Purchasing an established business or franchise, you have avoided the headaches of starting a business from scratch. You already have customers, revenue and by-passed some of the most difficult times in owning a successful business. However, avoiding common tax mistakes when purchasing a business, you can set yourself up for success.
Two of the biggest mistakes are incorrect tax structures and poor financial set up. We discuss these below.
Not only purchasing a business is a big decision, however structuring your business operations is equally a big decision. This will not only impact the level of tax you pay, but also provide asset protection, future cash flow, finance and loan approval and wealth & succession planning.
Having the correct tax structure set up from the beginning can save you thousands of dollars of unnecessary tax if you get it wrong.
The 2 most common tax structures owners utilise when operating a business are Company or Trust structures. However, there are a couple of additional structures such as a partnership or operating the business as a sole trader.
In getting the correct business structure right for your circumstances, we at Roy A. McDonald, sit down with you and in detail go through their circumstances. We analyse which structure best suits your current and future needs, giving peace of mind your structure is going to set you up for sustained success.
RUNNING YOUR BUSINESS
Now that you have decided what tax structure you are going to operate out of, your focus needs to turn to running your business and how you are going to keep track of your financial information. Your financial information is the story behind your business. To ensure your story has a happy ending, you need to consider these important questions when starting a business.
- What accounting package will you use?
- Who will perform the bookkeeping work?
- How often will they perform the work?
- What other programs or apps will you use and do these integrate into your accounting software?
- How often are you going to review your financial information?
- Have you prepared a forecast budget and cash flow?
- What strategies do you have in place to manage ATO commitments (GST, PAYG, Income tax).
For business owners, staying on top of your financial affairs will not only keep you out of trouble but provide business insights to successfully grow your business. Getting a good team around you to help with analysing the financial side of your business can pay huge dividends. They can pick up things in your business you have not seen or provide a sounding board for business decisions.
Phone us today and take advantage of our complimentary no-obligation meeting to establish if we can assist you and your business going forward.