ASK AN AC­COUN­TANT

Want to know EX­ACTLY what you NEED to get your busi­ness off the ground? We sit down with three AC­COUN­TANTS to find out just that.

Collective Hub - - CONTENTS - WORDS TARA FRAN­CIS

how to start a busi­ness, or­gan­ise pay­roll and fig­ure out that bas state­ment

HOW DO I SET UP MY BUSI­NESS?

WITH CAS­SAN­DRA SCOTT, A REG­IS­TERED BAS AGENT AND A DI­REC­TOR OF BRISBANEBASED LAURUS BOOKKEEPING.

DE­CIDE ON THE RIGHT BUSI­NESS STRUC­TURE

The first con­sid­er­a­tion when set­ting up a new busi­ness is de­cid­ing on the most ap­pro­pri­ate busi­ness struc­ture. The most com­mon trad­ing struc­tures you will come across are: Sole Trader, Part­ner­ship, Trust and Com­pany (Pty Ltd, or Ltd if listed).

A Sole Trader is the sim­plest of the trad­ing struc­tures, and you can op­er­ate your busi­ness just un­der your own name – you don’t even need a busi­ness name reg­is­tered. The risk with be­ing a Sole Trader is that you and your as­sets are fully ex­posed. In the event that some­thing goes wrong, and you have cred­i­tors chas­ing you for money, your per­sonal as­sets (yes… in­clud­ing the house) are on the line. As a Sole Trader, any busi­ness profit is deemed to be your tax­able in­come, and taxed ac­cord­ingly.

A Part­ner­ship is an ex­ten­sion to a Sole Trader. It is es­sen­tially more than one per­son, en­ter­ing into a ‘part­ner­ship’ ar­range­ment. The same risks as be­ing a Sole Trader ap­ply, with the po­ten­tial for all part­ners to be ex­posed in the event of is­sues. Profit is dis­trib­uted in ac­cor­dance with the Part­ner­ship Agree­ment, deemed as in­come, and is taxed ac­cord­ingly.

Trusts are a lit­tle more com­plex and are of­ten used for as­set pro­tec­tion, the abil­ity to dis­trib­ute prof­its to ben­e­fi­cia­ries, man­age suc­ces­sion plan­ning and to gain spe­cific tax ad­van­tages. Prof­its are dis­trib­uted and man­aged in ac­cor­dance with a Trust Deed.

A Com­pany struc­ture has at least one share­holder, but can also have many, with the op­por­tu­nity for each to con­trib­ute cap­i­tal as re­quired. Com­pa­nies can pro­vide per­sonal as­set pro­tec­tion and tax ad­van­tages (they pay a flat tax rate: in Aus­tralia, for 2016/2017, the rate has re­duced from 30 per cent to 28.5 per cent for com­pa­nies with an ag­gre­gated turnover be­low AU$2 mil­lion).

REGIS­TER YOUR BUSI­NESS

Aside from the stan­dard re­quire­ments of set­ting up a busi­ness, such as reg­is­ter­ing with ASIC (asic.gov.au), reg­is­ter­ing for an ABN (abr.gov.au), reg­is­ter­ing with the ATO (ato.gov.au) for taxes such as goods and ser­vices (GST), pay as you go with­hold­ing (PAYGW), fringe ben­e­fits (FBT) and fuel tax cred­its (FTC), it is worth con­sid­er­ing the le­gal re­quire­ments of reg­is­ter­ing busi­ness names, do­main names and even brands or trade­marks to en­sure that you are not in­fring­ing on an al­ready es­tab­lished (and reg­is­tered) brand.

De­pend­ing on your state and pay­roll size, you may also need to regis­ter for pay­roll tax, and if op­er­at­ing across more than one state, you may need to regis­ter in mul­ti­ple states. Work­ers’ com­pen­sa­tion is another con­sid­er­a­tion, and again, you may need to regis­ter in more than one state if you have em­ploy­ees work­ing in those states.

GET AN ABN

If you are op­er­at­ing an en­ter­prise, you need an ABN, and reg­is­tra­tion can be done on­line via the Aus­tralian Busi­ness Regis­ter. You need an ABN prior to com­mence­ment of trad­ing. If you pro­vide ser­vices to a busi­ness and do not have an ABN, then legally the busi­ness should with­hold 49 per cent of the pay­ment due to you and re­mit this to the ATO.

REGIS­TER FOR GST

In gen­eral, a busi­ness does not need to regis­ter for GST (which means they charge GST on their in­voices, and can claim GST cred­its back on pay­ments made), un­til their cur­rent or pro­jected turnover hits AU$75,000 (AU$150,000 or more for non-profit or­gan­i­sa­tions). This is not an­nu­alised turnover, but rather the turnover in the cur­rent and pre­ced­ing 11-month pe­riod.

If us­ing an on­line web­store, it is im­por­tant to check the set­tings to make sure that GST is be­ing charged cor­rectly, on both the prod­ucts be­ing sold, and also the ship­ping. Gen­er­ally, if goods or ser­vices are be­ing sup­plied to an over­seas en­tity, GST may not be charge­able and many web­stores al­low this dif­fer­en­ti­a­tion.

You must also regis­ter for GST un­der the AU$75,000 thresh­old if you pro­vide taxi travel (and this in­cludes Uber driv­ers).

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