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 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 goals and objectives. A good way to achieve this is to establish a business plan.
The business plan should include:
- Defining what type of business you are in.
- Analysis of the industry and markets you will operate.
- Your goals and objectives, with your timeline to achieve these.
- Main products and services to be offered.
- Customers and your target market, both now and in the future.
- Advantages your business has over others; i.e. its ‘unique selling points’.
- Marketing plans to establish and grow your business.
- Suppliers required and others that may be needed, including staffing.
- What your competitors are doing.
- Facilities required.
- Pricing.
- Capital required to commence and potential financing required in the future.
- Equipment needed now and later.
- Financial projections and an analysis of your cashflow requirements.
Take care of bookkeeping
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 bookkeeping 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 bookkeeping to a specialist bookkeeper, 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 bookkeeper 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 bookkeeper 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.
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 have your own business, you need to proactively manage your cashflow to set money aside for future tax bills. Failing to set money aside to pay taxes is one of the most common pitfalls 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 full expensing of capital assets, which is available until 30 June 2023. 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 most motor vehicles.
