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Out Sourcery

  • Bookkeeping
  • MYOB Setup and Training
  • Business Systems and Management

MYOB | Professional Partner learn more »
 

Disclaimer

This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.

 

Roll Call of Common Business Errors

AFYF & Out Sourcery has a range of clients mainly populated with small businesses, professionals operating as businesses or companies, NGOs and a range of individuals across industries.

This broad range of clients has exposed us to a number of common business errors, some fatal, but mostly fixable or reversible that occur when people decide to go into business.

We have compiled a list of the common business errors that you may relate to.

1. Structure
 “Setting up a structure that you don’t require in the first stages of business”

Common Mistakes are:
• Taking on the wrong structure for your needs
• Not fully understanding the various options and structures
• Ending up with greater insurance costs
• Ending up with greater compliance costs (time & financial) 
• Chasing tax effectiveness that may not be there

AFYF’s Solution:
• Suggest you meet with Stuart or Carron as early as possible, as soon as you have your business idea is best, and before you start trading
• Make sure you have a clear understanding of the differing structures, the set up costs, the tax effectiveness, the ongoing compliance costs and the requirements of shifting between structures

2. Compliance and Registration
“Registering for an ABN and forgetting the rest”

Common Mistakes are:
• Registering for GST when you may not need to
• Registering for GST and choosing the incorrect reporting options for your needs
• Forgetting to apply for a TFN when required
• Not considering registering your business name
• Forgetting to advise ASIC and the ATO

AFYF’s Solution:
• Suggest you meet with Stuart or Carron as early as possible
• Understand how the business plans to trade and what it requires
• Lodge applications and registrations with ASIC and the ATO on your behalf
• Update details as they change

3. Insurance
“I don’t see or understand the need for insurance”

Common Mistakes are:
• Not understanding the legal requirements for Workers Compensation insurance
• Not understanding who is and who isn’t covered by Workers Compensation insurance
• Seeing life or income protection insurance simply as a cost and not as a potential asset
• Not assessing the potential risks to your business or personal assets that indemnity or liability insurance may assist in reducing

AFYF’s Solution:
• Outline and explain the different types of insurance that may be applicable for your business
• Suggest sources for each of the insurance products, brokers and companies
• In the case of Workers Compensation Insurance, assist in completion of original application and yearly compliance

4. Employment
 “Everybody has been an employee at some stage but being an employer is a whole different ball game”

Common Mistakes are:
• Negotiating rates of pay in cash or in-your-hand terms instead of gross rates and allowing the marginal tax rate system to work
• Not writing letters of offer or appointment outlining conditions and rates
• Not issuing job descriptions which leads to a lack of understanding in regards to expectations
• Not fully understanding superannuation requirements and compliance

AFYF’s Solution:
• Outline the compliance requirements with regard to the ATO and super
• Explain the difference between gross and net rates of pay and how the marginal tax system works
• Encourage the use of letters of offer and job descriptions and provide examples for use
• Explain the superannuation system and assist with lodgement and compliance

5. Record Keeping
 “The shoe box and outstanding BAS are not the way to go”

Common Mistakes are:
• Not understanding how to file to gain easy future access
• Purchasing computer accounting programs when they may not be needed
• Not understanding account reconciliation
• Forgetting to set up separate business bank accounts

AFYF’s Solution:
• Assess what accounting system will best suit your needs and budget. It may be a simple business spreadsheet to record income and expenses
• Assist with setting up and training in Xero / MYOB as required
• Outline a simple filing system
• Encourage separate business bank accounts

6. The Cash Economy
 “Why won’t the bank lend me funds?”

Common Mistakes are:
• Not understanding the assessment criteria in the lending process
• Not achieving goals, both business and personal, without borrowed funds
• Becoming obsessed with the cash you can take out of your business
• Finding it difficult to justify a sale price when exiting the business

AFYF’s Solution:
• Encourage you to think ahead to what you might want in the future and structure your business practices accordingly
• Give an overview of the borrowing assessment process
• Explain the ATO benchmarking process and provide details

7. Planning
 “I just work the hours and invoice people, it works, why do I need to plan?”

Common Mistakes are:
• Working for today without any vision for tomorrow
• No assurance on where the next month’s income is coming from
• Not seeing potential growth opportunities for your business
• Not considering issues that may arise in the future
• Not considering succession issues or exit planning

AFYF’s Solution:
• Provide framework and spread sheet examples for budgeting
• Provide assistance with the budgeting process
• Suggest the need and explain the process of compiling even a simple business plan
• Provide assistance with the business planning process
• Offer advice on marketing, sales and business management
• Suggest that you actively consider written agreements between partners that cover the processes concerning dispute resolution, succession and exit of the business

The combined goal of AFYF and Out Sourcery is to offer small business a range of services to assist in setting up the correct trading structure, putting systems in place to operate efficiently and profitably and meeting compliance obligations while continuing to grow your business.

Whether it be bookkeeping services, admin systems, training or more complex marketing and business strategies provided by Out Sourcery, or BAS, tax preparation, advice and lodgement facilitated by AFYF, we aim to give you a whole-of-business approach that ensures that your business is constantly being monitored and improved.

 

 


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