After clarifying your business concept and putting your ideas on paper, professional help can help you answer important questions to help you succeed.
A professional accountant and business advisor can assist with the points we covered in the previous article, including your reasoning for starting a business, how much money you will need, the skills required, and how to create a business plan.
There are other important points that a business advisor can help you with.
Business structure
Several factors need to be considered when choosing a business structure, including liability, management, funding, costs and taxes.
Setting up a business as a sole trader is simple, and you will get full management control and profits. At the same time, it’s not a separate legal entity, so you are personally connected to the business and are exposed to all legal action and debts that may arise. It will also limit the ability to bring on partners and investors.
A partnership enables people to combine their skills and resources into one venture. However, partners are individually and jointly liable for debts and legal actions. In addition, drafting a partnership agreement adds to the costs of setting up the business.
A discretionary trust gives you flexibility in income and capital distribution, ways to minimise tax and some protection for personal assets. At the same time, it has to be set up correctly to maximise the benefits and is not the right structure for attracting investors.
With a company, you limit the liability of shareholders and are able to raise substantial amounts of capital. The downsides are that you don’t have as much control, higher administration and setup costs, and more accountability and reporting requirements. While there is some protection for directors, they can still be liable for the activities and debts of the company.
A professional business advisor can walk you through the pros and cons of each structure and help you set up the business.
Help with getting finance
At some point, every business will need some type of finance. A professional accountant or business advisor can guide you throughout the process. This assistance includes determining the right time and reasons to seek finance, the finance options available, and how various business structures impact your finance options (as mentioned in the previous section).
Accessing Tax Incentives and Government Grants
It is worth also mentioning that businesses often seek assistance from the government in the form of Tax Incentives and Government Grants. At Myssy + Co we have had great success with helping provide our clients access to a number of assistance programs to inject needed and purposeful cash back into the business.
One example of this is a Gin Brewery client who has recently been approved for their fourth R&D Tax Incentive. Another client in the environmental technology space is currently in the process of receiving $2.5 million in various grants funding with a spend of appx $1 million.
While there are many companies offering grant assistance, businesses will achieve maximum benefits from using a multi-service professional firm that combines accounting, tax advisory and governmen
t grants work.
There is significant overlap between government programs and the general tax system and accounting. This is where the expertise of an accountant is crucial. An accountant has access to the numbers and understands them well, thus being able to provide valuable insights into which government programs and tax incentives may be most beneficial for a particular business. However, it is also important to have an adviser who has intimate knowledge of the business and can identify other opportunities that may be missed from a one-off grant application. Such an adviser can provide a more holistic approach to identifying and leveraging government programs and tax incentives for the business’ growth.
It may also be worthwhile to consider the ESIC (Early-Stage Innovation Company) scheme as it provides eligible investors with a 20 per cent non-refundable carry forward tax offset on amounts that are invested in qualifying ESICs. This allows an eligible company to effectively raise more funds as the investment is 20% cheaper for an investor. Whilst this programme assists with the funding of the company, it requires significant knowledge in this space to manage effectively.
To learn more about Government Grants specifically you can read a recent article of ours here.
Choosing and setting up the right systems
Having the right systems in place is essential for any business operation. It will enable you to monitor growth and quickly identify any problem areas. Furthermore, it will allow a business to keep up with the ever-evolving and onerous tax and compliance obligations.
One key component is a proper cloud-based accounting system which incorporates a basic CRM and document management functionality. You have a few options for cloud-based accounting systems, including Xero, MYOB, and QuickBooks.
A few of the things to consider when choosing accounting software include:
- Security – keeping your data safe while maintaining easy access
- Automation – the ease of integrating bank and payment systems
- Billing and invoicing – making it easy to issue invoices and pay bills
- Payroll – getting the right system for your needs.
If you are starting small as a sole trader, for example, you usually won’t need more expensive software options with payroll features. That said, it is important that your system can grow as you do.
A business advisor should be able to recommend the right system for your business, help implement and tailor it for your needs. It will create efficiencies for your business and save on unnecessary administrative time and cost.
Ignoring this will leave your business running blind.
The Myssy + Co Team regularly undertakes these engagements as part of its outsource solutions and external accounting work.
We saved one of our clients upwards of 22 hours per week by making significant changes to their internal accounting processes. This was a result of changing the system for supplier invoices to be captured, where payroll is managed and where customer payments are made. In addition there was a necessary alert put in place to provide advanced notice of low stock levels, which saved approximately 2 hours. All in all, valuable time is regained by the business to put to productive use. If you want to learn more about effective accounting systems you can learn more in this video.
Tax planning for your business
When moving from being employed to running your own business, taxes can be a challenge. As an employee, your taxes are taken out of your pay, so you don’t need to worry about tax obligations in most cases. This is known as the PAYG withholding system.
As a business owner, you will need to think ahead about your tax obligations to avoid unpleasant surprises. This includes setting aside adequate funds for tax.
Your tax obligations will also include collecting and paying GST. Most businesses that turn over $75,000 or more per year must register for GST and regularly submit a Business Activity Statement (BAS).
A professional business advisor can help you navigate tax challenges and stay current with your tax obligations.
The accountants and business advisors at Myssy + Co specialise in helping SMEs at any stage with business planning and structuring and meeting tax obligations. Reach out to us for more information on how we can assist your business.