Start­ing a New Busi­ness: Key Con­sid­er­a­tions for Success

Starting a business is an exciting venture, but there are key factors to consider to ensure long-term success. Whether you’re launching a solo enterprise or planning to build a larger operation, taking the right steps early can set you up for sustainable growth.

Laying the Foundation

Before diving in, ask yourself:

  • Are you confident in your expertise and have the necessary accreditations?
  • Have you thought about how you’ll generate your first dollar and grow that into a stable income?
  • Have you considered the upfront costs, including insurance, rent, staff, licenses, and choosing the right business structure?

Choosing the Right Business Structure

Your business structure affects everything from legal responsibilities to tax obligations. There are four main areas to consider:

  1. Cost – Sole trader structures are the most affordable, while trusts and companies typically involve higher setup costs.
  2. Legal Protection – Consider asset protection and the “corporate veil” that different structures provide.
  3. Governance – Understand requirements from regulatory bodies like ASIC, Trust Deeds, and the ATO.
  4. Taxation – Different corporate structures (sole trader, partnership, company, or trust) have varying tax implications.

Timing is also important—it can take one to two weeks to formally establish a trust or company and set up a business bank account.

Can You Change Your Business Structure Later?

There’s no single “right” or “wrong” business structure. As your business, financial situation, or life stage changes, you may need to adjust your structure. However, keep in mind that restructuring comes with added costs, including legal fees (for setup, agreements, and minutes) and potential tax implications (such as rollovers or capital gains tax).

Managing Start-Up and Running Costs

Efficient financial management is key to a successful business launch. Here’s what you need to consider:

  • Set up a dedicated business bank account, regardless of your structure.
  • Use cloud-based bookkeeping software and link your bank accounts, credit cards, and loans for seamless financial tracking.
  • Keep records of any business-related expenses you paid personally before setting up your structure, so your accountant can properly account for them.
  • Any funds you contribute to the business or expenses covered personally will be tracked as a loan account. Once your business generates revenue, you can repay yourself when cash flow allows.

Planning for Taxes

Tax obligations depend on your business structure and registration status. Consider:

  • Setting aside funds based on expected tax liabilities.
  • Understanding additional tax requirements if you are registered for GST, have employees, or trade internationally.
  • Maintaining strong cash flow habits to cover taxes and operational expenses. Avoid overspending without forecasting income and upcoming expenses.

When Can You Start Paying Yourself?

Earning income from your business is exciting, but ensuring financial stability should be your priority. Before paying yourself:

  • Establish healthy cash flow habits and monitor trends in revenue and expenses.
  • Maintain a comfortable reserve for unexpected slowdowns.
  • Adopt a sustainable approach—consider waiting a few months to assess business performance before setting a regular salary.
  • Start by repaying any loans from yourself to the business, as this repayment is tax-free.

Once you’re ready, speak with your accountant to determine the best payment method. Options include:

  • A formal salary (PAYG wages)
  • Distributions or dividends (for companies and trusts)
  • Loans from the business to yourself (with tax and reporting implications)

Each approach has different tax and compliance requirements, so it’s important to choose the right one based on your business structure and financial goals.

Final Thoughts

Starting a business requires careful planning, from choosing the right structure to managing cash flow and taxes. With thoughtful preparation and a clear financial strategy, you’ll set yourself up for long-term success. Importantly, get to know your accountant – they will be able to guide you through this process in great detail and ensure your business is structured for efficiency, growth, and sustainability.