Basic Biz Finance Advice

Author: Linda Kepitis
CPA JP
LKK Accounting Pty Ltd
CHERRYBROOK NSW
Tel (02) 9899-3670
Lkepitis@s054.aone.net.au

The failure rate in small business is very high - 1 in 3 small businesses will fail in their first year, and more than 50% will fail in the first five years.

The best advice that can be given to a person about to consider going into business is to "start small and grow big". However, the following are further tips for success:

Advice

Advice should be sought BEFORE STARTING THE BUSINESS, to ensure that the appropriate business structure is set in place. Tax legislation is very complex and there are advantages to choosing certain business structures.

Management

The owner will have prepared a business plan and will have completed some training in how to manage a business.

Research

The market for your product or service should be researched to ensure that it is in demand in the market place.

Cash

Flow All income and expenses should be recorded, and expected cash flow should be predicted for the coming year. GST liabilities should, in particular, be set aside.

When choosing an accountant, you should only choose one who is a member of a professional accounting body, such as CPA Australia (Tel 1300 73 73 73) or the Institute of Chartered Accountants (02 9290 1344). They should also be a Registered Tax Agent. You might prefer to deal with someone who is local to you, because it will be easy to meet with him/her, or you may have someone who is recommended to you. Your prospective accountant's qualifications should be noted on their business card. The Yellow Pages is another good source of locating an accountant.

The Goods and Services Tax (GST) regime has demanded that good record keeping is followed. This will keep the Tax Office happy, however, it will also assist you as a means of checking on how your business is growing. The type of records kept will be determined by whether you are computer literate. Your accountant will find it easier to understand and follow your records if they are presented in a neat and chronological manner. You should always perform a bank reconciliation, as this will ensure that you have recorded every transaction.

Business owners should seek support from the beginning and not wait until the business is in trouble. There are many government agencies out there that give free advice. Your accountant should be kept up-to-date with what is happening in your business. They are only a phone call away. Many great

Author: Linda Kepitis CPA JP

LKK Accounting Pty Ltd

CHERRYBROOK NSW

Tel (02) 9899-3670

Lkepitis@s054.aone.net.au

'Copyright 2003 Youth 2 Youth'

Disclaimer: This article is for your information, but it may not apply to or be suitable for your situation, so seek professional advice. Youth 2 Youth cannot be held liable for anything resulting from how you use the information provided in this article.