General > General Technical Chat
Starting your own small business
BradC:
--- Quote from: EEVblog on May 10, 2018, 07:27:40 am ---I'm paying about $800/year for full product and personal liability through my broker friend, compared to $3k+ when I got quotes myself.
--- End quote ---
I was paying ~5k and got that down to about 1.2k by talking to the right broker. The funny thing is the underwriters are *exactly* the same, as are the PDS. So for the same product, and the same cover I've saved heaps just by changing broker.
Halcyon:
Thanks for all the valuable advice everyone.
At this stage, I personally think a Pty. Ltd. company would be a bit excessive for what we are wanting to do. I guess the question remains, if we start this off as a "hobby", which is essentially what it is and it becomes successful and demand for services increases beyond that hobby level, is it possible to then move to a formal partnership and then later a company if demand keeps growing?
julianhigginson:
--- Quote from: Halcyon on May 09, 2018, 07:25:07 am ---Thanks Julian. What made you register for a company as opposed to a sold-trader. We have no problems lodging tax returns etc... realistically it shouldn't be too difficult. I understand there are advantages from a liability point of view, but at this stage the registration costs etc... do add up. Is it the case we can start off as a partnership but then dissolve that and "convert" it in to a business later?
--- End quote ---
firewalling against liability is the main thing - I mostly provide consulting and design contracting services, but I wanted the ability to also provide products... (haven't done so yet) now I still need public liability and professional indemnity insurance, but if anything goes wrong with one of those things when I need it to not go wrong, well, as long as I can show I did my best in setting them up, then it's hard to lose my house, just my business and its assets... As a sole trader there's no firewall. If you screw up your insurance somehow, and things do go wrong, you personally pay for that.
Also, consider that I'd be needing tax help to do my tax as a sole trader anyway - so that ~$800 a year is saving $200/year of what it'd cost to have personal help... and so the cost of being pty ltd is just $600/year.. and that's directly tax deductible from the business anyway - so really it's not that much in the scheme of things.
julianhigginson:
--- Quote from: Halcyon on May 10, 2018, 09:31:59 am ---Thanks for all the valuable advice everyone.
At this stage, I personally think a Pty. Ltd. company would be a bit excessive for what we are wanting to do. I guess the question remains, if we start this off as a "hobby", which is essentially what it is and it becomes successful and demand for services increases beyond that hobby level, is it possible to then move to a formal partnership and then later a company if demand keeps growing?
--- End quote ---
you can absolutely go from an informal partnership to a formal partnership to a pty. ltd. company as you want... But understand if you are selling a "thing" or a "service" to consumers, you'll probably have a brand you need to build, in order to protect you from inevitable copycats if it even looks profitable.. and to do that you'll want trademarks.... And which of you will own those trademarks? and what happens if they go rogue?
As money is involved, at the very least you should *seriously* consider a written agreement between all the starters on the venture, explaining what you all are meant to do, what you all are meant to get in return, and what to do in the case that you need to mediate over something, or god forbid, come to irreconcilable differences.. Just in this thread there are people telling horror stories.. I've heard of a bunch from people, too... When money is involved, people can change, and the more formally to structure stuff from the beginning the better.. (well within reason)
it's hard to tell too much more about what you need without understanding details of your venture.. I strongly suggest finding out if WSBC (linked before - they have penrith and katoomba offices) can help you out with a chat about all this stuff before you begin, to get you with some proper professional advice on the business you're actually starting, with details of what the business and directors will actually be doing and what your plans are.
And good luck - starting a business is a hell of a lot of work. :-)
Shock:
--- Quote from: Halcyon on May 10, 2018, 09:31:59 am ---Thanks for all the valuable advice everyone.
At this stage, I personally think a Pty. Ltd. company would be a bit excessive for what we are wanting to do. I guess the question remains, if we start this off as a "hobby", which is essentially what it is and it becomes successful and demand for services increases beyond that hobby level, is it possible to then move to a formal partnership and then later a company if demand keeps growing?
--- End quote ---
Talk to your accountant and read the ATO website don't take my advice. But essentially if you are doing business with other businesses you need to be registered and get an ABN as a minimum.
Trading outside of a business you can deal with businesses casually as a supplier but it's limited to $75. I've only ever done this once as I sold a retail store a small amount of stock which was unrelated to the business I was in and I don't think it's very common.
To charge GST you need to be registered and people will also ask for a GST invoice/receipt if you look like a business (as mentioned find it odd if you're not). There are tax advantages being GST registered.
There are also tax advantages running a business from home. You may be able to claim expenses and losses. For some business you can offset this against person income tax, rent and mortgage.
There is generally a requirement that your business must turn a profit at some point. i.e. your business was established to generate income. If your business is running at a loss continually year on year the ATO will likely step in. The exception being losses generated by investments and you have healthy income. Or at least that was the way it was explained to me, if you look like a sinking ship I'm sure the ATO will let you know.
The thing that will instantly flag you as a business is advertising like one. Not sure about now but in the past I know the ATO used to troll the yellow pages for tax evaders. They check bank accounts and for online activity as well.
When your business starts is largely up to you but you might be automatically considered a business by the ATO when you do business like activity. Say for instance you apply for the Microsoft BizSpark or WebsiteSpark Program, or you share income among your "partners".
Just sitting down and designing something with friends without any purchases, expenses, transactions or income does not necessarily constitute a running business. When your activity is planning to generate income from work (collaborating with others is a big factor) as soon as you're doing transactions the whole game changes and it's regarded as being "in business" so you need to be registered (or be an employee of someone elses) for tax purposes.
Services are regarded the same as physical goods. Buying and selling a couple of cars you restored for a small profit as a hobby is likely fine. Doing remote support jobs for a flat rate fee will likely be seen as a business activity even if for smaller gain.
My advice is read up on how startups fail, and best practices forming partnerships. It's not that expensive either forming a company if you shop around. It sounds like there might be two or three of you involved so far (not that I recommend forming a company with partners) but another way of looking at it is you can split expenses multiple ways lol ;).
Navigation
[0] Message Index
[#] Next page
[*] Previous page
Go to full version