Financing Your Start Up With A Credit Card

One of he most popular ways to fund a start up company is with the help of credit cards. A credit card gives the entrepreneur easy and fast access to much needed funds while he or she is in the process of building a company. Many of million dollars companies have been started with a simple credit card.

Personal loans from family members and friends are also highly favoured as finance for start up companies.

Cisco Systems, a successful company was founded by Sandy Lerner and Len Bosack and if wasn’t for their personal credit cards they might have never seen the levels of success they found thanks to their fluid funding tool.

Other business success stories are also based on credit card funding such as the story of Google and how Sergey Brin and Larry Page pulled their cards to fund much needed office equipment and computers to get rolling.

Movie lovers also know too well of the any famous directors who had to resort to the practice of funding their celluloid success with the help of a credit card to get off the starting blocks.
Start up funding exposed:

While a personal credit card can be and is a great tool to fund a start up venture it can be a bit of a grey zone because of the legalities involved. These days many banks offer you a business line of credit to fund a business. However, what many entrepreneurs fail to understand is that even these loans will be your personal responsibility in the event of a repayment default.

Unless your business is registered as an incorporated entity you will be made legally responsible for all debts accrued whether you apply for a business line of credit or a business credit card.

The problem for most start ups is that unless they have a guarantor with enough financial clout behind them they won’t be able to incorporate their company in the first place.
Check for exclusions:

One of the first things you should do when looking into start up funding is to see whether some of your personal assets can be excluded from your personal guarantee. Another option is to see whether the loan guaranteed percentage will decline as the business matures.

Never sign credit card contract unless you understand the legal implications of it.

Despite the possible financial implications sometimes entrepreneurs have no other option than to fund their business with a personal credit card. The same applies to personal loans from friends and family. Check what is expected of you and be sure you have a backup plan for the worst case scenario.

Business start ups mustn’t be a financial nightmare before they even take off. With a bit of financial diligence and planning you should be able to make the most of your options.

bizedge – Young Entrepreneurs Day

Get an edge and grow your business idea NOW.

Come and spend the day hearing from highly successful entrepreneurs, networking with other young entrepreneurs and learning key skills that will give you the edge over your competition and the market today.

BIZ Edge Young Entrepreneurs Day is a free event held during Small Business September by the NSW Department of Industry and Investment in conjunction with The Frank Team.

This FREE event specifically for young entrepreneurs is packed with all sorts of good ideas to grow your business to the next level or to help you get started in the business world. Check out what is involved in the day……

Keynote speaker: Amanda Gome from Smart Company – A highly successful entrepreneur, Amanda will share her secrets on how she built her business empire and what gives her the EDGE in their market today.

Workshops: All participants will attend two practical and highly useful workshops.

- Online Marketing Success with Fred Schebesta will run twice so all participants go through this workshop. Fred Schebesta will share his ideas and knowledge about the important elements of online marketing success.

- ACTIVATE Steps to Start UP with The Frank Team is perfect for you to learn the steps to starting up your own business, how to take your idea and make it a reality.

- Life cycle Marketing Systems with The Frank Team will help participants learn about marketing success for their business and how to set up systems that run this part of your business. This workshop is from The F rank Team’s highly successful YESUP.
After lunch, a panel of young entrepreneurs from a wide range of industries share their secrets to success, and answer audience questions.

Your panel includes:
* George Katrib – Bayswater Property Group
* Lisa Messenger – Messenger Marketing
* Glenn Drew – esite Connect

Plus you can meet heaps of very cool people, or take part in promo opportunities where you get up in front of the group, and tell everyone about you and your business, before continuing networking after the event downstairs at The Verandah Bar.

The BIZ Edge Young Entrepreneurs Day is on Friday September 11 at the Sydney Mechanics’ School of Arts, 280 Pitt Street, Sydney. The day begins at 9.30 am sharp and winds up at 3.00 pm.

To register go to www.smallbusinessmonth.nsw.gov.au. Enquiries to anna@frankteam.com.au or call (02)95186244.

But there is only room for 60 people so do RSVP quick to secure your spot.

So the important details….

When: Friday September 11th

Where: Sydney Mechanic School of Arts, Pitt Street, Sydney

What time: 9.15am for a 9.30am start – 3pm

And we will start without you if you don’t arrive on time!

RSVP: To register go to www.smallbusinessmonth.nsw.gov.au and search for “Biz Edge” event.

Any questions contact us on (02)95186244 and ask for Anna.

Look forward to seeing you there.

More info about the speakers at the event….

KEYNOTE – Amanda Gome
Amanda Gome is the founder and publisher of SmartCompany.com.au, a free online news and resources site for entrepreneurs. Previously she had been an editor and senior writer at BRW magazine where her passion and interest in entrepreneurship led her to founding and editing the Fast 100 list and the Emerging Companies section.

Over two decades in business journalism, Amanda has interviewed almost every entrepreneur in this country worth their salt … and plenty that weren’t! She is also an adjunct professor of business at RMIT University, lectures students in entrepreneurship and regularly comments on business.

Practical TAX Assistance Available for Young Entrepreneurs

Do you need more practical help to manage your business?

Do you get confused by all of your tax obligations and worry if you are keeping up?

We know that when you start and run a business all you want to do is just that – run the business! But what comes with that is plenty of administrative things…..like TAX! It can be confusing and annoying – we know. But there is a whole heap of help out there from the ATO just waiting for you to use for free to keep you on track and growing your business….without getting into tax troubles.

The Tax Office’s Small Business Assistance Program provides free, practical help which is aimed at keeping businesses on track.

In a recent speech to the Council of Small Business of Australia, Tax Commissioner Michael D’Ascenzo announced new measures to help businesses that are struggling to manage their tax payment obligations in the current economic climate.

Eligible small businesses with an annual turnover of less than $2 million can apply for:

• 12-month general interest charge free payment arrangements for activity statement debts (BAS)

• deferred activity statement payment due dates – they can grant requests for deferrals of up to two months for quarterly and annual payers and one month for monthly payers.

For debts of $25,000 of less, businesses can use the ATO online calculator to work out a payment arrangement that meets your circumstances. Once you have calculated a suitable payment scenario based on your circumstances, you can use this as a guide to propose a payment arrangement.

For debts of $25,000 or less, businesses can use the ATO automated self help service to apply for a payment arrangement by calling 13 72 26. The self help service operates 24 hours a day, seven days a week.

Businesses with a tax debt or experiencing payment difficulties should visit the Tax Office website www.ato.gov.au/businessdebt or phone 13 11 42 from 8.00am – 6.00pm Monday to Friday.

The Tax Office also offers other forms of free assistance to help business. Talk to them and they can help you better understand your tax obligations. Their range of business support services gives you access to experienced tax officers who can answer your questions for free and help you get on top of your tax issues.

They offer:

- On-site visits where they come to you, nice! http://ato.gov.au/businesses/smallbusiness.asp

- Local seminars and a range of workshops

For more information:
• Free tax support
• Rates, calculators and tools
• Record keeping for small business (NAT 3029)
• Do you need financial advice about managing your business during the downturn?

Make the Media Your Best Friend

Young Entrepreneurs in the Media

Dealing with the media can seem daunting when you’ve never done it before. Once you learn how, media coverage can be the best marketing tool to grow your biz.

We asked 3 young entrepreneurs how they got media attention, how it helped their businesses and what tips they have for anyone starting out.

Check out their stories here

Here are some examples of media releases featured in local papers by young entrepreneurs:

Download them and start thinking about what press release you could put together to get you and your business noticed in the media!

Paul Munro, Creative Director, Vision- Print Design Studio

1. Local paper (The Highland Post) – Local Young Entrepreneurs Reject the Recession

Vanessa Cullen, Principal, Forward Thinking Design

1. Fit Out magazine – Setting the Standard

2. Local paper – Design on Future

Where has The Frank Team been in the media recently???
We have been lucky enough to get some great media attention over the years. We have used a combination of direct media releases to journalists, as well as our website ranking highly for keywords that we know journalists are looking for and they then contact us!

Check out…
News.com.au – Young entrepreneurs tell Australians to toughen up on the global financial crisis
Daily Telegraph – Youth get down to business
The Australia – Now’s the time for web starts ups to go online
Want to learn how to get yourself featured in the media?

BOOK NOW for our PR Secrets for Beginners Workshop.

Send us your media coverage and we will add it here for ALL to see! jessica@frankteam.com.au

5 Common PR Mistakes

The thought of contacting a journalist and media agency can be scary, but it doesn’t have to be! We’ve been around the PR block and learnt a thing or two about what NOT to do when trying to gain media exposure for you and your business.

Here is your 5 COMMON PR MISTAKES TO AVOID download a peak at what to avoid with DIY publicity

Want to learn more?

If you want to learn more about how to be a self-sufficent PR gun, hurry and book now for our ‘PR Secrets for Beginners’ workshop which is running July 14th, Syd with young PR and publicity extraordinaire Jonica Bray.

As busy people it can be tricky to keep a finger on the pulse in all areas of your business or organisation. So knowing how to continually promote you and your organisation through media channels can be daunting…unless you have the know-how.
Effective PR is important to any organisation for a number of reasons. Mainly because it raises your profile to your audience, positions you as an expert in your field, helps to build your database and most importantly INCREASES SALES and exposure for what you do!

Book Now to come to our engaging and highly effective workshop so you learn the Tips from Jonica who has worked on the inside as media for many years.

PR Secrets for Beginners – Workshop

Would you love to get some coverage in the media to grow your business but don’t know where to start?

As busy entrepreneurs it can be tricky to keep a finger on the pulse in all areas of your business. So knowing how to continually promote you and your business through media channels can be daunting…unless you have the know-how.

Effective PR is important to any business for a number of reasons. Mainly because it raises your profile to your audience, positions you as an expert in your field, helps to build your database and most importantly INCREASES SALES!

Why pay someone else when you can learn the secrets of how to utilise the media and make the most of PR opportunities yourself?!

The Frank Team’s ‘PR Secrets for Beginners’ workshop will teach you how to be a self-sufficient PR gun with a toolbox full of strategies for getting you and your business the PR exposure to grow your business right now.

Following the success of April’s “SHOW ME HOW” online marketing workshop with marketing gun, Fred Schebesta, The Frank Team are excited to offer a 3 hour practical workshop for young entrepreneurs like you on how to get out there, get noticed and raise the profile of you and your business with PR and publicity extraordinaire, Jonica Bray.

The Frank Team’s “SHOW ME HOW” series deliver workshops that are presented by young entrepreneurs for young entrepreneurs that are only about stuff you need to know about and focus on showing you HOW TO DO IT YOURSELF.

When: 14th July 4.30 – 7.30pm

Where: bioFirst Seminar Room
Ground Floor, National Innovation Centre, Australian Technology Park, 4 Cornwallis St Eveleigh, NSW 2015
Parking available on site.

How Much: $66 per person (inc GST)

A recording of this workshop will be available to view after the event  – please email jessica@frankteam.com.au to book your access.

Also, if you have a skill that you would like to SHOW other young entrepreneurs HOW TO DO then please contact us for inclusion in our “SHOW ME HOW” series.

We have put together a short article on 5 Mistakes to Avoid when working with the media. We hope to spread the learning we have had over the years in regards to working with the media to you so please feel free to forward the article around and use in your newsletters etc with acknowledgment of The Frank Team of course.

Plus check out the coverage other young entrepreneurs have got in the media recently – get inspired!

Our Workshop presenter:

Jonica Bray from Publicity Insider

Through this workshop Jonica Bray will teach people all the basic skills they need to get their business PUBLICITY.

After working for leading national and international press and liaising with PR agencies on a daily basis, she has a lot of experience to share. As a journalist she knows which stories get published and which press release’s end up in the recycle bin.

Her inside knowledge can be passed on and by following the simple instructions you will have a basic PR plan in no time. Most news rooms work the same and are looking for particular types of stories at certain times of the year.

Jonica will provide you with those calendars and suggest ways you can be involved with many publications throughout the year, establishing your credibility and enhancing your reputation along the way.

The 3 hour workshop will cover:

- Introductory guide explaining what PR actually is (compared with marketing and advertising)

- How PR can help your business

- Why it’s important to set PR goals

- How to create a simple PR plan.

- Identifying target audiences and the publications they read

- The main ways to secure free editorial coverage

- How to develop story material for your pitch

- Digging deeper to get the story

- Who are you going to call?

- Roles within the media

- Becoming a PR expert

BOOK NOW TO SECURE YOUR SEAT

When: 14th July 4.30 – 7.30pm

Where: bioFirst Seminar Room
Ground Floor, National Innovation Centre, Australian Technology Park, 4 Cornwallis St Eveleigh, NSW 2015
Parking available on site.

How Much: $66 per person

A recording of this workshop will be available to view after the event  – please email jessica@frankteam.com.au to book your access.

We have put together a short article on 5 Mistakes to Avoid when working with the media.  We hope to spread the learning we have had over the years in regards to working with the media to you so please feel free to forward the article around and use in your newsletters etc with acknowledgment of The Frank Team of course.

Selling to Baby Boomers & Gen X

Bridging the Generation Gap

Young entrepreneur Amanda Jephtha recently attended a workshop with social researcher Mark McCrindle and is here to share the knowledge from that session.

Fact: everyone loves to hate Gen Y.
Fact: the future is not created by an economy, but a demography.
Fact: Gen Y is here to stay – and rule!

So how can we shake off our bad rep as demanding, fast-moving, selfish kids and get our message across?

How can we more effectively work with and sell to the older generations?

The key is to first UNDERSTAND them, and then modify your actions.

Check out these insights and tips on how to bridge the generation gap.

Why there are SO many oldies…

Since we’re not having as many babies and we’re all getting older (and living longer), soon there will be an explosion of older people. Actually, by 2020, there will be more than 3 times the amount of 65-69 year olds compared to 1978! A staggering statistic.
So whether we like it or not, we have to learn to communicate effectively with the older generations if we’re going to run successful businesses.

Thinking with the head versus thinking with the heart.

Typically, Gen Y decides with their emotions. Never mind reason; if we’ve absolutely fallen in love with something because of it’s looks or how it makes us feel, we simply buy it.

Gen Y engages emotionally as:
Seekers – someone who doesn’t know too much about a product, but is blindingly faithful, and
Embracers – someone who will trumpet your horn with full product knowledge and is in lurve with your product.
However, the older generations will first rationalise the purchase. Does this fit my needs? Is it value for (my heard-earned) money? Is the product guaranteed?

Generation X and the Baby Boomers engage cognitively as:

Hecklers – someone who doesn’t really understand the product and isn’t particularly attracted to it, and
Agree-ers – someone who understands the product is a good fit to their needs, but feels indifferent to the product.
Our aim is to convert all clients in to Embracers.

Image thanks to McCrindle Research

How to Sell to the Older Generation

Firstly, we need to satisfy the older generation’s need to rationalise. Answer their questions, even if you think they’re basic or repetitive – but don’t make them feel stupid!

Slow the pace down if you’re discussing new concepts.
Once we’ve ticked this box, only then can we successfully move them to the emotional quadrants, ultimately ending up as Embracers.
By then, the older generation will be your most powerful sales force. And considering the Baby Boomers own the majority of the wealth and spend more on technology than any other generation, who wouldn’t strive to achieve this?
What NOT to say
Generation X and the Baby Boomers just don’t use our vocab. Some even blame us for the downfall of the English language! But what do they particularly dislike?
Clichés.
We all love to hate clichés! So much so, McCrindle Research set out to find the top 10 clichés Gen Y use that Generation X and the Baby Boomers hate. So when you’re chatting with the oldies, avoid using:
1. My bad
2. Random
3. So hot right now
4. Fully sick
5. So over that
6. Oh my gosh
7. Whatever
8. Totally
9. Chillout
10. Whassup
Check out this full list of clichés that should best be avoided, no matter who you’re communicating with.
Remember…
Each generation operates differently. By being mindful of these differences, not only can we grow our businesses – we can make the richest and most abundant generation our biggest advocate!

Ten Secrets to Great Email Marketing

The debate about snailmail versus email rages on between the old timer marketers and the new age digital marketers. Here we get the inside word from a digital marketer’s perspective, Fred Schebesta, on how to increase your response rates and generate a multitude of leads.

As young entrepreneurs you often start with little to no money, and using the internet and emarketing smartly is vital as it doesn’t carry to cost of other more traditional marketing methods.

1. No mistakes!
Broken links and images in your emails are an instant detraction from what you’re offering. Not only does it damage the image of your company it also disables the customer from accepting your offer.

2. Make it a quick message for a quick medium.
You have 3 seconds to grab your customer’s attention otherwise they can just press delete or move onto the next email. Make sure your message is transferred quickly as people tend to read and discard email quickly.

3. Send more than one email in the campaign.
After you’ve sent your initial email with its offer send another one a week later saying that the offer has almost expired. This creates urgency for the reader.

4. Email link to websites.
You’ll receive much faster response rates if you link to a website instead of asking the buyer to pick up a telephone and call you. Ensure that your offer is clearly displayed on your website and it’s clearly understood how to accept the offer.

5. Reply to your responses.
Unlike with other mediums, the time between when your offer is delivered and when it can be acted upon is very short. As a rule, your response time should not be longer than 12 hours.

6. Give customers a reason to refer.
At the bottom of your email put a small blurb. “If you know of anyone else who would be interested in this offer please forward them this email.” Give your customers a reason to refer a friend and you’ll see an even better response rate.

7. Layout of the email.
Understand how your audience is going to read their email. In general people only view the email in a small box. What that means for your email is that it needs to convey its message in that little box and give them a reason to scroll down.

8. Tune into WIIFM.
The WIIFM (Whats in it for me?) station is a favourite station when it comes to accepting special sales offers. Ensure that your buyer has a clear and simple way of accepting your offer. ‘Click here to receive a free case study’ – ‘ Reply to this email to receive a free copy’ – ‘Place your name in the form to begin
your registration process’.

9. Flashy images vs Text.
There must be a balance between images and text in email marketing. Preferably more text than images. One image plus a single link with a call to action in actual text is ideal.

10. Clean Subjects.
Ensure that you have a subject line that is catchy enough for your email to be opened and relevant enough for the email to be read all the way through. Try using questions (e.g. Are you struggling to find clients?) or great adjectives (e.g. Exclusive unveiling of new product).

For more info and tips from Fred, check out his blog.

Tax Basics Explained Simply

Tax… we know it can seem overwhelming and quite scary when you’re first starting out. So we thought we’d put together some information for you about the basics of tax in Australia. All of this info is available elsewhere on the internet, but it’s here for you all in one place. We’ve also included links for further information and advice.

Now, take a breath as there is a fair bit of info coming right up. Just take it in bit by bit!

Why not start by figuring out if you are actually running a business?

Logical, I know! Some of the things to take into account include whether you have actually started to undertake business activities or started to “do” business with others (instead of just planning to at some point in the future), whether you intend to make a profit (perhaps now, perhaps down the track a little bit – the intention just needs to be there), and is there repetition and regularity to your activities.

Most businesses operate for a purpose and their everyday activities reflect this – they do the same or similar things in order to operate. The Australian Taxation Office (ATO) is here to help with some basic info for you about working out if you are running a business.

Are you running a for profit or a not-for-profit (NPF)?

According to the ATO, “a non-profit organisation is an organisation that is not operating for the profit or gain (either direct or indirect) of its individual members. This applies both while the organisation is operating and when it winds up. Any profit made by the organisation goes back into the operation of the organisation to carry out its purposes and is not distributed to any of its members.”

What does this mean? NFP’s still have staff and pay wages, including to any management peeps, but any profit that is generated is not given out to directors or employees as dividends or bonuses, that profit stays in the organisation and is then used to run it.

Some examples are churches, sports clubs, environmental protection societies and charities. Click here for more information on NFP’s.

For info on registering a NFP as well as registering click here.

If you intend on making some profit and paying out some of that profit to owners or directors, then you are probably NOT a not for profit!
Australian Business Number (ABN)

An Australian Business Number is an 11-digit number that is unique to your business.

What is it used for? It helps other businesses to easily confirm your details, it indicates to other businesses that you are operating a business (even if as a sole trader), it is required if you are claiming Goods and Services Tax (GST) credits, among other tax related things.

If you’re operating as a sole trader, partnership or company, you need an ABN. If you’re operating as a NFP, you may or may not need an ABN.

It’s pretty simple to get yourself an ABN, and it doesn’t cost anything. You can apply online .

More info for NFPs is available in regards to ABN requirements.

According to the ATO, “Anyone carrying on an enterprise (this is usually a business) should quote their ABN in relation to goods or services they supply to another enterprise. If they don’t, the general rule is that the payer must withhold 46.5% from the payment to the supplier (you) and send the withheld amount to the Tax Office. Some payments are excluded from this rule.”

So once you’ve got your ABN, remember to use it, otherwise the people you deal with may hold on to 46.5% of what they owe you, ouch!
Australian Company Number (ACN)

According to the Australian Securities and Investments Commission, “Under the Corporations Act 2001, every company in Australia has been issued with a unique, nine-digit number, an Australian Company Number (ACN), which must be shown on a range of documents. The purpose of the ACN is to ensure adequate identification of companies when transacting business.”

So what this means is, when you register as a company, you will receive an ACN. Often your ACN will be very similar to your ABN, only nine digits instead of 11.

For more info check out the ASIC site.

If you operate as a sole trader, you can do this under your own individual tax file number (TFN).

If you operate as a partnership, company or trust, you must also have a business tax file number. If you operate as a NFP, you might need a TFN.

For help in figuring out if you need a tax file number, check out the ATO site.
Your Accountant

It’s never too soon to get an accountant for your biz. Look at it this way – they live and breathe all this tax and compliance stuff! If you’re not sure about tax, account keeping, etc, why not go to an expert?

We know it is scary and you think straight away….”there is no way I can afford an accountant”! But you will be surprised at how affordable they can be, and how much they can SAVE you, thus paying for themselves in your business! The Frank Team can recommend a few great accountants – who are young entrepreneurs – who are really affordable. Ask us for their contact details.

Remember there’s no obligation to stick with the first accountant you find. Go and meet a few, find one that you trust and enjoy working with, and who obviously knows what they’re talking about. Here at The Frank Team have been with the same accountant since 1998, she is awesome!

Accountants’ fees vary a lot. Be sure to ask about fees and find an accountant that you feel is affordable. $500 per hour charge rates might not be in the budget to start off with, so why not support another small business person? Also remember that meeting all of your compliance needs could end up saving you a lot of money and hassle in the long term.

Remember also that your local Business Enterprise Centre can be a huge help here too – and they give FREE advice!
Record Keeping (or bookkeeping)

What records do you need to keep and for how long?

Keeping records of all your financial transactions (money in and out) are vital to your financial record keeping, whether you do it on a day to day, monthly or even annual basis.

All payments you make, all money you receive- receipts, invoices, bank statements, proof of purchase of assets, everything! With as much detail as possible – job numbers, what it was you bought if it isn’t clear, who you just made that cheque out to. Months later it will be extremely difficult, if at all possible, to remember.

Start early with this stuff and set up a way of keeping track, trust us!

We know of some young entrepreneurs who were years behind in their recording and tax and it not only cost them in terms of paying their tax bills but also cost them huge amounts of time to back track. So even if it is shoe boxes that are labeled, set up a way of keeping track of all money in (and what it was for) and all money out (and what it was for).Then an accountant will be much more useful for you.

Keeping all of your documentation together means when it comes time to process all of your accounts, the info is ready to go! It also means that if your accountant comes back with questions, you can look anything up that you need to, with minimal effort.

We keep our financial records in ring-binder folders, sorted month by month; if we ever need to look up a payment, find a receipt, even find companies’ contact details, we can generally find it within just a couple of minutes. Everyone needs their own filing system, electronic or paper/manual. You can even use online Google doc spreadsheets to keep yourself sorted.

If you were ever audited by the ATO, or needed to complete a financial audit for any reason, you could get in a lot of trouble for not having all of your financial records. So make it easy for yourself!

By law, you are required to keep financial records. As a general rule, your records should go five years back for regular income tax purposes, though it does vary for other taxes. For more info, check out the ATO site.

If you’re a NFP, more information about record keeping requirements is available here.
Cash vs Accrual Accounting

Ok… so now we’re getting into the technical stuff. Cash and accrual accounting are just two different ways of keeping track of your finances.

Cash accounting records only the amounts of cash that have flowed in and out of your business. So when you receive $100 for your product, you record that sale. When you pay $40 to your supplier, you record that purchase. Cash accounting is definitely the easiest place to start.

Accrual accounting records all of the expenses and purchases paid by your business, as well as those that are currently due or outstanding. So if you sent a client an invoice for $100, you would record that as a sale, even if you haven’t yet received that money into your bank account. If you receive an invoice from a supplier for $40, you record that purchase/expense. You then also have an Accounts Receivable account/category in your accounting system (money that you are due to receive) and Accounts Payable (money you need to pay).

An accounting package of some sort will help you with this system, if that is what you choose. You would use accrual when you have larger volumes of transactions happening and you need to be able to track and predict cash flow.

Tax Returns

If you’re operating as a sole trader, your business tax information will go into your individual/personal tax return. You may need to complete some extra schedules/forms, and record all business income and expense. Your business profit will then be taxed at your marginal rate of tax. For details go to the ATO site.

If you’re operating as a partnership, the partnership lodges its own tax return. BUT, because of unlimited liability, the income and expenses from the partnership’s tax return then get allocated to the partners. This means, on your individual/personal tax return, you will need to report your share of the business’s income and expenses. Your partnership profit will then be taxed at your marginal rate of tax. More info here.

If you’re operating as a company, your company will need to lodge a tax return. You will need to show all business income and expenses. Your business profit will then be taxed at a rate of 30%, or 30 cents per dollar. And yes that means for any profit you make, 30% of it is paid to the government. More details here.

As soon as your business starts to earn an income and incur expenses, you need to start thinking about your tax return. Your first financial year of operation (even if you start your business in May) is the first year you need to lodge a tax return or include biz info in your own personal tax return, depending upon the business structure you’ve chosen.

If you’re operating as a NFP, you need to be aware that only certain types of non-profit organisations are exempt from income tax. Charities and income tax exempt funds require endorsement from the Tax Office to be exempt from income tax. Other non-profit organisations can self assess their exemption.

Many non-profit organisations are taxable and may need to lodge an income tax return and pay income tax.

Taxable non-profit organisations are generally treated as companies for income tax purposes, whether or not they are incorporated.

More info here.
Tax Concessions for Small Biz & NFPs

If your revenue is under $2 million, you might be eligible for certain tax concessions. Simpler depreciation, entrepreneurs tax offset, the list goes on.

For more info, check out here.

This is where an accountant can come in really handy. Do your research; list your questions then book in some time with an accountant or Business Enterprise Centre for some specific advice for your business.

If you operate as a NFP, you may be eligible for a number of tax concessions. For more info, go here.

It really is up to YOU to be aware of and find out what obligations your business has in regards to tax, and what concessions it could be eligible for.
Goods and Services Tax (GST)

In Australia, GST is incurred at a rate of 10% on top of the company price for many goods and services. So lets say you go to clothes store and buy a new shirt, it will have 10% GST included in the price already.

You don’t need to register your business for GST until you have sales of up to or over $75 000 a year, including GST (your portion of the sales would be ten elevenths of $75 000, or $68 181).

It’s up to you if you register for GST under the $75 000 threshold, or under $150 000 if you’re a not-for-profit. There are some exceptions – like if you’re a taxi driver. Check out www.ato.gov.au for more information.

Being registered for GST means that you are helping the government collect GST. This also means that you can claim credits for any GST that you pay in the price of your business purchases.

When you are registered for GST, you need to show this information on the tax invoices that you send and give to customers when you make a sale. In fact, the difference between an invoice and a tax invoice is being registered for GST – if you are not registered for GST, you are using an invoice. If you are registered for GST, it is known as a tax invoice.

We have a sample tax invoice for you to use if required.

You can register for GST when you are applying for your Australian Business Number; through your tax agent (your accountant); or through the ATO. For more information, check out the ATO.

See Business Activity Statement below for more info about reporting on GST.
Pay As You Go Tax Withholding (PAYGW)

What is PAYW, I hear you say?

Pay As You Go tax is the amount of money that is withheld from your wages each week/fortnight/month. If you’ve ever received a pay slip, you’ll notice it has Gross Wages (e.g. $500), PAYGW (e.g. $60) and Net Wages (e.g. $540).

Now that you’re running your own business, it’s up to you to withhold that PAYGW tax (for yourself and for any staff that you employ), and then pay it to the ATO when it comes to BAS time (see below).

Personal income tax rates change from financial year to financial year. Which means when a new financial year rolls around, you need to check the new rates at which you should withhold tax.

You can get updates for your accounting software, like MYOB, which have the current tax rates. Or you can check out the ATO’s online tax calculator. It’s a simple tool to use; you plug in each person’s information and it tells you how much money to withhold for that pay period. Easy! Check it out here.

If you operate your business as a sole trader or company, it’s likely you pay ‘pay as you go withholding’ (PAYGW) installments at different times throughout the income year as you earn your income. These installments are credited against the total amount of income tax you are liable (must) to pay for the income year.

All that means is the government keeps track of those payments, and at the end of the financial year when you work out how much PAYGW you are required to pay for that year, you see how much you have already paid and then either just pay the difference or get a refund back from the ATO.

If you operate your business as a partnership or trust, you do not have to pay PAYG installments. However, you may have to pay PAYGW installments on your individual share of your partnership’s income or any income you receive from your trust.

If you operate as a NFP and you have employees, you need to withhold PAYGW just like any other business. You’ll need to determine who is an employee, a contractor and a volunteer. NFP’s also have some fringe benefits tax concessions for additional benefits for their employees. For more info, check out the ATO.

Handy Hint: have a separate bank account in which you collect your GST and PAYGW tax, and even superannuation (so you are moving money into this account regularly). If you put these small amounts away each week, or fortnight, whenever you receive payment, when it comes time to pay your BAS and superannuation, you won’t have to scrounge the money out of your other accounts. Streamline this from the beginning. There are lots of banks now that as part of your business account can provide you with a tax management account that has higher interest rates, so check with your bank.
Business Activity Statements (BAS)

So now it’s time to report to the ATO…

Generally, new businesses use an activity statement to report and pay their GST and PAYG withholding.

When it comes time to do your Business Activity Statements (or BAS as most people call it), you will need to include in your declaration the amount of sales you made (money IN); and the amount of GST collected. You will then need to include the amount of purchases (money OUT) you have made; and the amount of GST you have paid. Then you will be required to either pay the Australian Taxation Office the difference (if you have collected more GST than you have paid out) or this will contribute towards a refund from the Australian Taxation Office (if you have paid more GST than you have collected in sales).

So depending on the difference between what you have collected and paid you may have to pay the government, or they will pay you!

BAS’s can be lodged either monthly (if you make a lot of money), quarterly (if you make a bit of money) or annually (if you don’t make much money).

In each BAS, you will need to outline:

* Sales made in $ (sales your business completed)
* GST on the sales made in $
* Purchases made in $ (things your business bought)
* GST on the purchases made in $
* Wages for the period
* Pay as You Go Withholding tax incurred on those wages (which you’ve been holding for your employees, just waiting to pay to the ATO)

You may also be required to pay Pay As You Go Installments (PAYGI– different to Pay As You Go Withholding [PAYGW], which refers to employees personal taxation. We’ll call them Income Tax Installments for now to keep it simpler) to the ATO, if your business has reported an end of year profit before and you are expecting to make a profit again this year. This installment will be outlined on the BAS report you receive from the ATO.

Once you are paying PAYG installments, any installments you pay during the year are credited towards your final tax assessment after you lodge your income tax return. What does that mean? For example, if you make four installments of $1000 throughout the year and your end of year company tax bill is $4200, you’ll only need to pay the ATO $200, instead of $4200 in one big go).

The amount you need to pay to the ATO will consist of:

+ GST you collected

- GST you paid (you receive a credit for this)

+ PAYGW tax that you collected/withheld from your employees’ wages

+ Income tax installment (if relevant)

For more info, check out the ATO here.

REMEMBER – if you have any questions, find someone to ask. The Frank Team can get your questions answered – just send them through – we will then share the answers with all of the young entrepreneurs in the network.So send us your questions.

Your accountant, lawyer, Business Enterprise Centre are great as well or just give the ATO a call – we’ve had to call them in the past and found them to be extremely helpful!

Don’t bury your head in the sand about tax stuff, or ignore what needs to be done. Even though it’s not as interesting or exciting as some of the other aspects of running your own biz, it is vital to your ongoing success.

Media Opportunity – Calling all Under 20 Young Entrepreneurs

Are you a young entrepreneur who is under 20 years of age?

If yes, we wanna hear from ya!

The Frank Team has been contacted by a media outlet and they are interested in doing a story on some young (under 20) entrepreneurs out there right now running their businesses. Yey for young entrepreneurs!

If you (or anyone you know of) meet these criteria please contact us ASAP.

Criteria:
- Under 20
- Currently running your own business (part time or full time) of any type (business, social, environmental etc)
- From any state in Australia

Please get in contact with us ASAP with your direct phone number (mobile, land line), your age and your business name. You can also call me with any questions: (02) 95186244

Spread the word to any other young entrepreneurs you know and get them to contact us ASAP.

Jessica

The Frank Team – Director

jessica@frankteam.com.au

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