Westcourt

Tax Tips for Entrepreneurial Start-Ups 

Tax Tips for Start-Ups

If you are starting a business, you are in for an exciting time.  The opportunity to create a business start-up and scale it up is incredibly exciting.  And unless your start-up business is giving tax advice – you are likely a bit green when it comes to expert tax advice and business accounting. 

We have a few tax tips for Perth start-ups that we commonly give to new start-up businesses. 

  •  Use cloud accounting technology

The impact of business cloud accounting technology has revolutionised bookkeeping and accounting.  Getting a handle on evolving accounting technology and using the artificial intelligence in cloud accounting technology can automate and eliminate the mundane low value bookkeeping work that can tire down the creativity and entrepreneurial flare of the Perth start-up community. 

Like any artificial intelligence, cloud accounting technology can become a mess if not set up properly with the correct framework.  So, engaging with accounting experts are Perth to configure your Xero or Quickbooks accounting file will save significant rework and bookkeeping mistakes later on. 

Further, most cloud accounting programs allow you to store supplier invoices online with your payments.  This feature, at its most basic level, can be the backbone of making your business a paperless (or paper-light) business.  

  •  Separate your business and personal finances 

As a start-up your cashflow and working capital is tight.  And with such tight cashflow you can find that your personal expenditure is impacted.   

Resist the temptation to see the business cash as your personal cash to pay bills.  Pay yourself a regular set wage (or dividend or profit allocation) and pay your personal bills from your personal bank account. 

Creating a discipline to separate your business finances from your personal finances will create tension in the business to pay its costs (including your cost) to stress the business to perform.  It will also reduce the administrative work associated with multiple transactions of a personal nature. 

  •  Know the accounting needs of your tax structure 

Each type of tax structure you control has different accounting needs.  If you, with your accounting partner, has chosen to operate through a company you have different regulatory requirements including The Australian Securities and Investments Commission.  Alternatively if you are operating through a discretionary trust or unit trust your accounting reporting obligations are governed by your trust deed.  A business partnership will be impacted by the partnership agreement or under the West Australian law governing partnerships (The Partnership Act 1895) so your cloud accounting program, and the chart of accounts, should consider how that applies to you. 

Getting written business accounting advice from your accountant which initially recommended the structure is important for start-up businesses.  If your reporting requirements are missed then you can spend limited resources on rework. 

  •  Know your tax cashflow 

The myriad of taxes that applies to businesses is significant.  The impact of Goods and Services Tax, Pay As You Go Withholding Tax, Payroll Tax, Income Tax and other reporting requirements like BAS and Single Touch Payroll can be overwhelming for a business founder who has never come across the accounting needs for a business. 

Getting accounting advice on the rhythm and seasonality of tax payments so you can include these amounts in your cashflow will help you forecast and control your future business cashflow.  This could be coupled with programs like Calxa or Futrli to give deep insight into your forward cashflow needs. 

  •  Manage your investors 

If you are engaging with investors into your start-up you need to manage them properly.  The investors might be other family members like your parents or they can be a third party investor that sees the future of your business venture. 

If you are raising capital from investors into your start-up you need to check that you are not breaching ASIC rules for raising capital.  And if you do have investors, even sophisticated investors, get clear documentation on how you will engage with them, report to them, and you both understand the investors rights and genuine interest in your business. 

Outside investors can enjoy significant tax concessions if you are an Early Stage Innovation Company and getting clarity on the impacts of these concessions is important to setting good relations with your investors.  And if your investors are also employees understanding the fringe benefits tax impact of lending money to your employees, or issuing shares to your employees, is critical to avoiding a nasty tax surprise afterwards.  

Getting advice from your accountant on your capital raising obligations and ongoing reporting obligations is important to help future capital raisings. 

  •  Understand government incentives 

The government has a range of tax incentives to encourage people start and create a business.  This can include the R&D Tax Incentive, Export Market Development Grant, Temporary Full Expensing, Early Stage Innovation Company tax concessions and small business restructure tax concessions. 

Engaging with your accountant to understand how the government tax concessions and government grants and tax incentives can give your business desperate working capital in the early stages that will make a genuine difference to your business. 

  •  Beware of superannuation obligations 

The penalty for missing your employee superannuation obligations can be 200% of the missed superannuation payment.  And that can apply even if you are a day late in the payment.   

Importantly superannuation can apply to contractors and subcontractor.  So understanding the tax impact of engaging contractors can also be of value to business founders across Perth.  

Getting tax advice on your HR and payroll, or outsourcing your payroll, on your superannuation obligations is a wise move to avoid the dreaded Superannuation Guarantee Charge. 

At Westcourt we understand what it is like to create a business.  We did it ourselves.  Getting tax and business advice from a start-up and successful Western Australian business accounting firm is a natural choice.  Our single focus on families in business, coupled with our global reach gives us a natural edge when choosing an accounting firm to follow you on your journey to create your business from a start-up to an ongoing legacy.

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