It can often be a daunting process starting a business. It’s key to ensure that you surround yourself with people that have the skills to assist your business in the early growth stages.
The Business Plan
The first step is to ensure you have a business plan. A business plan is a formal statement of a set of business goals and the plan for reaching those goals. From a tax perspective it is important you have a business plan as it is one indication that you are carrying on a business and not simply involved in a hobby.
The business plan will focus on your business from an internal perspective. Detailing the organisational chart, management and ownership, key personnel and how you propose to recruit. It will detail the key products or services you will offer and how you plan to develop these products and services. A good business plan should also cover risk management areas, such as insurance and legal consideration.
The next part of the business plan should focus on your particular market. The questions you want to ask yourself are “Who are my customers or clients?” and “Who are my competitors?”. Consider preparing a SWOT analysis. A business plan will also consider the future, in particular vision and mission statements, the businesses goals and objectives and an action plan.
Most importantly, the business plan should focus on the finances. Detail the assumptions and start projecting. You need to consider the likely start up costs. Prepare a cash flow forecast into the future. One key consideration the tax office take into account when determining if you are in business, is whether there is a real prospect of profit. You should prepare a profit and loss forecast including a balance sheet. Work out what income you need to generate to break even. Finally, you should support your analysis with documentation.
Tax Structure
Once you have completed your business plan it is important you get the tax structure correct. There are numerous tax structures available, including sole traders, partnerships, companies and trusts. Determining the structure that is right for you is critical, not only for tax purposes, but also for asset protection reasons. To find out more CLICK HERE.
Building your business
Throughout the initial stages and ongoing development of your business it is important that you seek qualified business advice. Once your business is up and running there will be numerous tax and compliance issues you will face. We can put you in touch with business advisors and tax specialists that can assist the development of your business.
If you require assistance, please contact us on (02) 8264-0755
All representations and information on this site is general in nature and should not be relied upon as advice. If you require specific advice please contact us.