Thinking of starting up your own business? This article covers completing a business plan and tax structure advice.
Here at Ask Us Tax we have developed an easy to understand checklist that can be used as a great starting point to ensure you don’t miss a crucial step in the process…
Completing a business plan
This is the most important step. A business plan allows you to understand where you are going and how you are going to get there. It helps you identify key areas of your business, the responsibilities of each person, your strengths and weaknesses and can be used externally to seek finance.
If you would like a business plan template click here.
A business plan is not a once-off document. It should be updated at least every 12 months as your business evolves to realign your goals for the next 12 months.
Remember – if you fail to plan, you plan to fail!
Deciding on a tax structure for your business
Ask Us Tax professionals can advice you on the best tax structure for your business.
Once you have a plan in place, the next most important step is deciding on a business structure. The four main business structures are:
Sole trader: an individual trading in own name;
Partnership: an association of people or entities running a business together, but not as a company;
Trust: an entity that holds property or income for the benefit of others; and
Company: a legal entity separate from its shareholders.
There are advantages and disadvantages to each structure including initial set up costs, control over running of the business, sharing of workload, sharing of profits, asset protection, taxation, ability to obtain finance, and many more.
Here at Ask Us Tax our team has extensive experience in advising clients of the appropriate tax structure. It is crucial to get this right the first time, so please contact us here for a confidential discussion.
Having appropriate supporting legal documents in place
Depending on the business structure selected, we also strongly believe in having appropriate supporting legal documentation in place such as but not limited to:
Partnership Agreements (for partnerships) which help identify key responsibilities of the parties involved, profit sharing, how capital contributions are made and withdrawn, etc.
Service Trust Agreements (for service trust entities) and
Shareholder Agreements (for companies).
These are legally binding documents and require a legal person to prepare them. We regularly use and recommend Kirrily Mitchell from www.documentshop.com.au.
Kirrily provides an online service including the establishment of companies, trusts, self-managed superannuation funds, business names, ASIC Compliance Services and the agreements described above.
To continue reading about obtaining registrations, organising finance and accounts, and insurance click here.