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NEW BUSINESS •  25 AUGUST 2021 • 7 MIN READ

Master checklist for new business owners

Master checklist for new business owners

When you took up the title of “business owner”, there was probably much excitement about your new venture, your brand and product/ service. The last thing you wanted to deal with was the financial and legal obligations that come with running a business.

We’re here to make them a breeze. So in addition to helping you prepare them each year, we’ve built a checklist to ensure your business is set up correctly.

Read on and learn what’s needed to keep the tax office happy – along with any employees or additional shareholders of yours. Below are the procedures you need to be on top of.*

* It could be a great idea to bookmark this.

Choosing sole trader or a company

What’s your long-term plan? If you’re planning to stay small, it could be a good move to class yourself as a sole trader. However, there are real benefits to incorporating your business as a company if you have growth on the horizon.

If you’re not sure yet, you can get a better idea of the ideal choice for you with our article – .

And if you’ve already decided to register as a company, here’s where to do it. We can also handle the whole process for you – just get in touch.

Registering for GST

Here’s how to figure out whether or not you should register your business for GST.

Are you (or your business) earning (or expecting to earn) over $75,000 per annum?

Then you’re legally required to register for GST. The ATO explains how to in this article.

Are you earning under $75,000 per annum?

Then it’s your call if you’d like to register for GST. It could be helpful if:

  • You’d like to claim back GST on a large asset you’ve purchased and you’re fairly sure sales are going to be over $75,000 at some point
  • Most of your sales are to overseas entities – you won’t pay GST on the overseas income, but you can claim GST on the expenses you incur in Australia

The key to understanding GST is recognizing what you can and can’t claim. Learn all about that in our dedicated article, here.

As our client, we’ll offer you a full GST service if you’re using Xero. We make sure you’re claiming all your permitted expenses.

Accounting software

You can’t trust a spreadsheet.*

Of all our recommendations, the strongest is that you use some form of accounting software. We’re big advocates for our partner, Xero. They’re the best accounting software on the market in Australia, but there are other providers like MYOB, Quickbooks, FreshBooks, and Reckon.

If you’re yet to choose a system, it may help your future-proofing to know we’re a Platinum Champion Partner of Xero’s and a certified Xero advisor.

Have a chat with our support team if you’d like to learn anything about Xero (including integrations with your current systems). You can also do a 30-day free trial over on Xero’s website.

* The problem with relying on a spreadsheet is that a single mistake in your formulas at any point can cause catastrophic problems in future.

Bank accounts

It’s best to have two bank accounts. One that handles normal trading transactions, while the other takes care of your tax savings.

We suggest transferring 30% of your sales into a separate bank account. This ensures you have adequate funds at hand when tax time rolls around!

Insurance

The ideal combination of insurance for you will depend on your business and personal situations.

Here are some questions to consider:

  • Should your business assets be insured?
  • Do you need professional indemnity insurance?
  • Have you thought about personal loss of income insurance?
  • Do you need public liability insurance?
  • Do you need business interruption insurance?

Discussing your needs and risks with an insurance broker is a great idea.

It’s also worth knowing that some insurances can be GST-deducted for business purposes, while others are only applicable for personal tax returns.

Internet

Protecting your data is critical for you and your customers. You may need:

  • A firewall
  • Anti-virus software
  • Two-factor authentication
  • Separate emails for business and personal use
  • Strong password protection – including mandatory changes on a regular basis
  • Data backup
  • A Virtual Private Network (VPN)
  • Secure wi-fi connections
  • Tracking apps for mobile devices
  • Data encryption

Also have a think about:

  • Software you need
  • Creating a website
  • Creating social media accounts
  • Protecting your data (so important that it needs to be repeated)

Agreements

Unless you already have a company constitution, it’s a good move to formalise agreements between shareholders or partners. Your agreements don’t need to be complex and can be written without legal support.

An agreement should detail:

  • Each person’s activities
  • How profit is shared
  • Funding arrangements
  • How disputes will be resolved
  • Any other terms and agreements between you worth documenting

We recommend asking your lawyer to take a look at anything you’re about to sign.

Income tax

If you’d like an in-depth intro to everything you need to know about income tax, go straight to our article, here.

You can do your future self a major favour by keeping your bookkeeping and accounting systems up to date. It equips your accountant to see how you’re tracking and let you know how much tax you should be putting aside.

To ensure you pay your annual tax bill without worry, we always recommend putting aside 30% of your sales in a separate bank account on an ongoing basis.

Employing people

Before employing staff, it’s important to understand that you have responsibilities as an employer.

  • You must have an employment contract signed before an employee starts
  • You need to know your superannuation responsibilities
  • You must register as an employer with the ATO via MyGOV
  • With Single Touch Payroll (STP), you report employees' payroll information to the ATO each time you pay them through STP-enabled software. Payroll information includes:
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If it’s only you working in the business, it’s a good move to keep yourself off the payroll for the first year. You’ll still pay tax, but later, and the amount will depend on your profit levels. We explain further here.

Figuring out if you need an accountant

Having an accountant by your side allows you to focus on growing your business, while they handle the numbers.

  • They take care of the tax balancing act – making sure you pay the right amount of tax that’s also the least amount of tax. On average, Beany saves its clients over $4,000 of tax each year!
  • Having an accountant extends your annual tax returns from the 31st of October to the 15th May of the following year (circumstances may change this date)
  • They preserve your energy for the productive parts of your business, while they handle compliance

Understanding the expenses you can claim

It’s difficult to figure this out. Here’s why:

You can claim any expense directly linked to the production of your business income.

Distinguishing what’s directly linked is hard. Doctor’s bills aren’t linked – even though your work depends on you being healthy. Neither are your boat costs – even when you’ve taken clients out on it.

We have an in-depth article on figuring out which expenses you can claim, here. But keep in mind that as a Beany client, we’ll make sure you claim all of your legitimate expenses.

Common pitfalls for new business people

It wouldn’t be silly to make a calendar notification for three months from now to check this list again. Are you slipping into any of these habits?

  • Failing to use technology to make things easier
  • Holding back from working with others because you think nobody will understand the business
  • Not playing to your strengths and letting others handle your weaknesses
  • Being afraid to ask for help

You might also want to check the income tax section one more time.

Who are Beany? 

We’re an online accounting firm that is always right here for you, your accounting pain relief. The most advanced technology lets us work way more closely with you than a normal accountant world. ​

We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. We take out the ‘fluff’, break down the barriers and get things done. Looking out for you is what we are all about. Get started for free today.

Pete, Problem Solver

Got any questions about Beany?

Chat to one of our friendly problem solvers today to get clarity.

Kim

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