Thinking of starting up a business? More and more people are creating businesses of their own and taking control of their lives. There are start-ups popping up all over the place and it is great to see. We all want to be successful however, being successful takes more than creating a business plan, getting the website and social media up and running and selling your services or products.
There is a great deal to consider when starting your own business such as:
• Registering a business name
• Ensuring private expenditure is separate from business expenditure
• Applying for an ABN
• Deciding if you need to register for GST
• Knowing what you can claim against the business
• Keeping logbooks to ensure your Motor Vehicle claims are legit
• Making good use of the incentives such as ‘Instant Asset Write Offs’
• What accounting package is best suited to your business
The list goes on………………………………………
It could be that you are on top of all of this and have a handle of every aspect of your business however, often there are areas that create uncertainty and areas where you could well need some advice and guidance.
One of the most important aspects to running a successful business is good record keeping/bookkeeping. Managing your money and your bank account will help you grow a healthy cash flow and, keeping records of all income and expenses will help to keep you compliant.
Unfortunately, a lot of small businesses come unstuck due to debt. Debt that is caused by overspending, not allowing for GST and/or income tax payments and not following a budget.
I have included my top 10 areas of focus which, if followed will be a great starting point for your new venture. Remember the following and you will be off to a good start.
- Invoice on a regular basis. Put aside time for this task alone. Your cash flow relies heavily on your invoicing.
- For any large jobs that may go over a long period of time it is wise to send out ‘progress payments. This will ensure that your cash flow stays healthy and will also make it easier for the customer by allowing them to pay small, regular amounts rather than trying to pay a large amount all at once.
- Get everything in writing! Do not rely on memory alone.
- Follow up your debtors and do not let any debts go outside of your trading terms without a phone call.
- Have realistic trading terms. 30 days or 30 days EOM is not sustainable for small businesses. 7 or 14 days would be the recommended terms.
- Keep a good track of what you are spending. Create a budget!
- Carry out bank reconciliations on a weekly basis.
- Remember if collecting GST for the ATO it is not yours to spend. Banks are more than happy to offer ‘fee free’ accounts for the keeping of any GST collected (and income tax for that matter). Putting this money aside will keep you worry free knowing that every month or quarter the money is there to hand over to the ATO and, it is actually a form of compulsory saving as undoubtedly you will end up with money left over once you take into account the GST paid on purchases.
- Look over your accounting reports on a monthly or quarterly basis and track your business closely. The two main reports being Profit & Loss and Balance Sheet.
- Lodge and pay on time. If you are GST registered, you will have monthly or quarterly BAS lodgements and if you hire staff you will need to lodge your Single Touch Payroll every pay period. Then of course, there is your Income Tax lodgements. Late lodgements help you to get noticed by the ATO as do late payments and this should be avoided at all costs. Compliance is crucial. There is no getting away from the Tax Department.
Apart from all of that though, being a business owner can be fun. It is meant to be fun and enjoyable as you go about your days doing what you do best. The freedom and control that if offers makes for a great lifestyle if managed correctly and nothing is left to chance. If you need help with any aspects of your business, then reach out as there are a tonne of resources out there to assist you.