Going into business?

[dogwomble]

Hey guys,

I'm not sure whether this would be better in the 'law' or 'careers' forum, so if a mod thinks it's better elsewhere, please move it :screwy:

Anyways, to supplement my income and get a few extra dollars, I'm looking at forming a 'business' where I basically go around and fix up people's PC's for cash. It would initially start out in my local area, to solve any transport issues.

Basically I want a rundown in what I need to do re: business registration, and records that I need to keep for tax and that sort of stuff.

Cheers!

[Hairyman]

There is NSW Govt-sponsored course for running small businesses, I'd imagine that the ACT might have something similar. The place to start might be with your local accountant. They do business planning and set up companies and the like and could give you a place to start.

[macgyver]

Well I just recently left my job of 8 years to go working for myself in the IT consulting world and what a great change it has been, it was originally the paperwork etc that was putting me off but I have realised it really isnt that hard.

First of all good luck and below is what I have roughly done so far -

Business Name - ~$100
Public/Product liability insurance - ~$500
Professional Indemnity Insurance (may not apply for you if you arent really doing high risk work) - ~1500 - $2000 per year.

MYOB Accouting software - $250 - $300 (This makes tracking your money so freakin simple its not funny - I am really suprised how easy it all is to manage)

An accountant/bookkeeper who might be able to help answer questions for the first few months would probably be handy. (otherwise I am sure people here are happy to help)

I would personally open a separate bank account for your business and this will make it alot easier to track and manage money - once you put all your purchases and sales into MYOB you can then file your invoices etc and everything you have will be right in front of you on your screen.

I also bought a Microsoft Action Pack which gives you truck loads of MS software for testing etc for $600 which is a great deal, search google if that is somehting that might be of use to you.

This is a pretty crude break down I guess but it might give you enough info to get started, if more things come to mind I will let you know.

again good luck!

[dwarfthrower]

And don't forget an ABN.

[macgyver]

And don't forget an ABN.

bah there had to be something I forgot - I get the pleasure of doing my first BAS statement next week - I will update this thread with how I go :)

[Sagacious]

I am working on a book called tentatively 'Everything you wanted to know about starting & running your own small business but were too affraid to ask.' It covers many areas from structuring to debt recovery and more.

So what specifically do you want to know?

[dogwomble]

I am working on a book called tentatively 'Everything you wanted to know about starting & running your own small business but were too affraid to ask.' It covers many areas from structuring to debt recovery and more.

So what specifically do you want to know?

Well, it's more from the legal side....I really should be more specific. Now that there's been a few posts in this thread, I know what to ask a bit more now. It's more the legal type stuff rather than the technical stuff.

1. I know I need an ABN and know how to get one. It's a relatively simple process online :) However, now that business registration has been mentioned I may as well ask ... if I just use my own name, ie "My Own Name's Computer Maintenance", I am of the understanding I don't *techncially* need to register it, I just do if I want to use something other than my own name?

2. Insurance ... Now that that's been mentioned, I'm not really going to focus on doing stuff off site, I'm going to be focussing on on site (ie. customer premises). Considering if I source parts from a 3rd party, and I won't be doing stuff that'd be particualrly 'risky', how much of a priority would I need to put on Public Liability, Product Liability and Professional Indemnity? Thsoe numbers sound a bit big for starting out ... is it something I can focus more on once I get up and going? And what particular companies do this sort of insurance, if anybody knows of any?

3. Registration of GST - something that I'll probably be doing, even though I'm likely to earn <$50k a year. I assume that if I register for GST, then I add the 10% and that goes to the Government when I do my BAS?

4. I'm obviously going to be a Sole Trader. What's the implications of me using the earnings for my own personal not-business-related stuff? ie. if I bought a new computer for my own not-business-related use?

[muppet]

you'd still need insurance to cover you incase of big booboos inside other peoples homes. They may not always have insurance to cover themselves and if something goes *boom* they're going to want compensation - best to insure yourself just to be safe.

[macgyver]

4. I'm obviously going to be a Sole Trader. What's the implications of me using the earnings for my own personal not-business-related stuff? ie. if I bought a new computer for my own not-business-related use?

well I guess insurance is a gamble type thing - find an insurance broker in your area who can give you some advice (unless there is one on hand here?)

now for money basically you will end up with profit in your bank account - as a sole trader you then take drawings from that account and this is essentially the same as a wage so you can spend it on whatever you want - if you can find a way of making it a business expense then all the better - are you going to do the books on your new computer? if so then straight away you have deductions you can make.

Just remember that becuase you aren't paying wages and taxes straight up you will still have to pay tax on all profit somewhere down the line - so if you start off and your bank account looks healthy remember the tax man probly wants 20-40% of it depending how much you are earning :)

[pinchy]

The <$50k per year is to cover hobby businesses.... like a hobby farm etc...If you look like you're actualy in it to make money then you have to register for GST regardless of your turn over.

To be cynical: Hobby Business' generaly run at a loss, which means if you DID register with the ATO then they would have to pay you the difference in GST earned and spent... ie: by not registering a hobby business, the ATO doesn't have to pay you...

[pinchy]

Just remember that becuase you aren't paying wages and taxes straight up you will still have to pay tax on all profit somewhere down the line - so if you start off and your bank account looks healthy remember the tax man probly wants 20-40% of it depending how much you are earning :)

Not quite, thats starting to get into the area of capital gains tax.

The 'in a nutshell' way BAS works for GST is simple:
Take the difference between the GST earned on income and the GST spent on expenses and you get a figure.

If this figure is positive (earned > spent) then you must pay this amount to the ATO. If this figure is negative (earned < spent) then the ATO will refund you this amount.

[macgyver]

Not quite, thats starting to get into the area of capital gains tax.

The 'in a nutshell' way BAS works for GST is simple:
Take the difference between the GST earned on income and the GST spent on expenses and you get a figure.

If this figure is positive (earned > spent) then you must pay this amount to the ATO. If this figure is negative (earned < spent) then the ATO will refund you this amount.

Sorry, what I mean is tax on final profit - after all GST is paid and done, at the end of the 12 month period you are going to have profit in your bank, now the tax man wants some of that because you arent paying income tax so you have to pay tax on all profits as if it were your wage essentially. I am not an accountant by any means but I am just about to do my tax return for profit I have made as well as my BAS for all my GST credits and liabilities.

To put it simply - (someone correct me if they think I am wrong)

Expenses -
parts for computer system - $1000 (~$90GST paid to wholesaler)

Sales -
1 computer system - $1200 (~100GST paid to me by customer)

So basically I have paid $90 GST in credits and collected $100 - which means on my BAS rteturn I have to pay the ATO $10. Thats my GST out of the way, now I have also made $190 profit on that PC system which is sitting in my business bank account - either way the tax man wants a cut on that $190 which is where I have to pay a rate equivalent to how much I have made for the year.

[Sanura]

Doggy, this may be different for NSW... but I doubt it. You can register an abn under your own name and not pay for the privilage, eg, John Citizen. You have to pay for a business name though if you want to add anything else to it, eg, 'John Citizen's Computer Repairs'. I believe that is right. Anyhow, I reccommend looking up the ATO website, and looking for a list of small business resources on the net which deal specifically with NSW information. There are a heap around for queensland, I know, so there have to be quite a few for NSW as well. Here is a quick one I just pulled up from a simple google search: NSW small business (http://www.smallbiz.nsw.gov.au/smallbusiness?GUID={163B8441-14EA-49E8-A38E-B4E3E419F3FA})

[ShinymetalASS]

So what specifically do you want to know?


Im too afraid to ask.



And how much will my scumbag lawyer charge me?

[Sagacious]

Im too afraid to ask.



And how much will my scumbag lawyer charge me?
Don't be affraid...be very affraid.

Long after the price is forgotten the quality remains.

[ShinymetalASS]

Don't be affraid...be very affraid.

Long after the price is forgotten the quality remains.


Is that why they're called Solicitors?

:fineprint

Tee hee.

[Sagacious]

Is that why they're called Solicitors?

:fineprint

Tee hee.
In some countries yes...

...besides I prefer the slur sheister to scumbag if you don't mind.

[Kez]

You could try cash in hand consultancy, with no paperwork.

It's what I do, and depending on the type of work you do, both parties love not having the annoying paper trail.

[Sagacious]

You could try cash in hand consultancy, with no paperwork.

It's what I do, and depending on the type of work you do, both parties love not having the annoying paper trail.
The ATO hates that particular business model as it fails to provide the ATO or as I prefer to refer to them as 'the fiscal feind' with the revenue to which they feel they are entitled.

It is also illegal.

[stevecai]

based on what you've written, you'll be a sole trader. just run the business through your own name and you only need an abn if you make more than 50k a year from this. file all of its income in your income tax return. if you are going to be bigger than this, then look at some other corporate structures.