When starting a business, you need to tick off the basics.

Some of your decisions may have profound long term implications. Especially with regards to:

• Tax deductibility,
• Tax minimisation,
• Access to Government grants,
• Capital raising, and
• Liability protection.

Besides the tax and legal considerations, there is the most important factor: Are you pursuing a viable and worthwhile endeavour?

Consider these situations:

1. If you’re seeking to go down the disruptive and high-growth start-up path, you’ll want to be nimble, highly agile and connected to the start-up ecosystem.

   Very importantly, you’ll need to be highly critical of your business idea:

   • Are people really going to pay for your product?
   • Will they pay a high enough price to cover known and hidden costs (don’t under-appreciate the hidden costs)?
   • Is that market going to be big enough, and will you be able to defend your position?

2. Are you just creating a be-your-own boss type of business?

   This is where you might be great at getting and doing the work, but the financial rewards are perhaps just slightly better than a wage or salary job (sometimes it ends up being worse).

   Is that worth the 24/7 business ownership stress and risks?

   What might you be able to do to make it worthwhile?

3. Do you have the skills and passion to work ON-the-business, instead of IN-the-business ?

   A great many aspiring business owners are domain experts.

   They are exceptional at getting the work done to deliver the product to their customers.

   But, owning a business, especially one you hope to be worth millions one day, demands far greater management. You will need to build a team capable of:

   • Creating customer demand,
   • Winning that business,
   • Recruiting, training and retaining a team of exceptional people, and
   • Throughout, maintain ample cash-flow in order that your business survives.

   These things can be learned, but please be sure to give these challenges the respect they deserve.

We encourage you to join the Munro’s Business Academy to help you as you start your business journey, and please feel more that welcome to reach out for additional help when you’re ready.

If you’re ever in doubt about when’s the right time to seek professional help, please follow one of our key pieces of advice, which is to be proactive and ask early.

In order to set you for financial success, no matter what you do, it is important you start with the basics – tracking, classifying and monitoring your financial transactions.

In business, the practice of tracking, classifying and monitoring your financial transactions is called bookkeeping.

You need to know where your money has gone, and how much you are making from your products and services

There are many problems that can come from inefficient or inaccurate bookkeeping, such as:

• Lots of time and resources wasted unnecessarily.
• Inability to perform financial analysis.
• Financial losses through such issues as missed payments, invoicing errors and cash flow problems.
• Non-compliance with relevant government authorities, such as the ATO and the State Revenue Office, which could lead to severe penalties wasting thousands and thousands of dollars.

As accountants in business since 1973, we know business owners don’t only need to get the bookkeeping done for compliance purposes, they also should utilize it for powerful strategic financial management.

Insights gained from your financial records can, and should be, a key driver in how you make better decisions to grow your business.

But, the first place always starts with accurate, up-to-date bookkeeping.

A couple of the common issues we’ve seen with bookkeeping include:

• relying on the software too much, and
• business owners wasting too much time on the bookkeeping.

The software these days is far better than it has ever been, but it’s seldom a plug-in and let rip solution. This is especially true when payroll is involved.

We also mention business owners wasting too much time on bookkeeping because it’s not usually where your talent and best output lies.

Whether you are starting your business or looking to grow, you should be putting adequate time into working ON your business rather than IN your business.

You don’t need to concern yourself with endless amounts of paperwork and general bookkeeping tasks. These can be better left to skilled employees or to professionals such as ourselves.

Before we finish this video, we’ll use an example of a bookkeeping problem, and solution, to give you additional context about what we’ve been discussing.

Say you are a small business experiencing net profit growth year-on-year. Due to increased revenue over the last year, you are required by the tax system to lodge more frequent Business Activity Statements.

Up to then, you maintained your financial records in a spreadsheet, which presented many issues such as inefficiency and inaccuracy. So, things have to change.

In a situation like this, we could assist you in setting up a modern bookkeeping system, and provide you with comprehensive training on how to use the program.

The result, an improved bookkeeping system allowing you increased functionality to track your business performance and meet your tax obligations.

Additionally, with the more efficient bookkeeping system, you might also free up some of your time, which could then be used to grow your – allowing you to work ON your business, rather than IN your business.

If you want more time, and advanced insights, so you can focus on growing your business, please don’t hesitate to contact us and book a no-obligation meeting with one of our specialist advisors. We guarantee you won’t regret it.

Generally speaking, individuals, partnerships, companies, trusts, co-operatives and Self-Managed Superannuation Funds (SMSF) are required to lodge an annual income tax return in Australia.

The Australian tax system places the onus on you, the taxpayer, to know the rules and apply them correctly in your tax return.

With the tax laws changing regularly and new case law being established by the courts day-in and day-out, it is almost impossible for business owners to stay abreast and fully informed of tax obligations without the assistance of a professional accountant.

We’re here to collaborate with you, and your team when necessary, to share our knowledge and expertise and to ensure accuracy in your tax returns.

Whether you are an established business or a start-up embarking on a new venture, our proactive accountants will work with you to ensure that your hard earned wealth is protected and that you are paying as little tax as legally possible.

You can have complete confidence knowing that your business and personal tax affairs are in capable hands.

So, if you’re needing assistance with preparing an income tax return, then please give us a call. We’re here to help.

Building a startup is a monumental task.

It begins with an idea evolving through the development of a minimal viable product (MVP) and grows as you assemble a team, find product market fit and relentlessly drive your vision.

The reality is you’ll need funding to fuel this journey.

The pivotal question every founder faces is whether to raise capital. If your business can sustain itself and grow through earnings from existing customers or other sources, bootstrapping might be the preferred path. Alternatively, debt funding such as borrowing from a bank, or exploring government grants could be viable options.

For those considering raising capital from investors, it’s crucial to understand:

1. What you need the money for;
2. What is the minimum viable amount needed; and
3. What is the maximum necessary amount?

You want to know ‘what you need the money for’ so that you can explain this to investors and generally be best placed to use it wisely. You want to know ‘what is the minimum viable amount needed’ so that you know how much you need to raise to realistically achieve your objective. and then get to the next funding round.

And you want to know ‘what is the maximum amount necessary’ so that you don’t raise unnecessarily too much money and therefore give away more ownership than needed.

In the Pre-Seed and Seed rounds, you might require funds for market research and development of your MVP. As you progress to Series A, your focus will most likely shift towards hiring talent, improving your product and scaling your marketing efforts.

In all the stages, you might find developing a business plan with financial projections particularly useful to you, and investors, when answering those crucial questions of:

1. What you need the money for;
2. What is the minimum viable amount needed; and
3. What is the maximum necessary amount?

If you can’t do that yourself, then we can help.

Now, each funding stage attracts a different type of investor and involves giving away a share of ownership.

In the early stages, funding might come from “Family, Friends & Fools”, Angels, or through participation in Accelerators and Incubators.

In Australia, the total money raised in a Pre-Seed round may be around $150,000 with typical ownership given away of around 5-15%.

Money raised from participation in Accelerators and Incubators might be around $50,000 to $150,000 for around 5-10% equity.

As you move into a Seed round, early stage venture capital may come into play, often led by a “Lead investor”. It’s common in Australia for a Seed round to raise around $1 million in exchange for about 15-25% equity.

For a Series A round in Australia, you can expect funding of around $1-5 million for around 15% equity.

This funding generally requires that you have found product market fit and have annual recurring revenue of at least $1 million.

When raising funds and giving away equity, be mindful that you should reserve equity for key employees. Around 10% may be about right. Importantly, these aforementioned statistics are simply approximate guides.

Further, they do change over time and there are always outliers.

Now, regardless of the stage of funding, it’s essential to remember that securing investment shouldn’t just be about obtaining the funds. Choosing an investor is a significant decision, since you could spend several years partnering with them.

Be comfortable that you can work with them, such that they hold similar values to you and will provide constructive feedback, in appropriate ways. Further, consider if they’ll provide useful advice and connections.

Will they help you grow the business in more ways than simply giving you money?

The raising capital phase is often a time consuming process. Things you will most likely need to do throughout include:

• Create a forwardable blurb. This is a simple, compelling description of your startup that anyone can pass along to a potential investor in seconds.
• Create an investor deck and a pitch deck.
• Be investor ready. This means having all documentation ready for an investor to conduct their due diligence.
• Something that investors appreciate is confirmation from your accountant that your startup qualifies as an Early Stage Innovation Company, which they can utilise for the ESIC tax offset and incentives.
• Get the legal agreements arranged. This can start with a term sheet, evolve into a SAFE and Share Subscription Agreement. Be mindful of the terms and conditions, such as whether the valuation is pre or post money, and the liquidation preferences, to name just a few.
• There is also usually a need for a Shareholders’ Agreement and Intellectual Property Assignment Agreement.

Be prepared for talks with investors to not lead to a “Yes”, but also watch out for a common sin of investors where they don’t give you an outright “No”.

Sometimes your startup in its current stage isn’t right for an investor, but they like to keep the door open so that you might circle back later when you’re a little more progressed and appropriate for them.

Try to find this out early to avoid wasting each other’s time. But… stop on good terms so that you might raise from them later.

So, what happens when you actually get the money?

Very importantly, it belongs to the business. It’s not your’s for personal enjoyment. Investors expect you to use it appropriately to get the business to its next funding round, which might be in around two years time.

Throughout the raise, you should have already developed a plan of how you want to use the money and have talked with investors, about this, so that both parties are aligned around expectations. Be sure to include them in the topic of how much salary, if any, you intend to draw from the startup and how much you will pay others.

Aside from the money hitting the bank account, the company records also get updated to reflect the new share holdings.

In Australia, this involves submitting a lodgment with the corporate regulator, ASIC. This is normally handled by your accountant. I.e. us. Investors might also join the board to help provide advice, oversight and governance.

You should also keep investors informed of progress with regular, perhaps monthly, email progress reports.

As business advisors and accountants familiar with startups, we invite you to a free Get To Know Each Other meeting to see how we may be able to help you successfully navigate ordinary compliance, such as tax registrations, business activity statements and tax returns, and non-routine parts of the startup journey, such as capital raising.

You’re also encouraged to take the spam free Raising Capital (Investor Readiness) Diagnostic to see which areas you might be lacking in relation to a Pre-Seed or Seed round.

In this video we will go through some of the key considerations you will need to make when hiring employees.

1. The first consideration is assessing your business needs:

Before you start, it’s a good idea to assess your business needs so that you can hire the right person for your business.

If you need help with just one specific task, such as bookkeeping, paying for their advice as a contractor is probably the best way to go. However, if you need someone to help with the day-to-day running of your business and to look after clients or customers, you may need an employee.

When determining whether you need an employee or contractor you need to think about:

• The tasks you need the employee or contractor to do;
• Any skills and qualifications they’ll require;
• How busy the job will be;
• How long you think you’ll need them for; and
• If you intend on hiring an employee, you will also need to think about if you are going to hire them on a full-time, part time or casual basis.

2. The second consideration is ensuring that you comply with the Fair Work Employment Standards or other relevant legislation.

As an employer, you are legally obliged to pay your employee the right wage for their work. A great place to start understanding what your legal obligations are when you hire employees is the Fair Work Ombudsman website.

Generally, the employment standards require employers to:

• Issue employees with payslips;
• Ensure the minimum employment standards and minimum pay rates are adhered to as set out by the Fair Work Ombudsman;
• Provide full and part-time employees with paid annual leave based on their ordinary hours of work, which is generally four weeks for each 12 months of service; and
• Provide full and part-time employees with 10 days personal leave (sick and carers leave) each year.

3. The third consideration is complying with your other legal requirements, such as:

1. Registering for PAYG Withholding.

   As an employer you must:

   • Understand the residency status of your employees;
   • Work out the amount to withhold;
   • Report and pay tax withheld amounts to the Australian Taxation Office; and
   • Provide income statements to employees and lodge an annual Single Touch Payroll finalisation report with the Australian Taxation Office after the end of each income year.
2. You also have superannuation guarantee obligations.
   • Superannuation is a retirement savings program in Australia to help provide employees with a pension in retirement.
   • There is a minimum amount you must pay based on your employee’s ordinary times earnings and current superannuation guarantee rate.
   • The payments need to be made to the employee’s nominated superannuation fund within the legislated time period. The obligation to pay superannuation is very strict and if the rules are not followed, then significant penalties, such as 200% on the amounts originally owed, may be imposed.
3. Have you taken out workers compensation insurance?
   • Workers compensation insurance is a form of insurance paid to employees if they are injured at work. It is typically compulsory for employers and needs to be taken out in each state you employ people in.
4. You also need to consider other insurances.

• • Business insurance brokers can often help with this.

4. The fourth consideration is setting up your systems. Such as:

Have you setup Single Touch Payroll (STP)?

Under Single Touch Payroll, employers send payroll information to the ATO each time they process their payroll.

This ensures that the ATO has up-to-date information on employee salaries and wages, and helps to streamline the reporting process for employers. It is a mandatory obligation for any employer who hires staff for their business.

There are a number of STP-enabled software solutions available, including both desktop and cloud-based solutions.

Have You Setup Your SuperStream Payments?

SuperStream is a way for businesses to make employees superannuation guarantee payments electronically. This means that businesses will need to send employee contributions to their chosen fund using an ATO-approved electronic data and payment method.

The purpose of SuperStream is to streamline the process of making super payments, making it simpler and more efficient for both employers and employees.

There are a number of different ways to setup your SuperStream payments, including using SuperStream compliant payroll software.

Have you prepared an Employment agreement?

An employment agreement sets out an employee’s rights, as well as your expectations about their performance and duties. Having an employment agreement is important for your business because, amongst other things, it can help protect your intellectual property and confidential information.

Once you have these essentials in place, you can then start looking for an employee.

When looking for an employee, you could consider:

• advertising your job vacancy online;
• using a recruitment agency; or
• asking friends and colleagues if they know anyone who may be suitable.

Once you have found your new employee, it is vital for you to also:

1. confirm if the new employee has the right to work in Australia;
2. if so, you will need to provide them with a tax file number declaration form that allows you to appropriately withhold tax from their pay; and
3. a superannuation choice form that lets them choose their preferred super fund.

Employee hiring and management is seldom a one off event, but rather an ongoing relationship that requires constant communication, feedback, and support.

If you do it right, you can build a loyal and motivated team that will help you take your business to the next level.

If you’re needing assistance with business and employment matters, please let us know. We’re here to help.

In the realm of business, no year is perfect. We strive year after year to get better.

Importantly, what you want to understand and appreciate is that a structured, consistent approach is a great way to embed the continuous improvement cycle.

Monitoring your market-based Total Return to Owners, comparing your performance across years, setting and evaluating results against targets, and benchmarking against industry standards are not just measures; they’re milestones on the path to excellence.

We advocate for a strategic progression through the stages of business improvement. This isn’t merely about cost containment or waste reduction, though these are important. Our focus is on fostering ‘profitable’ growth – the kind that sustains and enhances your business’s value over time.

Dive into our webpages on Benchmarking and Profit Improvement to gain further insights into what you could be benefiting from.

When you are ready, schedule a free meeting and let’s see how we can tailor an approach for maximum benefit to you.