Starting your business

Are you looking to start a business?

Starting a new business can be an exciting endeavour but it could mean some changes to your financial situation. Before embarking on any business venture, speak with your accountant and get some legal advice on your idea’s viability and what steps you'll need to take. Read on for some general information and some consideration to get you rolling.

5 Questions to answer before starting a business

1. Is it a business or a hobby?

This is a critical question you should ask yourself. A hobby is what you enjoy doing in your leisure time. For example, mountain biking, playing music, painting and writing a journal are hobbies. Making timber coffee tables or pottery can also be hobbies.

If you want to start a business – or turn your coffee table hobby into a business – you will ultimately function to make a profit, so you will need to consider a range of issues, including tax, insurance and legal obligations. To position yourself for profit – and for future expansion – make a business plan.

Next, consider what you need to do to register and licence your new enterprise. This is where the Australian Government’s ‘Australian Business Licence and Information Service’ (ABLIS) comes in handy if you have any questions about setting up your own business.

The ABLIS can help you with:

  • A summary of state or territory, local and Australian government requirements relevant to your business
  • Information about licence fees, how to apply, periods of cover and renewals
  • How to access application and renewal forms
  • Where to go for more help and information.

2. How will I market my business?

You have your business idea, but how are your products or services different from others in the market? Do you have a unique value proposition? For example, you may be the only candle shop in your local area that has contact with a supplier that sells orange scented statue candles.

You will likely need a website, but what functionality would best help you to sell your products and services? Do you require onsite payments or is your page simply for information and testimonials from happy customers? Similarly, will you use social media, and what channels will best market your particular offer? A video platform like YouTube is likely of more use to a cabinet maker than an electrician, for example. Facebook may be useful for both, while Facebook and Instagram are certainly useful to build communities for a variety of businesses.

3. What about business banking?

Having enough money to invest in the business is critical to its success. For a new small business, developing a cash flow forecast and managing cash flow can be harder to more challenging compared to larger and more established businesses. Things to consider include:

  • Raising start-up capital
  • Record keeping
  • Cash flow control
  • Budgeting
  • Credit management
  • Insurance
  • Future capital for expansion
  • Foreign exchange (if dealing with overseas customers or suppliers)
  • Business bank accounts
  • Fees and charges
  • Business loan

4. Managing taxation for your business

If you’re just starting out, more than likely your small business will have an annual turnover of less than $2 million. If this is the case, you should investigate whether you qualify for any small business tax concessions from the Australian Tax Office (ATO). To find out more about tax concessions for small businesses, visit the ATO website or contact the Australian Government’s ‘Small Business Assist’ service. They can provide you with easy access to information regarding taxation matters for small business.

5. Recruiting employees

Before venturing down this path, investigate things like minimum rates of pay, payslips and leave entitlements for your new employee/s. You will also need to consider payroll tax, superannuation and insurance. These requirements can be different across Australian states and territories so make sure you have a complete understanding of your obligations as an employer.

The recruitment process can take a large part of your time. However, you may find it a good opportunity to identify skill gaps within your small business and factor this into your recruitment planning. The right candidate can really make a difference to the productivity of your business.

Do I need a business bank account?

The short answer is yes. Whilst Sole Traders can use a personal account for their business, for privacy, account keeping purposes and business simplicity, separating your business and personal banking is best practice. Partnerships and all other business types MUST have a separate business bank account for tax purposes.

Your business structure and activity will define what features the features you need from a bank account. The needs of a sole trader who deals exclusively on the internet and rarely makes a branch visit will likely be different to a café owner or smaller retailer who deals in cash and EFTPOS transactions and who will be a more regular visitor to their branch. Depending on the features you require, there may be monthly fees. Finding a bank account with the right features for your business is vital.

Depending on the products you hold, some financial institutions might manage your relationship through a business banking specialist and support team, who can work with you through the peaks and troughs of business life, provide access to a range of lending options, and help to ensure that tax time is easier.

Here are some of the basic business accounts we offer and their features.

Everyday business transaction account

This is good for your everyday transactions – taking payments from customers, paying suppliers and staff. IMB’s Business Transaction Account is designed to cater for the everyday needs of small to medium sized business owners and operators, and comes with a VISA Debit card.

Business savings accounts

When the sun shines, make hay… then save it. IMB’s Business Cash Management Account is great for businesses looking to earn a higher interest rate on cash investments or a place to park funds, with the flexibility to move it when you need to. If you don't need ready access to your funds, you might consider a Term Deposit. Fixed Term Deposits have a fixed interest rate for the duration of the term, while Floating Term Deposits have a rate that can fluctuate over the course of the loan. Contact our team for more info on your business savings options.

Internet business banking

Modern business banking is about convenience and, as detailed by the Australian Government, paying invoices online is preferred. Online and App-based business banking offers convenience and immediate access for decision-making and fast action.

Software integration

Some small business bank accounts offer seamless integration with the most popular accounting software, including Xero*, MYOB BankLink* and Quickbooks*. Time is money, so save it at tax time. At IMB, your business specialist or Local Business Centre will be there to help the integration to go smoothly.

Do you need an accountant for your small business?

Owning and running a small business can be relentless. With things moving at a million miles an hour, owners can sometimes make decisions on a whim due to a lack of time. This is where a certified accountant can help with the financial management of your small business.

5 tips for business owners choosing an accountant

Accountants can often be the trusted advisors of small business owners, so how does an owner choose an accountant to help with financial accounting? Here are some quick tips.

Tip 1:  Are they qualified?

In Australia, fully qualified accountants need to undertake many years of study. This can include an undergraduate degree in accounting at a higher education institution. Membership of professional associations such as ‘Institute of Chartered Accountants Australia’ or ‘Certified Practicing Accountant Australia’ (also known as a CPA Australia) indicates that the accountant meets the minimum standards of the association through extensive study and workplace experience.

Tip 2: Is the accountant registered?

There is the Federal Government tax and BAS agent register that small business owners can use to check and search for accountants. The Tax Practitioners Board website has some helpful tips on how to find a registered accountant.

Tip 3: Check if the accountant meets the requirements of your business needs

Ask questions around the type of services they offer. Accountants are many and varied; it is beneficial to select one that meets your specific small business needs. For example, you may require a specialist small business tax account to help you navigate through the financial obligations for end of financial year activities.

Tip 4: Make sure that customer service lives up to your expectations

Generally, a good accountant will provide good service. Does your accountant answer and return phone calls? Does your accountant respond to emails promptly? If an accountant is going to be a trusted advisor, they will need to meet your client service expectations.

Tip 5: Accounting fees

How will your accountant charge you for their services, and when? Fee structures from one accountant to another can vary. Whether it is hourly, fixed-fee or a monthly retainer that suits your business; it is a decision that will need to be made based on your business’ needs.

Getting to the point where you need an accountant to help with your small business finances can be a good thing. A good accountant will have the skills and experience to take some of the load in managing your financial information and business advice off your plate.

NEXT: Go to Part 2: Understanding Your Business

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Important Information

*Xero is provided by Xero Australia Pty Limited and MYOB Banklink is provided by MYOB Australia Pty Ltd.

This article has been prepared by IMB Bank and contains general information only. It is not intended to be relied on as advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal,  financial, taxation or other professional advice before you make any decisions about your business. Consider the relevant Terms and Conditions or Product Disclosure Statement and Target Market Determination before deciding whether to acquire any products or services offered by IMB Bank. Lending criteria, terms and conditions, fees and charges apply to IMB loan products.  

IMB Bank does not recommend any third party products or services referred to in this article and we accept no liability in relation to them. Any links to third party websites are for your information only and we do not endorse any content on those sites.