Starting a business – 6 tips to starting
Starting a business is a very exciting time. Just like you need a plan for the assets you will buy and the customers you will target, you also need a plan for your finances. Getting this right at the start can save you big headaches down the track. Below at 6 things to consider as your start your road to self-employment.
Separate Bank Account
Make a new bank account to use and get an EFTPOS or credit card for this. Have all your business income and expenses go through this account. This not only makes it easier for you to remember what was business, but also easier for your accountant to sift through (and even the Inland Revenue if you are reviewed).
Saving For Tax
Some businesses will stop each year because they forget to save for tax and it becomes too much. Don’t let this be you! If you earning under $80,000 profit per year, putting 20% of your profit aside will be enough to cover both income tax and ACC. Student loan and GST will be on top of this. Put this money into a separate savings account and don’t touch itAs every business is different let us know if you need help calculating this. Some will have very little costs so this is easy, others may be manufacturing where profit can vary a lot.
Spending the Profit
The best part! When you do this, transfer a lump sum from your business account to your personal account. Then spend from your personal account. This keeps the personal transactions to a minimum and makes it easy to group these at year end
Choose your structure from the start. Whether this be sole trader, company, partnership, Trust or more complex. Having this right from the start saves having to transfer assets and justify a change down the track.
If you are registering for GST, get some software to help you. This will not only save you valuable time, it will also help to prevent errors. If you do make errors, software such as Xero will automatically put fixed errors into your next return, keeping you up to date.
Shareholders / Partner Agreement
If you are going into business with others get help to do an agreement. This will not only cover how profits are to be split, but what happens if the business needs more money, what happens if one of you wants to or needs to exit. Having this in writing at the start prevents issues down the track and helps to secure the future of your business.
Finally, remember to have fun, you are now your own boss 😊