would also like to register for GST, before making this decision talk to your Accountant, Bookkeeper or Business Advisor. There are rulings around not having to register for GST if your turnover is less than $75,000 etc. So work all this out before you apply for you ABN (although you can register or de-register for GST at any time , depending on you turnover).
Find out what other licenses and registrations you may need.
Above I have mentioned getting an ABN, but you may also need a Tax File Number, PAYG, Industry License/registrations. The ATO provide a website that can also assist you here, click here to have a look at this page.
If you haven’t already got yourself a good insurance guy, then get one. Have a meeting with him and go through what you are doing and organise yourself some insurance. At a minimum you will need business insurance, personal protection insurance and a few more. Do not skimp on insurance, it is the most important thing you can do.
Choose the right accounting software for you and your business
There are so many choices out there on the market right now, so make sure you do your research on what software to use. There is Cloud Based, Desktop Based, ones that include payroll and the list goes on. Talk to your Accountant, Bookkeeper and Business Advisor and work out what one is going to work for you.
I would like to go into more detail on some of the above subjects and will be doing so in some blogs that are coming up. For now, the above should assist you in getting your business up and running.
Question: What issues have you had when setting up your business?