So you have read through Mimi’s first article about if your activity is a Hobby or Business and decided to go ahead with running your own business – what’s next?
In the second part of her article, Mimi shares with us her advice on the initial steps to take in setting up and getting started.
The first step is to call your accountant and seek their professional advice on your situation. Doing this will save you both time, effort and guess-work!
If your accountant has advised that your hobby is considered a business, here are some tips to help you transition:
1. Most of us have a Tax File Number (TFN), but if you don’t, register for a TFN at www.ato.gov.au – this is free.
2. If you haven’t already, register for an Australian Business Number (ABN) atwww.abr.gov.au – this is free.
3. You can register a business name if you like, or trade under your own name. If you don’t register a business name but decide to trade as another name, please be careful of other businesses that already ‘own’ that name – there are costs involved in registering a business name. Visit www.asic.gov.au
4. It is always best practice to provide your customers with an invoice (or tax invoice if you are registered for GST). For more information on how to set up you invoice/tax invoices visit www.ato.gov.au/Business/Bus/How-to-set-out-tax-invoices-and-invoices/ and download the document NAT1165 for great examples. Sometimes it is just as easy to purchase a receipt booklet from the Newsagency and order a stamp to print your business details on it.
5. Keep all your receipts and data related to your business – everyone has their own way of doing this. For small businesses, a spreadsheet is great for doing this. *tip: remember that lots of receipts fade over time – why not scan them and keep an electronic copy on your computer? Please remember to back-up your information on a daily basis (at a minimum)
If you’re uncertain about whether you can claim something, if it doubt, keep the receipt(s) and ask your accountant at the end of the year!
Keeping tidier records (not of the shoebox or storage container kind) will help you to reduce your accounting fees at the end of the year.
It is common for small businesses to ‘be-in-the-red’ or make losses in their first few years due to set up/start up costs. Maintain a business plan and budget to see where you are tracking. Both of these plans can change all the time – they’re flexible, and they should be!
Written by Mimi Yuen
Mimi Yuen grew up in the ‘Red Centre’, aka Alice Springs, and made the move to Townsville 2.5yrs ago. A very keen
When not at work in her own business or