Struggles of setting up your own business
At some point in time, after hearing the successful stories of people who started their own business and thrived, it got you thinking, “If they can, then so can I”.
With the determination and funds available, you think you’re ready. It can be exciting to start but before you do, you should first weigh all the advantages and disadvantages of starting your own business and setting it up by yourself.
You might think that starting a proprietary limited company (Pty Ltd) is advantageous considering it:
- provides limited liability
- efficient in attracting stakeholders
- avoids creating a conflict as you are protected by the law
- has an indefinite existence
- fixed tax rate
However, before you set it up on your own, here are some key points you need to consider:
1. What is the best entity structure for your business?
There are different entity structures as not one structure is good for everyone to use. It doesn’t mean that if it works for someone you know, it will work for you too.
2. What are the forms to get and the procedures of starting a Pty Ltd?
The setup can be a tricky, time-consuming, and required a lot of legal compliance and paperwork like:
- Registering your company with ASIC
- Having a company constitution
- Setting up the shares to issue together with their value and owner for the tax planning
- Setting how many directors there should be
- Understanding your responsibilities and obligations as a director
3. How to register your business for taxation?
First thing to do is to register for an Australian Business Number (ABN) and a Tax File Number (TFN). After-which you need to determine if you need to be registered for a GST or not. Next step is to consider if you should be on a cash or accruals basis. You’ll also need to comply with the rules and regulations on reporting requirements.
4. How much is the cost of the setup process?
Creating a Pty Ltd incorrectly yourself can cost much more than having a third-party do it for you as it includes professional services like legal and accounting expenses. You should also take into account that there are continuous expenses like annual ASIC fees, ongoing accounting fees, and tax requirements.
5. How much is your expected personal liability once you start a company?
Although Pty Ltd provides its protects its owners because of their limited liability, it does not imply that you are shielded from all monetary and legal repercussions. You can still be liable for circumstances like debt accrual and being sued.
6. Can you separate your personal and business finances?
It can be difficult to maintain a distinct division between your personal and corporate finances but it is something that you need to do when starting a Pty Ltd.
Starting a business is complicated but worry not as we can help you form a business that is right for you. You can schedule an appointment with us by calling or emailing us at [email protected].