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Starting Your Own Business: Tips and Tricks

starting own business tax accounting bankstown

If you’re thinking about starting your own business, you’re not alone. Every year, thousands of Australians take the plunge into entrepreneurship. But before you take the leap, there are a few things you should do to increase your chances of success. One of the most important is to hire an accountant. A good accountant can help you set up your financial systems, make sure you’re compliant with tax laws, save you money in the long run as well as help you obtain an ABN or a ACN number, register for GST and register your accounting books.

Starting your own business can be both exciting and daunting, but with these tips and tricks, you’ll be on your way to success in no time.

First, it’s important to brainstorm your business idea. What are you passionate about? What skills do you have? What needs are not being met in your community? Once you have a general idea of what you want to do, it’s time to start planning. Draw up a business plan and set some realistic goals. How much money do you need to get started? How much do you hope to make in your first year? What are your long-term goals for the business? Answering these questions will help you stay focused as you get started.

It is important to research the market to see if there is a demand for your product or service. If there is already a lot of competition, you may need to niche down or find a unique selling proposition. You should also create a business plan and track your progress. It’s important to stay organized and on top of everything so you don’t get overwhelmed.

Creating a business plan is one of the most important steps you can take, as it will help you map out your goals and strategies for achieving them.

Here are a few other tips and tricks to keep in mind when starting your own business:

1. Research the market and your competition. Knowing who your target audience is and what they want is essential for marketing and sales success.

2. Create a strong branding strategy. Your brand is what will make you stand out from the competition, so make sure it’s well-thought-out and memorable.

3. Get organized and stay on top of things.

4. find the right location. The success of your business depends heavily on its location. If you’re opening a brick-and-mortar store, make sure it’s in a high-traffic area with plenty of parking. If you’re starting an online business, choose a web host that offers great customer service and uptime guarantees.

5. Create a marketing plan. Once you’ve done your research, it’s time to start marketing your business. This includes creating a brand, designing a website, and promoting your products or services online and offline.

In conclusion, these tips and tricks should give you a better understanding of what it takes to start your own business. Keep in mind that there is a lot of planning and research involved, as well as some financial investment. However, if you are passionate about your idea and are willing to put in the hard work, starting your own business can be an incredibly rewarding experience. Get in touch with Impact Taxation and Financial Services today to help you with the process. They can help set up your financial accounts, assist you in meeting tax requirements, save you money in the long run, help you obtain an ABN or an ACN number, register for GST and register your bookkeeping. Get in touch with them by visiting https://impacttfs.com.au/new/contact/

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    10 things you should consider before buying a property

    Are you considering buying a property? Do you know you could miss opportunities to save thousands, or tens of thousands of dollars if you don’t plan well before the purchase?

    Below are a few key considerations:

    1. How should you set up your loan structure? If you don’t have a loan offset account for a rental property, after you make extra payments directly to the loan account, you can only claim interest deduction on the remaining balance of the loan. For tax purposes, this deductible balance can’t be changed even if you redraw the overpaid amount later. A good loan structure could also help you to stabilize interest rate and speed up loan repayment by combining a standard variable loan (with an offset account) and a fix rates account.

    2. Timing of renovation. You might want to do a renovation right after you have bought the rental property. But do you know for any genuine repair & maintenance included in the renovation, you can claim an outright deduction against the rental income when the property is available for rental? If the work is done before the date when the property is available for rental, you can only claim the deduction against future capital gain when the property is sold. Depend on when you are going to sell, it could take years or up to decades before you can claim the deduction.

    3. How should you split ownership? You might want to share the property ownership with a family member. For tax purposes, the percentage of ownership is based on the legal title, regardless of who is paying more on the mortgage. If the property will give you a tax profit, you might want to allocate more
    ownership to the low-income earner to utilize the lower marginal tax rate. If it is giving you a tax loss, you might want to allocate more ownership to the high-income earner to utilize the loss. The goal is for the family to pay minimum tax together.

    4. Should you use a family trust to purchase the property? There are many pros and cons related to a family trust. The advantages include tax savings on rental profit or capital gain, asset protection and succession planning on family wealth. However, family trust can’t distribute losses. All losses are trapped in the trust to be used to offset future trust profit. Therefore, you can’t utilize any rental loss in a trust to offset other income such as salary & wages. Family trusts also attract high accounting fees on initial setup and annual fees on financial statements and tax returns. State governments also charge much higher land tax on family trusts.

    5. Will the income level change in future years for different owners? You might want to forecast the possible income for different owners to understand total tax payment / savings related to the property. This could also impact on your decision making on point 3 and 4 above.

    6. Understand when you can treat your property as main residence to receive an exemption on capital gains tax. When eligible, even if you have received rental income, you could still treat your rental property as main residence and receive the exemption. To be eligible, you will need to treat it as your main residence at the beginning. Please check out this ATO link: Treating former home as main residence.

    7. Decide whether you need to purchase a depreciation report. Most taxpayers don’t know that the depreciation on the building will need to be added back to calculate capital gains tax when the property is sold. When the property is held for more than 12 months, after applying the capital gains tax discount of 50%, it will effectively cut the tax rate by half at the time of sales. This makes depreciation deductions desirable for high income earners. However, for low-income earners it might not be ideal to claim depreciation as a rental deduction since they could be paying more on capital gains tax in the future. It could get more complicated if the property is under joint ownership between high and low income earners.

    8. You might want to consider Centrelink payments for future or existing owners. Most Centrelink payments are income and asset tested. Before attaching a rental property to a family member who is receiving, or plan to receive government benefits, you might want to check the testing thresholds first to see if the Centrelink payment will be impacted. This is also applicable when you are making distributions from a family trust to different family members.

    9. Have you considered using your SMSF (selfmanaged super fund) to make the purchase of a rental property? There are a lot of tax saving opportunities with a SMSF since the income tax rate is only 15%. And the capital gains tax rate is effectively only 10% after factoring in the 1/3 discount. The major downside with a SMSF is normally you can’t get the money out until you retire or on compassionate grounds (SMSF does have more flexibilities compared to normal retail super fund. But the choices are still very limited). It could be expensive to set up and operate a SMSF too. There are also strict legal requirements on the trustees. Penalties on incompliance could be severe. Tax law around SMSF is very complicated too. You will need to find a good tax accountant specialized in SMSF to help you to understand the structure, also do a cost-benefit analysis before setting it up.

    10. Consider internal ownership changes. For your existing rental properties, you can also consider whether you should transfer the ownership between family members, or between different business structures (this is not applicable for SMSF). You might want to do this when the income level changes with family members, or rental property changes between tax profit and loss. Before the change, you need to consider the cost of transfer including capital gains tax, stamp duty, conveyancer fees, etc. Again, a cost-benefit analysis is a must before the change.

    Last but not the least, did you combine all the above strategies and compare your choices? If you haven’t yet, how would you know that you have picked the best strategy to minimize your taxes? We can help you to factor in all considerations, compare different scenarios, also present you with a Property Prepurchase Report with all our findings to help you to make a decision. Contact us today to book in a consultation with an experienced tax accountant!

    IMPORTANT INFORMATION
    This is general advice only and does not consider your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountant.

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