Home – New Forums Starting your journey New Business: tax/employee obligations?

  • This topic is empty.
Viewing 15 posts - 1 through 15 (of 17 total)
  • Author
    Posts
  • #967700
    ex_reven
    Member
    • Total posts: 5
    Up
    0
    ::

    Hi all,

    I recently started up my own company and have since been working on the website and branding (its a design company). Its me as director with 3 employees

    So basically I have an ABN, ACN, TFN and am registered for PAYG withholding. Im primarily a designer, so when it comes to accounting and book keeping I really have no idea, as Im young and I dont really have any personal experience with that.

    For example, I know I need a Company Constitution but I have no idea how to write one. And I know that I legally need to keep records of all business related transactions for tax purposes but I have no idea how to go about that. I know in theory how PAYG works but I have no idea how to apply that in paperwork.

    Basically what Im saying is that:
    On a business level I can make and handle money (im capable of finding, targeting, gaining and making profit from clients, sensible with expenditure, sound knowledge of who my target clients are, what suppliers I should deal with, and how to conduct myself professionally).

    BUT

    I have no idea what is required of me, due mainly to the fact that:
    a) Government websites lead me in circles and its difficult to find what I need
    b) When I do find what information I need, I rarely understand the practical application of it because of jargon.
    c) Unwilling to pay an accountant/legal advisor (its a 4 person company with a focus on building a portfolio/getting real world experience rather than making alot of money, so spending money on these people would be disadvantageous as we want to be able to deal with these issues as well).

    So I guess that my questions are vague and largely numbered, but what would be most helpful to know is:

    How did you find out what you needed to start your own business?
    How did you deal with government requirements?
    How did you simplify company obligations into something that doesn’t dominate your time and money?

    I guess I feel a little stressed about having to do something that feels needlessly overcomplicated. Sorry if I’m ranting.

    Thanks for reading,
    Anthony

    #1028213
    Paul Cunningham
    Member
    • Total posts: 69
    Up
    0
    ::

    Hi Anthony

    That’s quite a range of questions you’ve got there. There’s plenty of accountants in the forums so maybe you’ll get some advice from them.

    If you already have 3 employees you’ll need to be ontop of your wages and PAYG obligations pretty much from the get-go. Maybe you need to at least consider getting a bookkeeper to assist you that area. If you’re correct about your ability to make profits, you might need to budget for a little professional help in areas where you have no expertise.

    You’re probably right about government webistes, particularly the ATO. They are overly complicated but thats probably in part due to the complexity of the matters in which they deal.

    In the beggining you might feel that regulation can dominate your time but in the long run, its just part of doing business and you’ll become used to it.

    On the matter of a constitution. I dont think thats something you need concern yourself. Im not sure how you set your company up but when I did mine (all those years ago) I was supplied a generic constitution by my accountant. Incidently, while you may disparage paying for one now – a good accountant forms the backbone of a successful business

    #1028214
    King
    Member
    • Total posts: 2,212
    Up
    0
    ::

    A few hundred dollars spent on getting professional advice will be one of the best investments you can make.

    Far more worthwhile that new furniture or anything else non-essential – even paying yourself at this stage.

    Your solicitor and accountant should have gone through these things when setting up the company etc.

    So bite the bullet. It could save you 10x the amount you spend in the long run.

    But at least you need to to a business plan and make sure you know how to pay your staff properly

    #1028215
    ex_reven
    Member
    • Total posts: 5
    Up
    0
    ::

    Thanks guys. I have vista so thats incompatible with that specific software package but I will probably look into getting some form of book keeping software soon. Do you guys know about the costs of keeping them updated? Eg do I need to pay a certain amount each year to keep a current version/up to date tax tables etc? Or are book keeping programs like MYOB usually a one off payment?

    My employees listed are all friends who have other jobs, this is a side job of sorts while we are all at uni. We all study the same course and want to get plenty of experience of operating with real clients so that when we finish our degrees we arent left standing there with a piece of paper and no clue.

    I will probably look into getting an accountant in the future. We do have a family accountant that does our personal taxes free (family friend) but I didnt want to waste his time with another lot of paperwork. In the meanwhile Id just like to sort out the paperwork myself I think so that its at least organised for when I do need to goto him for help.

    Do programs like MYOB cover everything? Or will I need more than one program?

    Thanks again.

    #1028216
    Rhys
    Member
    • Total posts: 325
    Up
    0
    ::

    Anthony,

    I agree with the earlier posts – if you’re not sure of your legal obligations you really should have a brief chat with someone who understands these issues. It will save you far more than it costs.

    And once you start invoicing clients, payring suppliers or paying employees you really will need a system to track this, whether that’s MYOB / QB, etc, or an online solution. One of the desktop solutions will cost you around $700 (MYOB A/c +), but if you’ve never used one of these products before you will nede some help with set up, etc (again you can DIY but for a small initial outlay you can usually save a heap of time, plus a heap of risk). And yes that’s a one off cost for the s/w but if you want the annual upgrade (and that includes new tax tables) you will have to pay an annual upgrade fee.

    Or online you can look at Xero, MYOB will be launching their online solution in a couple of months, plus there are a range of other options. Costs in the range of $30 / $50 a month (pricing depends on a few factors so this is a guide only).

    Good luck, Rhys

    #1028217
    King
    Member
    • Total posts: 2,212
    Up
    0
    ::

    here is a free invoicing software – I used it for years till we bought another business and accessed a different system. It is nice and easy.

    It pops up with a registration reminder after 50 invoices (mine seemed to stop doing that after a while) , but it is only US$30 to register if you want.

    #1028218
    ex_reven
    Member
    • Total posts: 5
    Up
    0
    ::

    I will definately be looking into the software.

    #1028219
    CruzAccountant
    Member
    • Total posts: 195
    Up
    0
    ::

    Hi

    Sounds like you need to have a chat with an accountant. I’m happy to help you out, just send me a PM.

    Best starting point with taxes is a publication from the ATO called “Tax basics for small business”. Here’s a link.

    Richard

    #1028220
    ex_reven
    Member
    • Total posts: 5
    Up
    0
    ::

    Wow. Im surprised they didnt mail this to me when I set up my company. I got mailed this other 6 page brochure that basically told me stuff I had already needed to know to set up the ACN in the first place.

    #1028221
    FletcherTax
    Member
    • Total posts: 347
    Up
    0
    ::

    We all want to be the Jack of All Trades and save money in every step that we do. Part of the norm for a Soloist. Accountants are probably the worst culprits in this area!

    But, setting up a Company is a big step. One that has many circumstances regardless of the family or friend connection ties. (Probably even more so!)

    The longer you delay getting proper advice – the more trouble you will find yourself later down the line.

    REAL & CURRENT example – Prospect started up a company with 4 family members, shortly after experiencing large growth. Has never withheld tax, paid wages nor superannuation. Now, one of the family members wants to leave the group due to the some sort of major tiff. The ‘it will never happen to us’ happened. Exit family member now wants his Superannuation from the past 4 years. Lodged a claim with the ATO. ATO found other remaining 3 members also not been paid Superannuation. ATO then initiated a full blown audit. ATO has penalised the Company, and pursuing Directors individually, for misusing Company funds, not paying wages, withholding taxes nor paying Super at the end of each quarter.

    My part? They have called me for the first time yesterday, seeking urgent advice and consult on how to deal with the ATO and their options.

    This is a true story – no exaggeration. The directors which happen to be all 4 family members now face material penalties from different sections of the Tax Law.

    So if you want to save money NOW (or TODAY) and not seek professional advice for your TOMORROW – I sincerely wish you the very best of luck!

    And yes I am biased being an accountant, but this is such a common situation, its beyond a joke!

    #1028222
    SewSpunky
    Member
    • Total posts: 49
    Up
    0
    ::

    I honestly believe consulting with an accountant is an essential, not an optional when starting a business. You may not want to have the accountant fill out all the forms etc for you, but it is definitely worth having a consultation to find out exactly what you should be doing yourself.

    #1028223
    chris_king435
    Member
    • Total posts: 29
    Up
    0
    ::

    Hey guys,

    How long do you think he needs to spend with the account discussing “things”? what type of questions should he be asking? And how much is this looking at costing him?

    I’m currently in the same situation and think this information would be beneficial.

    Cheers,

    Chris

    #1028224
    CruzAccountant
    Member
    • Total posts: 195
    Up
    0
    ::

    Hi Chris

    Some accountants don’t charge for the initial consultation. In terms of ongoing cost, the accountant will need to scope out the work that needs to be performed in order to provide you with a quote. If you have a good bookeeper, this may reduce the accountant’s cost as the information will be easier to process.

    Feel free to send me a PM if you’d like me to assist you.

    Richard

    #1028225
    Accounts Studio
    Member
    • Total posts: 516
    Up
    0
    ::

    Having dealt with a lot of small businesses and seen the mess they get into when they don’t understand what they are doing, I totally agree with the earlier comments –

    (a) talk to an accountant about your situation to make sure you are minimizing your tax liabilities – this will vary for everyone depending on your individual situation
    (b) if you don’t want to pay a bookkeeper to look after your books then you need to educate yourself so that you know whether you are going to be able to do this yourself or not – you could either enrol in a TAFE course or could contact your local BEC http://www.becaustralia.org.au/ who should be able to give you free information and advice. They will also provide you with your legal requirements that must be met in terms of tax reporting, BAS, payroll etc. If you are not up to date on these and meeting your obligations then the fines can be very high so it really is worth spending the time and a small investment in making sure you know what you are doing.

    Basically –

    Payroll – you need to be registered for PAYG, provide all staff with payslips, make regular payments to their superannuation funds, ensure that you are withholding the correct PAYG amount – you can either get the up to date tax tables from MYOB or google them online and print off. You will also need to register for workers compensation. If you are a director of the company discuss with an accountant whether you should be treated as an employee or take directors drawings instead.

    GST – if you anticipate a turnover in excess of $75,000 you need to register for GST. You will have either been told to report annually or quarterly. Make sure you have clear records of all your expenses and income, what is GST, Fre, GNR etc to report on your BAS. Quarterly BAS are due 28th April, 28th July, 28th October and 28th February each year.

    Tax – your tax return due date will depend on your business structure.

    Hope that helps.

    #1028226
    akagrp
    Member
    • Total posts: 315
    Up
    0
    ::

    Hello Anthony

    I understand you concerns of unwilling to spend on accountant/legal, but it is highly recommended and I am not just saying that because I am an accountant.

    But as a business owner you need to see the value that others can bring into the business, a good accountant will pay for themselves from the guidance and advice they provide.

    I have worked with many young start ups and I can assure you the ones that sourced advice from the experts at the stand archived greater success in the first 12 months then those that had seen an accountant 12 months after they started for Tax.

    Given that you are asking how do I write a Constitution would indicate that you opted to just go to ASIC and register the company even though by having paid just $200 more you would have received all the documentation you are trying to put together now. What is your time worth?

    You advise you do websites and branding, just think how your business will grow if all business owners were unwilling to seek your services from the very start, you know with your websites and branding solutions you can take their business to the next stage correct, that is what a good advisor will also do to your business.

    Most accountant/business adviser offer first consult for free, see what they could offer you, and yes we do offer first 1 hour free aswell.

    All the best.

Viewing 15 posts - 1 through 15 (of 17 total)
  • You must be logged in to reply to this topic.