Starting your business

5 Questions to answer before starting a business

1. Is it a business or a hobby?

This is a critical question you should ask yourself. A hobby is what you enjoy doing in your leisure time. For example, mountain biking, playing music, painting and writing a journal are hobbies. Making timber coffee tables or pottery can also be hobbies.

If you want to start a business – or turn your coffee table hobby into a business – you will ultimately function to make a profit which will subsequently result in tax, insurance and legal obligations. The best way to a profit – and for expansion – is a business plan.

Once you decide on starting a business, you may be required to appropriately register and licence your new enterprise. This is where the Australian Government’s ‘Australian Business Licence and Information Service’ (ABLIS) comes in handy if you have any doubts or questions about setting up your own business.

Generally, they can help you with:

• A summary of state or territory, local and Australian government requirements relevant to your business
• Information about licence fees, how to apply, periods of cover and renewals
• How to access application and renewal forms
• Where to go for more help and information.

2. How will I market my business?

You have your business idea, but how are your products or services different from others in the market? Do you have a unique value proposition? For example, you may be the only candle shop in your local area that has contact with a supplier that sells orange scented statue candles.

You will likely need a website, but what functionality would best help you to sell your products and services? Do you require onsite payments or is your page simply for information and testimonials from happy customers? Similarly, will you use social media, and what channels will best market your particular offer? A video platform like YouTube is likely of more use to a cabinet maker than an electrician, for example. Facebook may be useful for both, while Facebook and Instagram are certainly useful to build communities for a variety of businesses.

3. What business banking management do I need?

This is critical to the success of your business. For a small business, developing an ideal cash flow and meeting your bottom line can be harder to achieve compared to larger and more established businesses. Things to consider include:

• Raising start-up capital
• Record keeping
• Cash flow control
• Budgeting
• Credit management
• Insurance
• Future capital for expansion
• Foreign exchange (if dealing with overseas customers or suppliers)
• Business bank accounts
• Fees and charges
• Business loan

4. Managing taxation for your business

If you’re just starting out, more than likely your small business will have an annual turnover of less than $2 million. If this is the case, you may be able to investigate a number of small business tax concessions from the Australian Tax Office (ATO). To find out more about these tax concessions for small businesses, visit the ATO website or contact the Australian Government’s ‘Small Business Assist’ service. They can provide you with easy access to information regarding taxation matters for small business.

5. Recruiting employees

Before venturing down this path, investigate things like minimum rates of pay, payslips and leave entitlements for your new employee/s. These details can be different across Australian states and territories so make sure you have a complete understanding of your obligations as an employer.

The recruitment process can take a large part of your time. However, you may find it a good opportunity to identify skill gaps within your small business and factor this into your recruitment planning. The right candidate can really make a difference to the productivity of your business.

Starting a small business isn’t easy and there are many considerations to resolve in order to get your business up and running. Here are a couple of the big ones that are central to your business’ success (the management of your money).
 

Do I need a business bank account?

The short answer is yes. Sole Traders can use a personal account for their business, but for privacy, account keeping purposes and business simplicity, separating your business and personal banking is best practice and strongly recommended by accountants and financial institutions alike. Partnerships and all other business types MUST have a business bank account for tax purposes.

Your business structure and activity will define what features are more important to you. For example, the best bank account for a sole trader who deals exclusively on the internet will likely rarely require a branch visit. A café owner or smaller retailer who deals in cash and EFTPOS transactions will be a more regular visitor to their branch. Depending on the features you require, there may be monthly fees. Finding a bank account with the right terms and conditions for your business is vital.

Some business bank accounts feature an ongoing relationship with a business banking specialist and support team, who can work with you through the peaks and troughs of business life, provide access to more lending options, and ensure that tax time is easier. 

Here are some basic business accounts and features.

Everyday business transaction account

This is good for your everyday transactions – taking payments from customers, paying suppliers and staff. IMB’s Business Transaction Account is designed to cater for the everyday needs of small to medium sized business owners and operators, including a VISA Debit card. More than just a business facility, this account is also a financial management tool allowing you to keep accurate records of your business transactions.

Business savings accounts

When the sun shines, make hay… then save it. IMB’s Business Cash Management Account is ideal for businesses looking to earn a higher interest account on cash investments or a place to park funds, with the flexibility to move it when you need to. Other savings accounts businesses can access are:

• Term Deposits Fixed Term Deposits have a fixed interest rate for the duration of the term, while Floating Term Deposits have a rate that can fluctuate over the course of the loan.
• Negotiable Certificate of Deposits (NCDs) Bank-issued certificates that are issued in large denominations and for specific terms which can be traded in the secondary market. The business owner opens an NCD and is issued a certificate that guarantees the holder to be paid back the interest plus the deposit. Contact our team for more info.

Internet business banking

Modern business banking is about convenience and, as detailed by the Australian Government, most invoices are paid online. Online and App-based business banking offers convenience and immediate access for decision-making and fast action.

Software integration

Some small business bank accounts offer seamless integration with the most popular accounting software, including Xero*, MYOB BankLink* and Quickbooks. Time is money, so save it at tax time. At IMB, your business specialist or Local Business Centre will be there to help the integration to go smoothly.

 

Do you need an accountant for your small business?

Owning and running a small business can be relentless. With things moving at a million miles an hour, owners can sometimes make decisions on a whim due to a lack of time. This is where a certified accountant can help with the financial management of your small business.

5 tips for business owners choosing an accountant

Accountants can often be the trusted advisors of small business owners, so how does an owner choose an accountant to help with financial accounting? Here are some quick tips.

Tip 1:  Are they qualified?

In Australia, fully qualified accountants need to undertake many years of study. This can include an undergraduate degree in accounting at a higher education institution. Membership of professional associations such as ‘Institute of Chartered Accountants Australia’ or ‘Certified Practicing Accountant Australia’ (also known as a CPA Australia) indicates that the accountant meets the minimum standards of the association through extensive study and workplace experience.

Tip 2: Is the accountant registered?

There is the Federal Government tax and BAS agent register that small business owners can use to check and search for accountants. The Tax Practitioners Board website has some helpful tips on how to find a registered accountant.

Tip 3: Check if the accountant meets the requirements of your business needs

Ask questions around the type of services they offer. Accountants are many and varied; it is beneficial to select one that meets your specific small business needs. For example, you may require a specialist small business tax account to help you navigate through the financial obligations for end of financial year activities.

Tip 4: Make sure that customer service lives up to your expectations

Generally, a good accountant will provide good service. Does your accountant answer and return phone calls? Does your accountant respond to emails promptly? If an accountant is going to be a trusted advisor, they will need to meet your client service expectations.

Tip 5: Accounting fees

How will your accountant charge you for their services, and when? Fee structures from one accountant to another can vary. Whether it is hourly, fixed-fee or a monthly retainer that suits your business; it is a decision that will need to be made based on your business’ needs.

Getting to the point where you need an accountant to help with your small business finances can be a good thing. A trusted certified professional account will have the skills and experience to take some of the load in managing your financial information and business advice.

_{* Xero is provided by Xero Australia Pty Limited and MYOB Banklink is provided by MYOB Australia Pty Ltd. You have your business idea, but how are your products or services different from others in the market? Do you have a unique value proposition? For example, you may be the only candle shop in your local area that has contact with a supplier that sells orange scented statue candles.}

NEXT: Go to Part 2: Understanding Your Business

 

_{Important Information:
This article has been prepared by IMB Bank for general information and reference and it is not intended to be advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice when appropriate, and consider the relevant Terms and Conditions or Product Disclosure Statement before deciding whether to acquire any products or services offered by IMB Bank. Lending criteria, terms and conditions, fees and charges apply to IMB loan products. We do not recommend any third party products or services referred to in this article and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites.}