Thinking of starting a business

Starting a small business has a lot in common with the opening moves in a game of chess. To be successful you have to get the opening moves right.

Having an optimistic outlook is helpful, and you should spend some time researching and understanding your market. You also need some luck, as the harsh reality is that passion, enthusiasm, talent or great ideas do not on their own guarantee success. The Australian Bureau of Statistics has indicated for many years that 42 percent of new businesses last less than three years. A lot of these businesses would have avoided a lot of heartache, and tears, if they had sought sound assistance and advice from the outset.

Evaluation phase:

Strangely enough this can be an anxious and uncertain time, yet it is exciting at the same time. Remember to think with your head, and not your heart, and keep your emotions under control.

Planning:

There is an old cliche and truism which says "People don't plan to fail, they just fail to plan." This represents powerful, and well meant advice for people embarking upon creating a business. A plan should contain a market analysis, a marketing plan, and a Cash flow budget. You will then be better placed to blueprint your progress, in your early days, and to raise money in this difficult environment. You may choose to:

• start from scratch,
• buy an existing business,
• buy a franchise.

Each of these options has its own associated issues.

The Business Structure:

The structure you choose can effect:

• whether you need to register your business,
• the safety of your assets,
• the continuity of the business when sold further on
• your future tax position.

Other areas that should also be considered are:

• Business Insurance's
• Employer Obligations
• Legal Issues
• Permits & Registrations
• Claiming Motor Vehicle Expenses
• Vehicle & Equipment Finance Options

The importance of good business records:

There are many reasons for keeping excellent to good records, including the fact that it is a legal requirement. By law you have to keep business records for a minimum of five year after the taxation returns have been prepared, plus records must be in English, in Australian dollars and be in a form that the taxation office can review in order to assess your tax liability.

The graphs, below are constructed from data taken from a nationwide survey, demonstrates the importance of using up to date and accurate information. The higher the quality and accuracy of accounts, and the frequency of account production, the higher the business survival rate.

Accounting Software For Small Business

One of the biggest mistakes small business owners make is that they purchase accounting software beyond their business needs and level of accounting skill. This can lead to considerable frustration and records that amount to nothing more than a 'computerized shoebox'. Such accounts are very expensive to process.

With so many software options available it is easy to become confused. They range in functionality and sophistication with a price tag to match. To assist you we provide the following guidelines:

• If you don't understand double entry accounting (i.e. debits, credits and journal entries) then avoid sophisticated accounting software programs. If you need to use such a program then consider a training course at a local TAFE that runs for around 14-20 hours at a cost of around $350. This is money well spent and is tax deductible if you go on and start your business.
• Don't buy software beyond your business needs. If you don't need inventory or a fully integrated general ledger system don't buy a 'Mercedes' when you only need a 'Magna'
• Your software should be compatible with our general ledger system to allow easy transfer of electronic data. This can save time, money and assist with meeting the various lodgement deadlines.

Let's briefly have a look at one of the simplest and most popular accounting software programs in Australia.

If you simply need a 'cashbook' program to track your receipts, payments and GST we strongly recommend Cashflow Manager. It looks and operates like a manual cashbook complete with a spreadsheet or column layout and it requires no understanding of accounting, debits, credits or journal entries. At around $249 it represents excellent value for money. The program provides business templates that will get your books set up. The templates automatically establish columns for certain business types.

Reconciling your bank account(s) is also very simple. If you have internet banking you can download your bank statements and import the data to save even more time. You can have multiple bank accounts in a single business,and the comprehensive reports both explain your business

















results, and make preparation of your BAS very easy. The program includes the debtors side of 'Invoice Manager' that both lets you generate Tax Invoices, and track your debtors (customers who owe you money) plus it will produce Customer Statements.

If you have staff you can add 'Wages Manager' for an additional $249. Wages Manager is terrific value and once set up is very simple to operate. Wages Manager allows you to process pays, print pay slips, produce Annual PAYG Payment Summaries, and also track staff entitlements. Periodic updates are produced to allow you to keep up with income tax table alterations.

Let us help you to turn your business idea into reality.

The preceding are a few of the items you need to consider before plunging into business.

If you have a good idea for a new business venture but don't have expertise in the legal or financial aspects of creating a new business, we can help you to:

• Prepare a business plan, cash flow projections, budgets, and trading forecasts.
• Assess your finance requirements, advise on the best sources of finance, and draw up the necessary proposals.
• Establish a good working relationship with your bank.
• Register for an Australian Business Number with the ATO.
• If necessary, complete registration procedures with the Australian Securities and Investments Commission
• Deal with any company secretarial issues.
• Set up a recording system for your internal use and for complying with statutory requirements.
• And train you in the use of your accounting software.

You see, small business is our passion!

If you would like to know more, please contact us directly on 03 5571 2774 or 0408 529 730 or at our office which is located at 305 Gray Street, Hamilton, Victoria. 3300.   We guarantee your confidentiality. Because we hate spam as much as you do, your email address will never be rented,traded or sold.

IMPORTANT DISCLAIMER:

Readers are advised that the purpose of this guide is to provide general introductory information. The information has been prepared in good faith and is for guidance only. It does not purport to contain all the information that would be relevant to any particular business opportunity. Further, the guide is provided to interested persons on the basis that they will be responsible for making their own assessment of that opportunity with the assistance of the information provided. The information in the guide should not be relied upon in substitution for professional advice and individual investigation.

Consequently Peter Mulcahy cannot accept liability for any loss occasioned, however caused, as he cannot take into account any specific individuals needs or other considerations. Parties considering any action or refraining from any action, on the basis of the contents of this web page, should first seek independent professional advice.

We are Quality Assured by the National Institute of Accountants (NIA), which means you can be sure every project we undertake is carried out to International Standards, so that you can be guaranteed the precise result you pay for.

Last updated Saturday 28th November 2009