No doubt you have heard of the benefits of Self Managed Superannuation Funds (SMSF), and most of you think that it all sounds to good to be true and you can't wait to be in control of your own superannuation! Well before you make this life altering decision you need to STOP, breathe and know what you are in for, as they are not for everyone.
Nobody likes to think about it, but it’s inevitable - one day you will leave your business. You may decide to sell up, retire or may have to leave due to health reasons. That day needs to be planned for. A succession, or exit plan outlines who will take over your business when you leave.
A succession plan is a strategy which determines the best way for you to exit your business while ensuring it continues.
Most people don't take backups seriously until they lose precious data and all the hours that went into it. Computers are vital to all businesses these days and if you are depending on this technology to work everyday with minimal downtime then backups are a must.
There are a number of systems and devices which you should consider backing up. There are your servers, phone system (if it's internet based), internet modems, camera settings, workstations, printers, etc. Every device that you can configure in an administration panel has cost you time to set up. You can backup anything.
Negative gearing is something we love to talk about when it comes to properties. It is a buzz phrase thrown around at get togethers causing all to nod as if they have uncovered the holly grail. But many don't really understand the concept.
Basically, negative gearing is where you borrow to buy a property, the amount of rent you receive from the property in a year is less than the amount required to pay the loan and all other associated costs like rates, insurance and maintenance. When tax time comes around you can offset any loss on owning the property against other income to reduce your overall tax bill.
At this time of year the catch cry of many business owners is: 'I need to spend money to save on tax'.
This kind of thinking is inherently flawed:
- Firstly you have to spend the money, which can cause all sorts of cash flow problems.
- Secondly every dollar you spend you will only realise a saving of say 30% being the company rate of tax.
- Thirdly reducing your profit to not pay tax will ultimately stunt the growth of your business.
In business any investment you make has to yield a return. You invest in equipment to increase productivity, you factor the rate of return before you purchase it, you maintain it so that it will keep giving you the desired return. The same rules apply to your investment in your people.
Employees are the biggest investment your business will have. It takes time and money to train and develop their skills. You don't want them to leave because they are not being nurtured in the right direction.
Very often the difference between Profit and Cash Flow can make or break a business.
To define in simple terms, profit is what is left of revenue once expenses are paid. Many believe this is what should be in the bank... if only! More usually the profit may be used to invest in new equipment, pay loans and help expand the business. And let's not forget the “T” word, yes you also have to pay taxes out of profits. And then after all that, the owners, with any luck, will get their slither or hopefully a chunk of the pie.
You've done the groundwork.. you know why you want to start your own business and planned how you are going to achieve it. The check list is complete, business plan... check. Finance in order.. check. Marketing strategy... check. Business name... check?? Then the questions begin...
Do I need to register the business name, and how? Will I operate through a company? Will the company name be my business name? What about GST?
Legal obligations and registrations are the mundane part amongst the excitement of starting a business, but they are fundamental to your success.