Everything you need to know when kicking off your start-up

So, you’ve decided to join thousands of Australians and jump off the employment bandwagon to start your own business.

There are so many different things to consider when setting up a new business but one thing you need to be on top of is your financial situation.

Here’s my guide to what you need to do to make your new venture financially robust.

Make a business plan

The reason that a lot of businesses fail is that they don’t have a plan. Every new business owner should sit down at the beginning (before they start the business!) and plan what they hope to achieve from their new business; in other words, establish your goals and objectives. A good way to achieve this is to establish a Business Plan. 

The things that should be considered in preparing your Business Plan include:

• Defining what type of business you are in.
• An analysis of the industry and markets you will operate.
• Your goals and objectives, with your time-line to achieve these.
• The main products and services that will be offered.
• Customers and your target-market, both now and in the future. 
• Advantages that your business has over others; i.e. its “unique selling points”.
• Marketing plans to establish and grow your business.
• Suppliers you will require and others that you may need, including staffing.
• What your competitors are doing.
• Facilities required operating your business. 
• Your pricing; how much you will charge.
• Capital required to commence your business and potential financing required in the future.
• What equipment will you need; now and later.
• Financial projections and an analysis of your cash flow requirements.

Take care of book keeping

Good business records help you manage your business, make more timely decisions and comply with tax compliance obligations. 

If you decide to look after your book-keeping yourself, accounting software can help you to accurately record your income and expenses, with features such as the ability to automatically upload your bank transactions on a daily basis and back-up your information. 

If you decide to outsource your book-keeping to a specialist book-keeper, you simply hand over your paperwork to them and they will take care of it; freeing you up to spend time doing what you do best and focus on running your business. An outsourced book-keeper can also act as a second-pair of eyes to help keep your business on-track, while using accounting software that has the ability for both you and your outsourced book-keeper to view your information together, remotely.   

Monitor cashflow

One of the main reasons businesses fail is not necessarily because they’re not making a profit (although this is, of course, important) but because they run out of cash and are unable to pay their debts when they fall due.  

So, make it easy for your customers to pay you, so that you can get paid faster. Monitor and chase debts as they fall due and introduce direct payment technology such as point-of-sale software, mobile card readers, etc. 

Year-end tax tips

• Claim a 88c per kilometre deduction for every business or work journey you undertake in your own car, up to 5,000 kilometres. Alternatively, keep a logbook and receipts and claim a proportion of your actual costs. 
• If you take a course or attend a conference related to your current job, you can claim a deduction for the cost of the course and other costs, such as textbooks and travel.
• Speak to your accountant before the end of the financial year for tips and advice to help you save tax. The fees are tax deductible!
• If you need a bag for work purposes, such as a briefcase or a handbag, the cost should be tax deductible.
• If you pay a work-related subscription, such as to a trade union or a professional association, the costs are tax deductible.
• Claim a deduction for the cost of insurance premiums against the loss of your income, provided the policy isn’t taken out through your super and doesn’t cover you for physical injury.

Take care of your taxes

Particularly if you’re coming out of a paid job, you’re probably used to getting your taxes deducted straight from your pay packet by your employer. But now you’re in business on your own account, you need to proactively manage your cash flow to set money aside for future tax bills. Failing to set money aside to pay tax is one of the most common pitfalls that new businesses fall into.

You might also need to register for GST. For most businesses, you only need to register for GST if your turnover from your business (combined with any other business you run) exceeds $75,000. 

But being self-employed also comes with some tax perks. For instance, you have access to all the tax concessions available to small businesses, including the instant asset write off of capital assets, which is available on all capital assets costing less than $20,000, until 30 June 2025. That means you can immediately deduct the cost of any plant, tools or equipment you use in your business, including items such as computers and even some (probably second hand) motor vehicles.

For help with your bookkeeping, contact H&R Block (https://www.hrblock.com.au/business-services/bookkeeping/)

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