Here are 5 factors to consider when deciding if you should set up your business as a sole trader or company.

Risk

I use the example of sole trader paramedic who runs medical tents at school boy rugby union carnivals.  What would happen if someone was seriously injured at one of these events (which has happened at similar events) and the paramedics insurance company denied full cover?

As a sole trader, the paramedic could lose their house if the parents sued them.

If:

• the business was set up as a company, there is a layer (like a brick fence) between the paramedic and the family which could help save the paramedic’s house.
• you or your partner have assets, or you are in a high risk business, you need to seriously think about operating as a company (and the cost of having a company as insurance).
• you have no assets or the risk is very low, then operating as sole trader may be the option for you.

What your Clients Want

I have seen it from time to time, that the client wants to do business with a company rather than a sole trader.  If this is the case for your clients, then you have no choice but to set up as a company.

Also for some businesses, they may see a company as much bigger than just a sole trader.

Your future funding plans

You need to understand what your future funding plans are.

If you want to look for investors for example, rarely will they invest in a sole trader.  So you must have a company

Also, sole traders are not eligible for some grant programs.  The Research and Development Tax incentive in one such example.  So if you are thinking of accessing grant programs, you may be forced to be a company.

Your Staffing plans

A sole trader can employ staff, but you can become personally liable for a whole range of issues around such.  What if they get injured in the workplace?  What if they sue for unfair dismissal?  Having staff increases risks to you and you may want to be a company to reduce this risk

Taxation

In many cases there are tax advantages from being a company as compared to a sole trader.

Not only may you be legally able to split income but also in many cases, business can deduct more expenses than a sole trader can.

Summary

In my view there is no right or wrong answer here.  Circumstances may dictate that you need to operate as a company.  Other times it will be your choice and there is nothing wrong if you start out as a sole trader and switch to a company later (for example when you are about to employ your first staff member)

If you want more information on setting up a company ASIC has some great information.  Click here to learn more

If you want help to improve your your businesses chances thriving and surviving in these uncertain times contact me below.

Contact Wayne Wanders for your FREE Discovery Session to learn how your business can scale and grow profitably

To ensure Wayne helps your business specifically, the best approach Wayne has found is to have an obligation free Discovery Session with you.  In this session we will review your current business in a factual and objective manner, to better understand the challenges that you face.

At the end of this Discovery Session, you will have multiple ideas on how your business can scale and grow profitably.

Simply fill in the contact form below or email Wayne at wayne@aRealCFO.com.au or call Wayne on 0412 227 052 to organise one of these obligation free Discovery Sessions.

To get Wayne to help your business, simply use the contact form on the left to email Wayne or call him on 0412 227 052.

The 2023 Startup Muster measures and publishes the progress, challenges and opportunities within the Australian startup ecosystem.  It was based on a survey of over 1,100 people in the ecosystem including 585 founders.

Some of the things I found interesting include:

• Founders seem to have less enjoyment with their startup – possibly indicating the current economic conditions.
• The top 2 events in founding a startup are identifying a compelling opportunity and solving a problem they were experiencing.
• The biggest missing skill set in a startup remain marketing, sales and business development.
• The Research and Development Tax Incentive is the 3^rd highest funding source after the founders own money and family and friends.
• 54% of startups surveyed have not received any grant funding and 62% are not planning to apply for grants. Which seems to go against the big pot of money potentially on offer under the National Reconstruction Fund.
• Startups on average have less than 10 months of runway, which is surprising as it often takes more than 10 months to close a founding round. When you add to this that 34% of startups have no financial forecasting, I sense an impending cash crunch in the startup sector.
• Average age of founders in the survey is now 46 with the number of founders aged under 40 decreasing in the last 5 years. But conversely 24% of incubators and accelerators are run by universities.

To read the full 2023 report click here

Contact Wayne Wanders for your FREE Business Survival Session

Today is Micro, Small and Medium Enterprises Day (MSME Day),  acknowledging the important contribution of small and family businesses in Australia.

Small and family business owners play a vital role to our society and local communities.  In terms of our economy, we can thank our Australian small businesses for:

• employing over 5 million people, that’s 42% of the private sector workforce, making small business Australia’s biggest employer.
• contributing over $438 billion to Gross Domestic Product (GDP), equivalent to over 33% of Australia’s total economy.
• employing the largest number of apprentices and trainees in Australia. Small businesses hired almost 288,000 apprentices and trainees, which represents 63% of Australia’s apprentices and trainees.

And the best way to support your small business today is by continuing to support them with your business.

If you want a confidential discussion on your business situation, contact me below

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au

When people set up a business with a partner, I often see one key thing that they did not do.  And that was having a business prenup, (often called a shareholder’s agreement) between the partners.

Often, a business prenup is considered a bit like a marriage prenup, with reactions such as why are we planning for failure.  On this basis, business partners often do not get a business prenup.

But here is a great example of why you should have a business prenup that has nothing to do with failure.

There were two partners selling Christmas trees on the northern beaches of Sydney.  Both were actively involved in the business.  One partner, moved their family to Queensland and could no longer be actively involved.

Now the partners had a problem. 

What would happen if the partner moving to QLD wanted to sell their share to someone the other original partner did not want to work with?

What about if the original partner wanted to buy the moving partner out, did the moving partner have to accept this and if so, what was the value?

There was no rules or guidelines in place, and this could end up in an ugly divorce, even though neither party planned it that way.

And there are lots of different other life choices that could impact your business partnership.  One partner gets married.  Has kids.  Moves away to support a sick relative.

And these are a great example why you should have a business prenup covering what happens should one partner wish to / have to leave.

The other issue that comes up from time to time is if there is difference between the partners about how the business is run.  The business prenup can set out how disputes are resolved.

If you want help to improve your your businesses chances thriving and surviving in these uncertain times contact me below.

Contact Wayne Wanders for your FREE Business Survival Session

One of the questions I often get asked by people who, as a sole trader, have just set up a new ABN for their new business or side hustle, is, what is the best way to track your business expenses?

And I have a really simple and cheap solution.

Just open up a new bank account (and possibly new credit card) in your name, trading as your business name.  Deposit all the income from your new business into this account.  Make sure you pay all your business expenses from a debit card on this account, or the new credit card (not your personal credit card).

That way you can use your bank statements to track your business expenses (and your business income).   This way in October 2022 when you are preparing your tax return, you don’t have to remember what you spent on the business over a year ago in August 2021.

Then once your business is more established, and there is more money flowing, you can start to look at other options such as Rounded, QuikBooks, Xero or Myob.

So, a simple and cheap way to track your business expenses (and your business income) when you set up your sole trader or side hustle ABN is to just open a new bank account.

And this separate bank account helps you provide evidence for grants such as the NSW Govt’s Micro Business Grant.

A Bonus tip for newbies to the business world!

Once you start making money, you will want to transfer some money to your personal account to cover your living expenses.

But make sure you leave behind a percentage to cover the tax you will need to pay and some money for your super.  Depending on how much income you will earn, this could range from 20% to 30%.

This way once the tax bill arrives, and yes it will arrive one day, you actually have the cash to pay this.

Want some free Business Advice?

If your business is in NSW, you may be able to access free and subsidised business advice to help you start, run, adapt or grow your business under the NSW Government’s Business Connect program.

And as an accredited advisor under this program, I can help your start-up or business with:

• Business Performance Analysis
• Cashflow forecasting
• Tactical and strategic business planning
• Product and service profitability
• Understanding what grants may be available for you.

Simply click here to book a session with me.

Please note the team at Realise Business (a not for profit business) will need some information to confirm you are eligible for this free service, prior to confirming your booking.

Contact Wayne Wanders for your FREE Business Survival Session

To ensure I help your business specifically, the best approach I have found is to have an obligation free session with you.  In this session we will review your current business in a factual and objective manner, to better understand the challenges that you face.  And this session does not need to be face to face.

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

To get help you successfully navigate your way through your financial challenges so your business can survive and thrive in these uncertain times, simply use the contact form on the left to email Wayne or call him on 0412 227 052.

Let Wayne Wanders, a fully qualified and experienced CFO, help you successfully navigate your way through your financial challenges so your business can survive and thrive in these uncertain times.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au

Thinking of starting a new business but don’t know what to do, the free Exploring Being My Own Boss Workshops may help you by giving you an understanding of self-employment and entrepreneurship.

The free Exploring Being My Own Boss Workshops are over 2 weeks covering 10 key areas that may help on your journey to starting your business and self-employment.

To participate in a workshop, you’ll need to:

• Be available to participate in the full two-week workshop program
• Not be employed for more than fifteen hours each week
• Not be undertaking full-time education or training
• Have the right to work in Australia.

To learn more click here

If you want some help, contact me below.

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au

New Business Assistance with the New Enterprise Incentive Scheme (NEIS) provides personalised support to help eligible people become a self-employed business owner.

The assistance is in the form of small business training, 12 months of mentoring and if eligible, the NEIS Allowance for up to 39 weeks and NEIS Rental Assistance for up to 26 weeks.

The key eligibility for you to apply for the New Business Assistance is that you are at least 18 and have the right to work in Australia (other than a working holiday / student visa).  You must also be available to work in the new business.

To be eligible for the New Business Assistance, your business idea:

• is either not currently operating on a commercial basis or is an existing micro-business owner/sole trader seeking to refocus their business in response to COVID-19.
• Is assessed as commercially viable.
• will be established, located and operated solely within Australia

Note the NEIS Allowance and NEIS Rental Assistance are dependent upon you being on eligible support payments.

To learn more about New Business Assistance click here

If you want some help, contact me below.

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au