When we start a new business, there’s a lot of excitement, dread, worry and fear... and then more excitement! But making sure you build the right business for you and your family takes time and planning. Here’s a few things the accountants at Northwest Accountancy suggest when starting your business.  

Create A Great, Detailed Vision 

You need to know what you want the end result to look like. Building a business to sell looks very different to building a business because you are a plumber and don’t want to work for any one else. You need to know if you’re building a business with staff or just doing it to make you tax legit.  

The clearer your vision, the easier the next steps become.  

Choose the Right Business Structure.  

As accountants we definitely have Opinions on this topic. Our opinions are that the right structure will support you in your business activities and help you pay the appropriate (and minimal) taxes whereas the wrong decision can be expensive and stressful, and potentially slow the growth of your business.  

You should talk to an accountant or a lawyer about this step – or both.  

Register Your Business 

You need to tell all the right people about your business. Yes, this means you will pay tax, but it also means you won’t go to jail for tax evasion. You get to choose!  

You may need:  

• An Australian Business Number (ABN)  

• Or an Australian Company Number (ACN)  

• Your Business Name (through ASIC)  

• TFN and GST registration if your business will earn over $75K pa 

• PAYG prep for hiring employees 

Not knowing the law will not get you a get out of jail free card, so hire people who do know. You’ll still need to do your own research as well, but knowing where to find out what you need to do and having a guide can make this process much easier.  

Pick an Accounting System!  

There’s heaps on the market, and they all do similar things although in different ways. Your accountant will have a recommendation based on their experiences and ease of use. We like to use Xero at Northwest Accountancy, though we do also use other services for our clients.  

You'll need to keep accurate records of cash moving about your business, so set up good systems and great habits as soon as possible!  

Open your bank accounts.  

We have opinions about this too! We like to use a structure called Profit First, so we recommend you start with five bank accounts. Income, Owner Pay, Profit, OpeEx (Operational Expenses) and Taxes to begin with. At a bare minimum you will need a transaction account and a tax savings account so you can save tax every time an invoice gets paid. This stops the dry horrors of an unexpected tax bill! 

Final Admin  

You’re almost set to go! Are you excited?  

Now’s when you get some expert advice again, as now you’re planning for everyday operations. You’ll need to know details about super (for you? Staff? Where? When?) and PAYG. You need to calculate how much to set aside for tax, and plan for any deductions, write offs and minimisation strategies you and your accountant can legally prepare for. How much are you paying yourself or others, and how?  

Last Words

Running your own business has great rewards and great gains but also has a great deal of work! Regardless of your industry, the initial work to set up and prepare will set you up for the life of your business. It’s up to you whether you set up carefully and slowly, and look forward to smooth sailing, or if you’re leaping haphazardly from idea to idea with no plan, no expertise and no idea. This is a recipe for problems that you never needed to have.  

If you’d like someone to talk to about this, drop Helen an email at [email protected] and we’ll arrange a chat. We've got collectively over a hundred years of experience with small business and accountancy and we’d love to help you with your big goals.