So, you’ve come up with a brilliant idea, found a big pain point and a gap in a growing market, and now you want to formalise the idea and get things moving. Great! Let’s delve into four key tips to Starting a business.
A company can be a great structure as it provides the following;
- Legal protection for personal assets
- Tax minimisation as tax is capped at 27.5%
- Ability to sell shares to raise Funds
So, when should you and shouldn’t you use a Pty Ltd vs a sole trader?
It comes down to three main considerations;
- Is the product you are selling or service you are providing risky? ie. can you get sued?
- Hypothetically, if your business was a sole trader structure, would the average tax rate go above 27.5%?
- Do you want to raise cash via selling shares to Fund the start-up or expansion costs?
If you answered YES to any of the above, then a company could be a good option.
Other considerations do come into play, however, tax minimisation, asset protection and the flexibility to grow the business are the most common factors for the decision of which structure is best.
What is the cost to set-up a company?
ASIC charges a once-off company registration fee of $488. You may also need the company minutes drafted and a company constitution in place. You would also need to apply for an ABN, TFN, GST (If revenue will be above 75k), and PAYGW (If you will have employees).
POP offers the complete company set-up for a flat fee of $1,000 pus gst. This includes all of the above.
There is nothing worse than spending hours going through bank statements to try find where you spent on what. It is important to do the following from the start;
- Set-up a business bank account
- Run all business income and expenses through this account
- Link this bank account to accounting software so you can easily track your profit/loss and balance sheet items
We recommend Xero as our preferred accounting software due to the high-levels of automation and enhanced functionality. The cost of Xero depends on whether you have employees or not. The cost is generally around $30/m without employees and $50/m with employees.
POP offers an exclusive 20% off your Xero subscription by being Gold-Level Xero Partners.
Are you ready for business cleanliness?
Business cleanliness is ensuring you have done the bare minimum requirements to win in business. It is key to giving your business the best chance at success. Small adjustments as shown below may significantly enhance your business.
We strongly recommend you review this list and action each item that’s applicable;
- Build a business website (even a simple one)!
- Set up google my business so people can find you and increase organic reach.
- Citation burst – use Brightlocal or another similar product, to list your services across multiple online directories.
- Ensure you have a centralised customer database with key information.
- Ensure your email is @yourcompanyname.com, not @gmail or @hotmail.
- Set-up a business phone number (1300 or landline) that links to mobile.
- Ensure business Logo and other key assets are trademarked.
- Spend time on the customer journey and test this. Ensure you have a clear path from an enquiry/lead to a paid conversion.
- Set-up systems to track where sales are coming from.
- Prepare a simple 6-month to 1-year cashflow forecast so you know what expenses will be coming up.
These basic elements will provide structure and professionalism to your business venture.
Sales and Marketing
Some aspiring business owners appear to be more focused on what people will think of their business vs building a profitable business. When you are first starting, sales are imperative for your survival and it’s important to allocate the majority of your marketing budget into Direct Sales.
That is, don’t spend big on brand advertising straight off the bat. We aren’t saying to ignore branding, laying the foundations of your business is crucial. What we’re saying is, focus on building some momentum and traction by selling your product or service first before spending large on the ‘look and feel’ of your brand. This can come overtime.
Get access to POP’s Business Framework by getting in touch with us today.