Are Registrations Just Another Brick In Your Business Wall?
You probably already know the statistics regarding the survival rate of start-up businesses. Nearly eighty percent of small businesses don’t survive the first three years. Only five percent of online businesses survive that same period.
In the words of Professor Julius Sumner Miller, Why Is It So?
Maybe it’s just too easy to set up a business in this country. In fact, the World Bank Study researched 189 different economic regions and ranked Australia as the seventh easiest place to start a business and the fourth easiest place to get credit. We have very few start-up barriers and on average it takes just 2 days to get up and running. Also, we now have a generation of people looking to ‘get rich quick’ using the pulling power of the internet and social media. Their impatience means they pull the trigger on their business idea before they get professional advice. You don’t need to be Confucius to know that businesses built on rocky foundations often collapse.
Laying the foundation ‘bricks’ of your business is critical and they include the right business structure, appropriate insurances, the most suitable accounting software and a business plan that incorporates a marketing plan and cash flow budget. Entrepreneurs in a hurry often bypass getting sound professional and instead rely on ‘Professor Google’. The consequences of the wrong legal advice, the wrong tax structure and inadequate insurances can be catastrophic. In this blog we are going to specifically examine the importance of having the right registrations for your start up business.
Another Brick In the Wall
When starting a business, a lot of business owners think like Pink Floyd, “All in all it's just another brick in the wall”. However, there are a number of key registrations required before you can trade. Firstly, every business needs an Australian Business Number (ABN). This is required irrespective of the type of business structure you use. ABN’s are managed by the Australian Taxation Office and there is no cost for an ABN. Applications can take several weeks to process.
Once you have an ABN you can then register for GST, PAYG Withholding and FBT (if required). You also need to quote your ABN on your tax invoices and if your business turns over more than $75,000 per annum you need to register for GST. If you have employees there are additional registration requirements for PAYG, Superannuation and WorkCover.
Depending on your business structure you might need to register a trust deed or partnership agreement that sets out the legal and profit distribution arrangements within your business. You might also need to register a trademark that protects your business name and/or logo from use by others. Trademarks are managed by IP Australia and applications can take months to process. The cost to register a trademark varies depending on the type of trademark you are registering.
Registrations are a critical part of the business start-up phase and penalties may apply if you fail to register on time. Some trades require specific registrations and a number of professional services demand practising certificates.
In summary, starting a business is a bit like a game of chess, to succeed you need to make the right opening moves. That includes building your business on solid foundations including the right business registrations. If you’re thinking of starting a business the expression, 'people don't plan to fail, they just fail to plan' serves as both valuable advice and a warning for impatient entrepreneurs. Talk to us today and let’s make sure your foundations are rock solid.