Rask - How to start a business in 2025 - Part 2
The discussion emphasizes the importance of setting up a business structure correctly from the start, considering options like sole trader, partnership, company, and trust. Each has its pros and cons, particularly regarding liability and tax implications. The podcast stresses consulting with an accountant to avoid future issues like capital gains tax. It also covers the necessity of registering for an ABN and GST when applicable, and the importance of having the right insurances in place, such as workers' compensation and public liability.
Financial management is highlighted as a critical factor for business success, with cash flow management, budgeting, and financial forecasting being essential. The podcast provides insights into setting up business bank accounts and using accounting software like Xero. It also touches on the challenges of securing funding, suggesting bootstrapping as a viable option for new businesses. Legal compliance, especially for e-commerce businesses, is discussed, including contracts, consumer laws, and product safety regulations. The episode concludes with a preview of the next topic on business launch and marketing strategies.
Key Points:
- Set up the correct business structure from the start; consult an accountant to avoid future tax issues.
- Register for an ABN and GST when turnover exceeds $75,000; ensure proper insurances are in place.
- Manage finances effectively with cash flow projections and budgeting; use accounting software like Xero.
- Consider bootstrapping for funding; be cautious with bank loans and investor involvement.
- Ensure legal compliance, especially for e-commerce, including contracts and consumer protection laws.
Details:
1. 🎙️ Introduction and Disclaimer
- The content provided is limited to general financial information.
- Listeners are advised to consult with their financial planner.
- A financial services guide is available for detailed reference.
2. 🏗️ Laying Business Foundations
2.1. Purpose and Strategic Direction
2.2. Marketing Fundamentals
2.3. Launching Strategies
2.4. Scaling Operations
3. 💡 Avoiding Common Pitfalls
3.1. Business Structuring and Financial Stability
3.2. Regulatory Compliance and Operational Efficiency
3.3. Common Mistakes and Long-term Success
4. 📊 Structuring Your Business
4.1. Common Business Challenges
4.2. Financial Literacy Importance
4.3. Trading Terms Impact on Cash Flow
4.4. Business Structure Options
4.5. Strategic Business Setup
5. 📜 Compliance and Financial Management
5.1. Company vs. Trust Structures
5.2. Business Registration and GST
5.3. Insurance Requirements
5.4. Role of Accountants in Business Setup
6. 🔄 Supply Chain and Inventory Insights
- The small business instant asset write-off has been extended for the entire 2025 financial year, allowing immediate deductions for assets up to $20,000.
- Assets over $20,000 must be depreciated over their useful life, rather than written off immediately.
- Examples of eligible assets include vehicles under $20,000, cameras for photographers, and computers costing a couple of thousand dollars.
- This extension provides significant tax relief and encourages investment in business assets.
7. 🌍 Impact of Global Trade and Policies
- Understanding business write-offs is crucial for financial accuracy. Not all purchases qualify; for example, personal lunches typically do not qualify unless they occur on business premises, emphasizing the need for clear differentiation between personal and business expenses.
- Fringe Benefits Tax impacts certain employer-provided benefits, such as meals outside the office, highlighting the tax implications of non-work-related benefits.
- Consulting with an accountant is advisable to ensure accurate differentiation between personal and business expenses, preventing potential financial discrepancies.
- The extension of the instant asset write-off policy offers immediate relief and support for small businesses by allowing instant deductions for asset purchases, representing a strategic move to bolster small business growth amidst changing global trade policies.
- This subsection underlines the broader impact of trade policies on business operations, demonstrating how specific tax policies can influence financial strategies and operational decisions.
8. 📈 Strategizing Business Launch and Marketing
8.1. Government Programs and Grants
8.2. Resources for Starting a Business
8.3. Financial Management and Business Structure
9. 🧮 Tax, Insurance, and Legal Essentials
9.1. Financial Planning and Cash Flow Management
9.2. Importance of Financial Tracking
9.3. Key Financial Components to Track
9.4. Operational Costs and Additional Expenses
10. 🚀 Funding: From Bootstrapping to Investors
- Understanding both fixed costs (e.g., equipment, insurance, salaries) and variable costs (e.g., occupancy costs, electricity, telephones) is crucial for financial planning.
- Tracking cash movements through the profit and loss statement, including tax payments and lease expenses, is essential for maintaining a clear net cash position.
- A downloadable spreadsheet is available to help itemize cash movements, enhancing financial transparency.
- Free community access and a video tutorial by accountant Dan offer additional support for applying the spreadsheet to financial data.
- Early-stage funding and grants are emphasized as valuable for ensuring business sustainability and growth.
- Different types of investors have varied expectations, which should be understood when seeking external funding.
- Successful bootstrapping strategies often involve reinvesting profits and maintaining lean operations to conserve cash.
- Examples of early-stage funding sources include angel investors, venture capitalists, and crowdfunding platforms.
11. 🔧 Effective Risk Management
- Obtaining bank loans for new businesses is extremely challenging and often requires personal collateral such as property, making it a risky option for unproven entrepreneurs.
- Bootstrapping is a common method for funding new businesses, where founders use their own resources to start as lean as possible, focusing on rapid development and customer feedback to iterate quickly.
- Bringing in shareholders can help fund a business but may dilute ownership, which can impact future valuation if the business succeeds.
- Validating business ideas early to ensure demand can reduce risk, allowing entrepreneurs to avoid putting personal assets at stake.
- Starting a business with minimal funds and moving quickly can reduce financial risk and reliance on external funding, decreasing stress and potential liabilities.
12. 💡 E-commerce Strategies for Success
- Starting with a Lean Startup approach offers flexibility and adaptability, allowing businesses to pivot based on real-time customer feedback effectively.
- Entrepreneurs should avoid high financial and mental stress by not over-leveraging personal assets during the unproven phase of the business, preserving resources for strategic growth.
- It is advisable to refrain from taking bank loans before establishing revenue to avoid financial obligations without confirmed market demand.
- Maintaining control and flexibility is crucial; thus, involving investors early should be avoided to reduce adherence to external stakeholder demands.
- A case study of a successful e-commerce startup that used bootstrapping to scale effectively could provide practical insights and inspiration for new entrepreneurs.
13. 🤝 Building Community and Engagement
- Implement accounting software like Xero from the onset to streamline financial tracking and reporting.
- Establish a dedicated business bank account to separate personal and business transactions, ensuring clearer financial organization.
- Create an additional business account specifically for savings or tax-related obligations, such as a Business Activity Statement (BAS) account, to manage funds proactively.
- Prioritize proper budgeting to prevent unexpected financial shortfalls, highlighted by cases of clients being unprepared for tax liabilities due to inadequate cash flow management.