Business Accountants Sydney CBD – avoiding Small Business Start Up pitfalls
If you are thinking about business start up and growing your wealth, great care needs to be taken about the taxation and accounting side of your future business to ensure that it is accurate and compliant. If you’re on the look out for helpful business accountants Sydney CBD, City Tax Accountants can help you with:
- drafting your business start up Constitution;
- ABN, ACN, GST, PAYGW and Business Name registrations;
- Tax advise and tax effective planning;
- setting you up with bookkeeping software for small business: invoicing, accounts payable, bank reconciliation & bookkeeping (15% discount to Xero accounting software online offered);
- fixed fee monthly packages: Bookkeeping + Payroll + BAS + Annual Tax Return (from $176 plus GST per month). [/mt_list]
Start Up Business
Any business when it first starts needs to work out how much business start up capital is needed. If you’re starting a small business in Sydney, speak with City Tax Accountants, they are the best start up business accountants Sydney has to offer. In the beginning, work out whether or not you have enough savings to put into the new business, or if you need to obtain finance.
What Business Structure is the Best for Your Small Business
Depending on the type of business you intend to have there are several options that are available for you. Choose the one that best fits your company.
- Sole Proprietor- The most common of all structures. It does not require you to file anything other than the usual permits and licenses required to do business. Check with your local offices to see what is required in your state and county. If you use any name other than your own you will have to have a license for a DBA (doing business as). You are also responsible for making sure no other businesses are using the name.
- Easy to establish with low legal costs. The permits and licenses are easy to obtain and relatively inexpensive.
- You are the decision maker. You have total control over your business.
- Tax rates are low and reporting is simple.
- You are entirely personally responsible for all debts and liabilities of your company.
- Hard to raise capital. Banks and lenders hesitate to lend on a sole proprietorship because they lack confidence in your ability to repay loans. There are no stocks for sale, so investors may be hard to find.
- Limited Liability Company- This structure is a combination of a limited liability corporation and a partnership. The company is not taxed separately but is passed through the owner or owners personal taxes just as a partnership does. There several steps you need to take for this structure. The business name must be unique and contain the letters LLC. You must file your Articles of Organization which is a simple form that shows the name, address and members of the LLC. You may need to check with your local offices to see where this needs to be filed. There are a few options available and some states require additional forms, again consult your local offices or an attorney to inform you of licenses, permits and other forms that may need to be filed.
- Limited Liability means that owner/owners or members are not personally responsible for debts or liabilities that the company may incur.
- There is less paper work and the start-up costs are usually much less than a corporation.
- Division of profits is up to the members. You can decide the percentages based on investment by all members and allocate the profits in that way. There are no regulations that must be adhered to.
- There is a limited life for LLC if one member decides to leave the business the business is dissolved. You can incorporate a clause in your business articles to cover this.
- If you are a member in an LLC you are considered self-employed, you will are held responsible for your Social Security payments and for Medicare.
- Corporation- Consider a legal entity in itself, it is usually owned by shareholders, but the company itself is responsible for all debts and liabilities. There is more complicated rules and regulations governing the corporation. Most corporations must be registered with the Department of State and must have both Federal and State licensing requirements met. Federal and State identification numbers are issued and all reporting and filing must use them. When forming a corporation it is highly recommended that you have a corporate attorney. They can make recommendations and help you file all of the paperwork necessary for your company.
- Limited liability. The company itself is held liable for any debts or liabilities incurred. Shareholders are usually only responsible for their investments.
- Generating Capital is easier as stocks, stock options can be sold. Also lenders are more likely to loan money on a corporation as they know that there is additional recourse to recovering the loan amounts.
- Taxes are easier as owners are only required to pay taxes on income they received such as salaries, bonuses and dividends. The corporation taxes are based on a lower tax rate than personal taxes.
- High quality employees are usually easier to get as they are more attracted to the benefits that a large corporation can offer.
- Expensive to start up and to operate.
- There is a potential for double taxing as the corporation pays taxes on the profits and then when dividends are paid to shareholders.
- The record keeping and reports that will need to be filed for federal, state and local agencies can be time consuming and difficult.
- Partnership- Formed by two or more owners. Each owner is responsible for the company and the decision making. There is usually a partnership agreement that will help define all aspects of the partnership including the percentages each will have, the area of expertise or even how the company resolves issues. For a partnership it is easier if you have an attorney that can help you set up the partnership agreement. The normal registering of the company with the various Federal, state and local government offices apply and the licenses and permits needed can be checked with your local offices. Check with your attorney for the best options available for the type of partnership you want. There are three different partnerships you can do, the first is General Partnership. All partners share equally unless otherwise stated in a partnership agreement. The second is Limited Partnerships, this is designed more for a short term investment and limits the partners percentage for profits and decision making and therefore limits his amount of liability. The third is Joint Venture. As the name suggest it is usually formed for a short period of time for a single project. If you continue on you must file all of the forms, licenses and permits to continue doing business.
- It is easier and less expensive.
- The ability to combine resources will help with the start-up of the company.
- You have more resources in development of a partnership. The combined knowledge and expertise in different areas will enable you to combine your talents.
- Added benefit for potential employees is the opportunity to become a partner.
- Liability for any and all debts incurred by the company are shared by the partners. Their personal property and assets can be used to satisfy any debts.
- In any partnership there can be disagreements regarding the operation of the company and decisions that may or have been made.
- Unless you have a partnership agreement in place the distribution of profits is divided equally among all. This can cause arguments if one partner seems to devote more time and energy into the business.