In his weekly post, our Chief Financial Officer Greg Taylor looks at some things you need to do to get your new business financed. This week he looks at the structure of the business.
Did you make a New Year’s resolution to start your own business?
Roy Morgan research shows that small businesses are gradually recovering from a rough 2011-2012, and consumer sentiment is volatile but up on levels 12 months ago. While small business confidence levels are lower than that of big businesses and are lower than this time two years ago, the trend overall is upward.
Interestingly the report found that small business owners have changed over the past 10 years. People aged 50 or more are the fasting growing group of people operating small businesses. In 2002 they made up 38.8 per cent of all small business owners. Today they make up 45.7 per cent.
Assuming you have done your homework on developing your business products or services and you are confident it will fly, the next questions are whether you afford to go into business and how will you finance it? My head of business banking says you shouldn’t think about starting a new business without working out the structure of the business, preparing a cash flow forecast and preparing a business plan.
This week let’s look at business structure. According to the Australian Government’s business website (www.business.gov.au) there are four main options.
You can be a sole trader which is an individual trading on their own. A partnership is an association of people or entities running a business together but not as a company. A company is a legal entity which has either public or private shareholders who invest in it. A trust is an entity that holds property or income for the benefit of others.
There are advantages and disadvantages with each option. The structure you choose is important because it will influence the types of licenses you’ll need as well as the way you pay tax. It is best to get advice from a solicitor and an accountant to help you work out the structure that best meets your business needs.
This blog is taken from Greg's weekly column in the Newcastle Post newspaper.
Next week: Cash flow forecast.
Please share your tips for starting out in business below.