{"id":1212,"date":"2022-02-10T16:52:50","date_gmt":"2022-02-10T05:52:50","guid":{"rendered":"http:\/\/www.asapfinance.com.au\/?p=1212"},"modified":"2022-06-23T15:57:05","modified_gmt":"2022-06-23T05:57:05","slug":"setting-up-the-right-business-foundations","status":"publish","type":"post","link":"https:\/\/www.asapfinance.com.au\/de\/en\/setting-up-the-right-business-foundations\/","title":{"rendered":"Setting up the Right Business Foundations"},"content":{"rendered":"
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To trade as a business, you need to meet the right compliance requirements. It\u2019s certainly not the most exciting part of creating a business, but setting up the right legal, accounting and tax compliance foundations ensures that you\u2019re doing everything by the letter of the law.<\/p>\n

Here are the main compliance steps to think about, and why they\u2019re so important to the smooth running of your business.<\/p>\n

Decide on a legal structure for the business<\/strong><\/p>\n

First off, you\u2019ll need to make a decision about the legal structure of the company. There are two key choices here \u2013 incorporated (a limited company) or unincorporated (usually either a sole trader or a partnership). The key difference here is around liability. In other words, do you want your business to be a limited company, where you and the business are treated as separate legal entities? Or do you want to be unincorporated, like a sole trader, where you and your business are seen as one single entity?<\/p>\n

Most startups will opt for the incorporated limited company route, keeping your personal and business finances separate and lowering your personal liability and risk.<\/p>\n

Open a business bank account<\/strong><\/p>\n

To trade, take payments and pay your suppliers, you need to have a business bank account that\u2019s separate from your own current account. This helps to create a tangible divide between the money you\u2019ve generated from the business, and your own personal cash.<\/p>\n

Most high-street banks won\u2019t let you use a personal current account for business purposes. Banks will offer a variety of different business accounts, with varying levels of fees, overdraft levels and additional business features. Set up the business account and then use this account for ALL transactions going in or out of the company.<\/p>\n

Set up a bookkeeping and accounting system<\/strong><\/p>\n

It\u2019s a legal requirement for your limited company to keep adequate records and to submit annual statutory accounts. To be able to meet these requirements, it\u2019s essential that you have a bookkeeping process and a reliable accounting system in place.<\/p>\n

There\u2019s a dazzling choice of different cloud-based accounting platforms aimed at the ambitious startup owner. Xero, QuickBooks, MYOB and Sage are big names in this space, and all offer easy-to-use systems that make the accounting process relatively straightforward. It\u2019s a good idea to engage an accountant, right from the start, to get the best possible accounting advice.<\/p>\n

Register for the relevant business taxes<\/strong><\/p>\n

Tax is an unavoidable part of running any business. It\u2019s mandatory for you to register for the relevant business taxes, and you\u2019ll also need to factor in that a certain percentage of your startup\u2019s profits will end up going to the tax authorities at the end of each financial year.<\/p>\n

If you\u2019ve opted for the limited company route, you must register for corporation tax in your home territory. Corporation tax is paid based on a percentage of your year-end profits, once reliefs and other allowances have been taken into account. Approximately a quarter of your end profits will end up being paid over in tax, so it\u2019s imperative that you put this money away in a separate tax accounting, or ring-fence it in your accounts, so you have the money to pay the bill at year-end.<\/p>\n

Other taxes to register for include:<\/p>\n

Self-assessment income tax<\/strong> \u2013 although you\u2019ll pay corporation tax on your company\u2019s profits, directors are also taxed on their own personal earnings too. If you\u2019re an unincorporated sole trader, this is also the way you\u2019ll be taxed on your business profits, as your personal and business income are treated as the same thing.
\nGoods & Services Tax (GST) <\/strong> \u2013 GST (or VAT in the UK and Europe) is an indirect value-added tax or consumption tax for goods and services. If you sell products or services that qualify for GST\/VAT, you\u2019re responsible for collecting these taxes and paying them to the tax authority on a monthly, quarterly or annual basis.
\nPay-as-you-go (PAYG)<\/strong> \u2013 if you have employees, and your home territory operates a PAYE\/PAYG system, you\u2019ll need to make income tax deductions from your employees\u2019 wages and pay these taxes directly to the relevant tax authority. This is all done via your regular payroll run.<\/p>\n

Sources:<\/p>\n

PAYG withholding<\/a>
\nGST and GST Sales<\/a><\/p>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"

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