There is never the wrong time to take steps to get your tax affairs in order, and plan how to maximise your return! Here are my tips for a happy tax time…
10 Tips For Starting A Small Business
If you’ve thought about opening your own business, you might have begun to look for advice. There are so many tips for starting a new business out there that choosing which ones to follow can get confusing.
As a seasoned entrepreneur, I can tell you that there is no perfect formula for starting a small business. I’ve learned that the best business advice usually forces you to think in a new way. So, I’ve compiled a list of tips for starting your own business that you might not have heard.
Tips for starting a small business
Opening your own business is often a learn-as-you-go process. But, the more smart decisions you make early on, the better chance your company has for success. If you have an entrepreneurial idea, try these ten tips.
1. Address excuses
Countless people dream of becoming entrepreneurs, but they never do. They’re burdened with excuses and fears of failing. From money to time to responsibilities, you can make a million cases for not starting a business.
Let’s face it, being your own boss is scary. In most cases, new business owners have a lot to lose with little insight into their chances of success. Worrying about the risks of business ownership is normal.
But, excuses only slow you down from reaching your goals. If you really want to start a business, you need to address the reasons you think you can’t start a business and get rid of them. Find a solution to the issue rather than let it hold you back.
2. Absorb everything
Listen to what others have to say—friends, family, experts, even yourself. When it comes to things that have to do with your entrepreneurial goals, be a sponge. As you learn, start to work out the idea in your head. Write things down. Keep notes from all the resources you come across to develop a detailed plan.
When you tell people about your startup, read their body language. Do they like the idea? Or, are they just being nice and really think you’re going in the wrong direction? Encourage your listeners to be honest with you. The collective opinion you get from peers could be a reflection of how consumers will react.
Don’t ignore the power of advice from experts and veteran business owners. These folks know first-hand what does and doesn’t work. Smart entrepreneurs learn from the mistakes other business owners have made.
3. Be a solution
Rather than starting your idea with what to sell, think about what it will solve. It’s a lot easier to gain a solid customer base when your business is fixing a problem. Your startup should fill a hole in a certain market or niche.
For example, I didn’t create Patriot Software just because I had a passion for software. I wanted to solve an issue that small business owners like me faced. After doing some research, I found I could provide payroll and accounting software that is easy-to-use and affordable.
Home in on why you are opening your own business. Understanding your motives will help you create a brand and market your company. Know what problems your target customers face and how you can solve them.
4. Keep it simple
If you’re like many entrepreneurs, you have a business idea and you’re ready to run with it. Be careful not to let your concept snowball into something overcomplicated. You could end up with an expensive, elaborate end-product that nobody wants to buy.
As a new business owner, try to start small and narrow your focus. Learn how to test your business idea. Create a simple, quality good or service. A successful business idea should fulfil promises to customers and exceed expectations.
Cut unnecessary features that water down your offerings and cost you money. As a small business, you don’t need all the bells and whistles of a giant corporation. It will be easier to add to your business as it grows.
5. Count the costs
Once you start to develop your business idea, add up how much it will cost. You will need to factor in every business expense necessary to launch and operate. Some costs to keep in mind include your location, rent, supplies, marketing, and more.
Come up with the most educated number you possibly can. Then, take whatever you think that dollar amount is and quadruple it. Seriously, quadruple it. You’ll experience unexpected costs of running a business around every corner. It’s better to be over-prepared than short on funds when bills start to roll in.
When you’re thinking of the cost to start a business, don’t forget about your personal budget. Look at how much money you need to live, including rent, food, gas, healthcare, etc. Lay these expenses out in order of which ones you must pay (e.g., mortgage) to ones that can slide if the money runs out (e.g., entertainment).
Once you have a grasp on all your expenses, start to create a business budget. At first, you might need to get some outside capital to make ends meet, like a small business loan. Go over all of your options before putting your money into the startup.
6. Imagine yourself with zero money
I mean zero. There is a high probability that this will happen. I’ve had several businesses not make it for the long haul. And, I’ve come close to bankruptcy.
Launching an unsuccessful business idea is a reality for many entrepreneurs. Over half of new businesses fail within the first five years of opening. How would you handle having no incoming money?
It’s a good idea to come up with a “just in case the worst outcome happens” plan. You might need to get a job on-the-fly or temporarily live with your parents. You might have to go without comforts that you’re used to. Figure out how you would get by if your business plan went south.
Look at your current sources of income. What do you earn from your current job? How long would your savings last if you quit? What unexpected things could mess up your plan (e.g., you wreck your car or your furnace breaks)? Prepare yourself for all the situations that could happen if the business idea doesn’t work out.
7. Earn while you build
If you want to start a small business, don’t quit your day job—yet. Launching a successful startup is a process. Build your business in stages and gradually transition from employee to entrepreneur.
As a new business owner, it will take some time to earn a steady income. Keep your nine-to-five and work on the business during off hours so you can earn during those tough, first stages. Once you have a healthy inflow of cash from your company, you can tackle business ownership full time.
8. Speak up about your business
One challenge many business owners face is that they don’t know how to sell. It can be intimidating to share your business with the world, especially when you’re new.
If you’re worried about what people will think about your business, you need to get over it. If you can’t convince consumers to buy from you and support your company, it’s difficult to make money. Not outgoing? Fake it ‘till you make it. If you really want business success, you can’t afford to be shy.
In my early days as an entrepreneur, I had to to do public speaking for the first time. Back then, I didn’t have any training or experience in talking to large groups of people, not to mention I wasn’t very keen on the idea of facing my worst fear.
But, if I wanted my young company to succeed, I need to to get out of my comfort zone. This came in the form of planning and hosting nearly 70 three-day conventions for my customer base of network recruiters.
I can’t begin to tell you how afraid I was. As it turned out, I became a lot more comfortable in front of people after speaking at the conventions. Though I was more introverted than extroverted, I learned to “put myself out there” for the sake of my business.
Be ready to speak confidently about your business, even if it makes you uncomfortable. As a new business owner, you will need to market and network constantly. From networking with clients to negotiating supplier payment terms, you must be able to communicate.
9. Know the legal requirements for starting a small business
Starting a business is exciting. Laws are not. But, you need to understand the rules that come with opening a business. If you fail to follow government regulations, you could face steep penalties.
From forming a legal structure to setting up an accounting system, you must follow laws. You need to register the business with your state. You must also take care of business-specific tax liabilities. And as you hire workers, you need to follow employer laws.
The rules that apply to you depend on your state, business structure, and industry. Consider talking to a small business accountant as you set up your company.
10. Balance passion with wisdom
One of the most important ingredients in a successful business idea is passion. Passion will consistently drive you to improve your process so your business grows.
That said, don’t let passion take over all your decisions. Passion will move you forward, but knowledge will point you in the right direction.
Conduct market research on your industry and talk to target customers to find out your business’s potential. Ask experts questions about launching a startup. Reach out to professionals that can help you with certain areas of business, such as financial advisors and lawyers.
As your business starts to come together, think of it like driving a car. Let your passion hit the gas pedal and your mind control the steering wheel. That way, you can be confident about the direction you’re headed and sustain the momentum you need to get there.
Source: Forbes.com
JobKeeper eligibility explained: Everything we know so far
The Morrison government’s $130 billion JobKeeper wage subsidy package passed through parliament on Wednesday, giving effect to the largest single piece of fiscal policy in Australian history.
But the question on the mind of more than 730,000 businesses heading into the Easter long weekend remains whether or not they’ll be accepted into the scheme, which will provide $1,500 fortnightly payments for each eligible employee on their books.
About six million workers are expected to be covered by the program, but many businesses remain nervous about their prospects heading into April, as the Australian Taxation Office (ATO) prepares to begin accepting formal applications.
Despite reassurances that officials will look to be inclusive rather than excluding well-meaning firms, there are still more questions than answers about the types of business activities the ATO will be taking into account when considering eligibility.
Legislation passed through parliament yesterday outlines how the JobKeeper scheme will work for those accepted into the program, but includes far fewer details about eligibility requirements and the application process.
Under the laws, which amend the Fair Work Act temporarily, Treasurer Josh Frydenberg has been granted broad powers to pen additional rules about eligibility under the program, including the manner in which payments are made, the process for reviewing decisions and record-keeping requirements.
Treasurer and tax commissioner have broad powers
The making of these rules can be delegated to tax commissioner Chris Jordan by the Treasurer, enabling officials from the ATO and Treasury to maintain a large degree of flexibility about which businesses and workers will and won’t be eligible for JobKeeper payments throughout the life of the scheme.
It’s been designed that way to enable officials to modify and update the JobKeeper framework as the program progresses, preventing a situation where the ATO is forced to rule out businesses based on regulations already enshrined in the Fair Work Act.
These rules may cover:
- Eligibility criteria for JobKeeper payments;
- How JobKeeper applications must be made;
- Whether a payment will be made in instalments or a lump sum;
- Entitlement to payments or instalments;
- The amount of JobKeeper payments;
- When a JobKeeper payment should be made;
- Conditions for applying to the JobKeeper scheme;
- Providing information or notices; and
- The rights, obligations and liabilities of JobKeeper recipients and other entities that benefit from those payments.
At the time of writing on Thursday morning, the JobKeeper legislation has not received Royal Assent yet. While this part is largely a formality, it limits what the ATO is able to say publicly about the scheme.
SmartCompany is expecting responses to a list of questions about the administration of the program next week; we’ll update this article when that information becomes available.
What we know so far
We already know a fair bit about the approach the ATO will be taking though. The headline eligibility requirement for employers and sole traders, updated by Treasury last Sunday, involves:
- Businesses estimating their turnover has, or will likely, fall by 30% or more (where turnover is under $1 billion);
- Businesses estimating their turnover has, or will likely, fall by 50% or more (where turnover is over $1 billion).
Businesses are expected to provide evidence, such as with business activity statements (BAS), of these revenue declines.
Most businesses will be required to prove their turnover has fallen over the course of a month or quarter (depending on their BAS reporting period), relative to their turnover in a corresponding period a year earlier.
Turnover will be calculated in the same way it is for General Sales Tax (GST), which is reported on BAS statements.
The headline criteria published Sunday is slightly more flexible than previous guidance initially outlined by Treasury, which required firms to show a 30% decline on a comparable period a year ago, of at least a month.
Firms which don’t meet the criteria will be relying on “tax commissioner discretion” to have their applications approved.
Treasury says firms which have not been in operation for 12 months, or which can show their turnover a year ago was “not representative” of their usual average turnover, will fall under this discretion category.
Firms which have undertaken acquisitions or have typically highly variable turnover have been singled out by Treasury as candidates for eligibility discretion.
“The Tax Commissioner will have the discretion to consider additional information that the business or not-for-profit can provide to establish that they have been significantly affected by the impacts of the Coronavirus,” Treasury said on Sunday.
The ATO will also have the discretion to set out alternative tests for firms, with Treasury saying there will be “some tolerance” for businesses which, in good faith, estimate a 30% fall but experience a slightly smaller decline.
What employees are eligible?
This part has not changed too much since the JobKeeper scheme was first announced on March 30. Although under the laws passed Wednesday, the Treasurer and tax commissioner have broad powers to change eligibility rules for workers.
As it stands, the following workers are eligible for JobKeeper payments:
- Full-time and part-time staff; and
- Casuals employed on a regular and systemic basis for longer than 12 months as of March 1, 2020.
There are additional requirements staff need to meet as well:
- Staff must be currently employed by an eligible employer (including those stood down or re-hired);
- Eligible staff must have been employed on March 1, 2020;
- Staff must be at least 16 years of age as on March 1, 2020;
- Staff must be Australian citizens, the holder of a permanent visa or a 444 visa holder as of March 1, 2020;
- Staff must be residents for Australian tax purposes as on March 1, 2020;
- Staff must not already be receiving JobKeeper payments from another employer;
- Employees cannot be receiving parental leave pay from Services Australia; and
- Employees on workers compensation will only be eligible if they’re working (even on reduced hours).
I’m a sole trader, what about me?
Sole traders are eligible to apply for JobKeeper payments and can register alongside all other businesses.
Firms without employees are required to provide their ABN and then nominate an ’employee’ (that’s the sole trader in most instances) to receive the payment alongside that person’s Tax File Number (TFN).
Sole traders must also have included assessable income from their business in their 2018-19 tax return and lodged taxable supplies between July 1, 2018, and March 12, 2020. This is basically a test to ensure an applicant has been operating their business.
Sole traders must have had an ABN on or before March 12, 2020, and have been “actively engaged” in their business.
Eligible sole traders must also meet the same age, citizenship and visa status requirements as employees (explained above).
Sole trader payments will be made monthly to a nominated bank account.
Other than this, the same eligibility criteria apply to sole traders as other businesses regarding turnover decline and ATO discretion.
Businesses operating through partnership structures can only nominate one partner to receive the JobKeeper payment, but where shareholders provide labour to the company but receive dividends in lieu of wages Treasury says one shareholder can be nominated for JobKeeper.
Sole trader structured firms with employees will be eligible to receive one JobKeeper payment for the director and other payments for eligible employees.
Source: SmartCompany