Starting Your Small Business: A Step-by-Step Guide

Embarking on a new business venture is an exciting and rewarding journey. Whether you’re launching a small online store, a freelance service, a local shop, or a hands-on business like a tradie or a hairdresser, getting the foundational elements right from the start is crucial. This guide will walk you through the essential steps of setting up your small business, from registration to choosing the right bookkeeping system.

1. Registering for an ABN (Australian Business Number)

An Australian Business Number (ABN) is a unique identifier that you’ll use for business dealings with the Australian Taxation Office (ATO) and other entities. Here’s how to get started:

Why You Need an ABN:

• To register for Goods and Services Tax (GST).
• An ABN is necessary for issuing invoices. Without an ABN, other businesses must withhold 47% of any payments to you for tax purposes..
• To obtain an Australian domain name.

How to Apply for an ABN:

• Step 1: Visit the Australian Business Register (ABR) website.
• Step 2: Complete the online application form, providing details about your business activities.
• Step 3: Submit your application. If successful, you will receive your ABN immediately.

2. Registering for GST (Goods and Services Tax)

GST is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. You must register for GST if:

• Your business has a GST turnover of $75,000 or more.
• You want to claim GST credits for your business purchases.
• You provide taxi or limousine travel for passengers (including ride-sourcing), regardless of your GST turnover.

How to Register for GST:

• You can register for GST at the same time you apply for your ABN via the ABR website.
• If you already have an ABN, you can register for GST through the ATO’s online services.

3. Choosing a Business Name

Your business name is a critical part of your brand identity. Here are the steps to register your business name:

Steps to Register:

• Step 1: Check if your business name is available using the Business Name Register on the Australian Securities and Investments Commission (ASIC) website.
• Step 2: Once you’ve confirmed the name is available, you can register it through the ASIC Connect portal.
• Step 3: Pay the registration fee. You can choose to register your business name for either one or three years.

4. Setting Up a Business Bank Account

Separating your personal and business finances is essential for clear and effective financial management. Here’s how to set up a business bank account:

Steps to Open an Account:

• Step 1: Choose a bank that suits your business needs. Consider factors like fees, online banking features, and customer service.
• Step 2: Gather the necessary documents, which typically include your ABN, proof of identity, and business name registration.
• Step 3: Visit the bank or apply online to open the account.

Importance of Keeping Business and Personal Expenses Separate:

• Clear Financial Picture: Separating business and personal finances helps you maintain a clear understanding of your business’s financial health.
• Simplified Bookkeeping: It makes bookkeeping easier and more accurate, reducing the risk of errors.
• Tax Compliance: Ensures you can accurately report business expenses and income for tax purposes, avoiding potential legal issues.
• Professionalism: Demonstrates professionalism and credibility to clients, investors, and financial institutions.
• Expense Tracking: Makes it simpler to track and manage business expenses, which is crucial for budgeting and financial planning.

5. Establishing a Bookkeeping System

Effective bookkeeping is vital for tracking your business’s financial health. Here’s a guide to choosing the right system for your needs:

Using Excel:

• When to Use: Ideal for very small businesses or startups with simple transactions, and those not registered for GST.
• Pros: Low cost, customizable, and easy to use.
• Cons: Can become cumbersome and error-prone as your business grows.

If you are interested in obtaining a copy of my small business expense tracker, please contact me. This is an easy-to-use spreadsheet with step by step instructions that can be used with excel or google sheets and is great for small businesses.

Using a Bookkeeping System:

• When to Use: Suitable for small to medium-sized businesses with more complex financial transactions.
• Pros: Automates and streamlines bookkeeping tasks, offers features like invoicing and expense tracking, and integrates with bank accounts.
• Popular Options: Xero, QuickBooks, MYOB, Easy Business App

When to Hire a Bookkeeper

Hiring a professional bookkeeper can bring numerous benefits to your business, especially as it grows. Here’s when you should consider hiring one and the advantages it offers:

When to Hire:

• Your business is expanding, and transactions are becoming more complex.
• You need accurate and timely financial reports.
• You want to ensure compliance with tax regulations and deadlines.
• You prefer to focus on your core business activities rather than managing finances.

Benefits of Hiring a Bookkeeper:

• Expertise: Professional bookkeepers have the knowledge and experience to handle your financial records accurately and efficiently.
• Time Savings: Free up your time to focus on growing your business while the bookkeeper handles the day-to-day financial tasks.
• Accuracy: Reduce the risk of errors in your financial records, which can lead to costly mistakes and penalties.
• Compliance: Stay on top of tax obligations and ensure your business complies with all regulatory requirements.
• Financial Insights: Gain valuable insights into your business’s financial health with detailed reports and analyses provided by your bookkeeper.
• Stress Reduction: Eliminate the stress of managing your finances, allowing you to concentrate on what you do best.

Final Thoughts

Starting a business involves a series of crucial steps, from registering for an ABN and GST to choosing a business name and setting up a bank account. Establishing a robust bookkeeping system, whether through Excel, specialized software, or a professional bookkeeper, is key to maintaining financial health and ensuring long-term success.

Need assistance with your bookkeeping. Contact Number 19 Consulting to learn more about our services and how we can support your business journey.