Do I Need to Speak to a Professional?
When confronting the daunting world of business, there are a few things you should consider. The first and perhaps most important question you should ask is ‘who do I speak too?’ followed by ‘who do I listen to?’
Take advice from everyone but only listen to someone you are paying. That’s not saying that the advice you may be getting isn’t correct, it’s simply getting back to basics. The age old question, ‘whats in it for me?’ When getting advice, you want to ensure the person advising you is also getting something out of it. It motivates and quantifies what they are saying and prevents it from being made more in the capacity of a projection, something we often get from family and friends.
More often than not, hearing the things nobody wants to say will help you the most. This is always better coming from someone external. Look for someone who has experience in startup business in your industry or profession; you need someone who has a sound cross-section of experience both in success and failure, typically an accountant or business coach.
Do I need to know about tax before I get started?
This is always a difficult question to answer. In short, the answer is yes. You really do need to have a plan for the milestones you will come across and what you need to keep an eye out for. A large majority of businesses that fail have done so because they mismanaged their finances, often due to an underestimation of their taxes.
The reason this is a difficult question to answer is because tax is extremely complicated. If you were to start teaching yourself everything, you probably wouldn’t start a business. It’s overwhelming.
The reality is, tax is good, it means you are making money, it means you are making profit.
My advice, have a consultation with a professional, ideally a management accountant that can help you with setting up some financial systems and teach you how to run your financials. A tax accountant isn’t always the best person to speak with, they know tax but running a business is about knowing business and systems, not just crunching numbers and coming up with a figure to pay the tax office.
Do I need accounting software or can I use excel?
This is a topic I have had many long discussions on with excel geniuses who insist on telling me how fabulous their spreadsheets are and what they can get from it. Here is the reality, we can’t get the same information from your spreadsheets as you can, I don’t know how it’s formatted and I don’t know that it’s correct.
Accounting software is going to provide everything we need and further, it can’t be easily modified. It will most likely take less time to operate than your spreadsheet once you know what you’re doing and will support substantiation and record keeping standards if in any case you are investigated by the ATO. Your fabulous spreadsheet will not.
If you can’t afford accounting software, consider holding off on starting your business. Mismanagement of finances is after all the major reason businesses fail. Software manages your financials and fundamentally improves your chances of success. Remember, money in the bank isn’t the same as profit.
What happens when I want to employ staff or use contractors?
Staff, your biggest asset and your biggest liability! There are a few obstacles less painful than the ongoing and ever-changing issue of staffing. A concern for both big and small businesses and everyone in between.
A recurring issue we experience with start up businesses is deciding the framework in which you are going to employ or contract staff. I believe the key here is to firstly understand what the key expectations are of both the individual and the role.
Common mistakes that people make relate to how they employ or “contract” staff. Keep in mind, that depending on how someone is employed and the industry or profession they fall under will determine what set of rules and regulations are relevant and appropriate.
On this, my advice is simple; when it comes to staff and/or contractors, always speak to professionals. There are tax implications regarding PAYG Withholding to be considered, guidelines that need to be followed relating to Fairwork Australia, lawyers to be consulted around contracts and agreements as well as the mandatory insurances like workers compensation to abide by.
As frustrating as staffing may be, it’s the best way to move onwards and upwards and is simply a necessity we are required to deal with. When the perfect staff come along, look after them. Its been said that on average it takes the equivalent of 3 months worth of wages to train a replacement.