Are you about to do business with other businesses, but you’re not sure how to go about it? Here are 5 things to check before getting started.
Depending upon what you’re offering, your business structure may vary. Here are the 3 main types in Australia:
- A sole trader is a structure most appropriate when you’re running solo or a freelancer. It’s not expensive to set up, with fewer legal and tax formalities.
- If an association of people carry on a business as partners or receive income jointly, it’s a partnership. Control or management, and income and losses are often shared.
- Regulated by the Australian Securities & Investments Commission (ASIC) — a company is a distinct legal entity. It’s usually more expensive to set up and manage due to its overall complexity and reporting requirements. The company structure’s key benefit is to provide asset protection, although directors can be found legally liable for their actions and debts of the company.
If you need help to determine your business structure, speak to your business advisor, solicitor, and accountant.
Put together a business plan to better focus your goals. Address things such as competitors, primary customer, value proposition, and budget in advance to make sure you start strong.
How much money will you need (start-up costs)? Can you afford to start the business?
Other than those questions, you’ll also need to determine how you will access the money to fund your plans.
You’ll need to complete some financial forecasts if you consider obtaining a business loan. Prepare and provide these to your financial institution or investors.
You’ll want to deal with as little legal and accounting surprises as possible. Be aware of your legal obligations both to the Australian Taxation Office (ATO), state & federal, and local governments.
Register your business with the ATO to inform the government on the existence of your business, in which you have certain tax obligations or entitlements.
You can do the registration process yourself, or you can hire a solicitor or accountant to help complete your documentation and answer your legal enquiries.
Most small business owners get started doing everything on their own. At some point, consider hiring a team to take some load off.
Hire trusted and reliable advisers who can help you with issues and assist as your business grows. A contractor or part-time employee may cover you at first.
Don’t forget to consider your business’s cash flow and profits in the equation. You can enquire about the interest rates, fees, and charges that will be included and how long it will take to complete the repayment terms.
Usually, the following documents are required in an ABN loan application:
- Proof of identification (may include your Australian driver’s license, passport, birth certificate, or your proof of age card)
- Company information
- Bank statements
- Tax returns
- Financial statements
- Proof of rental income
- Notice of Assessment (NOA)
Most lenders require a business to be operating for at least 6 months and generating a monthly revenue of $5,000 to qualify for a loan.