Launching a new business is an exciting and fun thing to do but at the same time it can be extremely stressful and confusing. It is important to be aware of the many legal and financial related requirement business owners must follow when operating a business. It is also important to be strategic in the way you market your business to the public and to also budget appropriately so that your business doesn’t risk folding.
In today’s market, borrowing money is harder than it ever has been. Most banks and financial institutions are nervous about lending you money as a cash reserve in case there are future lockdowns or other global economic disasters. There are currently global supply chain issues affecting almost every industry. The wholesale price of goods is consistently rising and businesses need to be aware of their cost of goods at purchase price, so that they can pass on these increases wherever possible to remain a viable business.
Emily Ridley from Vault Accountants says explains “interest rates, employment costs and superannuation are also continually rising. Its really important to have a clear understanding of what it fundamentally costs you to do a job to ensure that you’re pricing it competitively, but profitability,” says Emily Ridley.
There is also a staff shortage, almost to the point of crisis. Some businesses are having to scale back, refuse work or close their doors simply because they don’t have the staff or the materials to carry out the work. This is heartbreaking for everyone Having an online / remote service / contact limited business plan, or the ability to pivot to this if necessary is also essential in todays market. Here at Vault we’re a fully functional cloud based service provider with everything in place to be able to help you, whatever the circumstances,” continues Emily Ridley.
To reduce the risk of your business failing Emily Ridley says that “it’s all about the numbers, Know your numbers, know your cash cycle. Know your creditors and the maximum timeframes you have to pay. Know when your ATO deadlines are due. Know what cash you have coming in and what is going out, and when. Know your profit margins on your sales items and ensure you have all of your operational costs covered when finding your price point,” says Emily Ridley.
There are also a number of financial and tax related obligations business owners must be aware of before launching their business.
“You need to understand the tax obligations relating to you, your business structure and how and why they apply. Not knowing what you owe, or are going to owe, the ATO and when is going to severely impact your cashflow within the business. You have a legal obligation to manage and maintain your compliance,” says Emily Ridley.
Furthermore, there are also a number of legal obligations business owners need to be aware of prior to launching their business.
“Depending on the structure of your business, you may need to know your ASIC, Office of Fair Trading and other licencing and governance obligations. If you have employees, you need to be aware of SGC (Superannuation Guarantee Contributions), STP (Single Touch Payroll) obligations and WorkCover. These obligations may affect contractors and subcontractors as well as permanent employees, apprentices and casuals,” says Emily Ridley.
You need to be aware of any industry licences such as construction, electrical, HVAC, gas, plumbing, real estate, liquor licencing – and ensure you have the right licence for the right structure. You might be personally registered with your industry governing body, but you might need a company registration as well if you’re not trading as a sole trader,” continues Emily Ridley.