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Australia has different business opportunities that can be explored to generate maximum income. There are different kinds of business structures available in Australia and they include; sole trader, partnership, trust and company. Before you choose the one that is most suitable you need to consider the following factors; the kind of business that you wish to establish, the expected income, the taxation structure and the effect of the business income on the other incomes that you have, the liabilities that you are prepared to handle, the asset value of the business, if you will wish to sell the business at a later stage and how much you will gain from it, in case it is a partnership the rights and responsibilities of the partners and the name of the business (Trotman, 2005 pp. 17-18).
After you have considered all the options and decided on the kind of business to invest in, you need to take into account any potential cost that you are likely to incur which may include fittings and government cost. You also need to know the financial needs of the business especially during the early days when you will need to use your savings or borrow elsewhere. Make a good research to establish the cost of financing the business. Get to know the general working capital of the business which includes; insurance costs and other utilities (Trotman, 2005, pp. 15-16). You need to have alternative ways of supporting yourself before the business gains momentum. You also need to draw a budget plan for your supplies and the marketing plan. Get to know the legal requirements of the business you are venturing in and consult with the local authorities to establish if the business activity is allowed in that locality. Look for trusted business people in the region who are dealing in a similar line that you wish to venture in for advice. Find out if there are any grants from the government on the establishment of the business you are starting. Research on any technical inventions and know the impacts they are likely to have on your business.
With this information at hand a name for the business can easily be suggested. The name can only be registered when it satisfies the following conditions; it should not be in use by another business, must not be offensive to the public decency and should not be confused with an already established business. The names that have already been registered are highlighted in the Australian website, and you will need to check through them before you choose yours. For one to be able to make the best decision on the kind of business structure, he or she needs to know the details of the business structures available in Australia (Trotman, 2005, pp. 19-20).
Sole trader
The simplest structure is that of a sole trader; here the owner of the business is the manager and the boss of his business. He or she will be responsible for the entire progress of the business, bear all the risks and enjoy all the profits. The tax file number is used to identify the tax return of the trader. To be able to carry out business transactions in Australia, a sole trader will need to apply for an ABN. He is also responsible to pay any tax demanded on his business. An Australian will be liable to the tax free threshold where his first $6000 is not taxed. At the end of each year a sole trader will have to pay in installments PAYG. For an enterprise business, a GST which is available on the ABN forms needs to be applied by the trader (Birt, 2008, pp. 26-28). Money that has been removed from the business for his personal use, the trader cannot claim a deduction in regards to wages. Incase the sole trader is a contractor or a consultant, the deductions in this case will be treated differently. Incase the trader hires workers for his business; he has to pay superannuation (Horngren, 2007, pp. 49).
Partnership
In this kind of business set up, two or more people join forces to establish a business where they will all be responsible for the management of the business. They require a tax file number for their tax returns which is available on the ABN form. Just like in a sole trader, partners will need an ABN number that they will use in their business dealings. When it comes to paying tax, a partnership is not considered as a separate legal entity. Partners pay as individuals on their share of the net income. The final share of the partners proceeds is usually displayed on the tax return. Unlike a sole trader, partners are not required to pay PAYG installments, but as individuals they need to pay it according to their share of income. Just like a sole trader, they cannot claim a deduction for any money they withdraw from the business for personal use. If they are dealing in an enterprise business they need a GST that is available on an ABN form. Personal service deductions are treated in a different way. Since partners are not regarded as employees of the partnership, they are responsible for their own superannuation arrangements. Partners can only claim for deductions on their contribution son the individual basis and pay a superannuation fee for their employees. (Birt, 2008, pp. 29-30).
Trust
This is an obligation that is placed on an individual to hold property or income for the beneficiaries. For the purpose of claiming annual income and tax return, a trust will need a tax file number for identification. The trustee is also required to apply for a tax number in its position as a trusts trustee which is found on the ABN form. In Australia all trustees must apply for an ABN (Trotman, 2005, pp. 19-20).
Its tax liability depends on the kind of business it is engaging in and the method through which the beneficiaries receive their income the adult resident beneficiaries will pay their own tax if the income is distributed to them. In cases where part of the income is distributed to minors or non residents, then the trustee will be assessed accordingly on behalf of the beneficiary. It is the beneficiarys responsibility to inform the tax authority that their tax liability is upon their trustees. At times the net income may be accumulated by the trust and hence the assessment will be done on the highest accumulated amount (Horngren, 2007, pp. 47-48).
Apart from the amount distributed to the beneficiaries, a trusts tax return also shows the incomes and deductions that have been claimed by the trust during the year. The tax return shows the details of the amount of income that is distributed to each beneficiary. A trust is not required to pay PAYG installments; this responsibility is left to the beneficiaries or the trustee (Horngren, 2007). It is also required to register for GST if its turnover is over $75,000 for a profit organization and $150,000 for a non profit one. The income and deductions accrued on personal service income will be treated differently. Trusts are required to pay a 9%superanuation guarantee on the eligible employees that they engage which will also include the trustees that they employ. (Horngren, 2007, pp. 45-46).
Once you have identified the structure that is most suitable, carry out more research on the identified line. Do a personal assessment of yourself to determine if you have the skills, the personality and good health as per the business. Avoid going into business for fun or in search of quick money. Venturing into business may be a risk that you have to be prepared for. Make sure you acquire the necessary license and permits for your business. This will put you on the safer side during your business operations. They will assure you that you are engaging in the correct business at a correct location and guarantee you protection from any kind of invasion (Birt, 2008). Have a good plan of your business and employ qualified individuals that will ensure a good return on your investments. Make proper entries of each and every transaction that can be assessed on a regular basis to determine the progress of the business. (Birt, 2008, pp. 31-35).
A business can not run without adequate funds. When choosing a means for funding your business, consider the terms and conditions applied and make a wise decision. Be careful when borrowing and mostly rely on your investments. When selecting a business location, it should be a place reachable by the customers. Be aware of the competition in the area and the transport system to ensure a timely and regular supply of the commodities. Do not take chances when applying for a lease, seek the advice of a professional and ensure that the lease will guarantee you long term operations of your business. There are several by-laws that are applicable to different kinds of business, make sure you check with the Australian tax office or your accountant to know which ones will be applicable to your business (Horngren, 2007, pp. 43-44). There are different types of policies that a business may require, insure your business, life and other risks that you may predict. Insurance compensation for workers is compulsory for all employees in Australia. If you are dealing with employees, make sure you give them a correct explanation of their job description which should be in written to avoid any inconveniences. Ensure that you have the required books to record the daily transactions of your business. Find out the kind of books that are applicable to you business, whether invoices, wages book, quotations, receipts, petty cash or the rest. (Trotman, 2005, pp. 23-24).
In conclusion, business is about communication and when you have a good and reliable communication network, you are likely to progress at a much faster rate. Ensure that your business is equipped with modern communication facilities that will boost your business activities. Know how to talk with your customers and engage sales promotion techniques where necessary.
References
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Birt J. (2008): Accounting: Business reporting for decision making: Wiley pp26-35
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Horngren C. (2007): Accounting: Pearson Education pp43-49
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Trotman K. (2005): Financial Accounting an integrated Approach: South Melbourne pp15-24
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