New Business Owner? Remember That You're Not a Tax Expert
Every year, many people decide that they are going to strike out on their own and become self-employed. Sometimes, this is a big change and will only come after decades of employment where they answered to another individual and did not have to take crucial decisions related to the business as a whole. If you're in this position now, then you may be looking forward to a new life ahead, but you should make sure that you don't fall into the trap that many people in your situation encounter. How can you guarantee that you carve out a future of freedom and not simply create an even more challenging job instead?
Focus on Your Expertise
When you set up in business by yourself, you will invariably take advantage of a specific skill or talent in order to provide a solution for the marketplace. You need to ensure that you focus on the delivery of that product or service very carefully and always outsource any other business tasks that are not necessarily your area of expertise. Take accounting and taxation, for example. This can be a huge burden for a new entrepreneur or small business owner, especially when you bear in mind how many different taxes you have to account for.
Tax Implications
For example, you may have to become an unofficial tax collector as you account for GST, or goods and service tax. Certainly, you won't need to worry about this until your sales pass a certain threshold, but you will need to get used to adding GST to invoices at that point and sending a net amount of money to the government.
You also need to fill in a business activity statement each quarter, and if you get to a certain size, then this may be a monthly endeavour. This will enable the government to keep track of your activities and make sure that you are accounting for tax in the right way as you go.
As you add staff to your business, you will have to account for taxes and recover these amounts from each pay cheque to include on your business activity statement. This is a very heavily regulated part of the tax code and you must ensure that everything is done adequately here or else you could risk a significant fine.
Common Sense
Don't underestimate how much work is involved in accounting for tax and paying your dues to the government. There are thousands of different rules involved, and you cannot be expected to know the answer to each, so this is why you need a bookkeeper and tax accountant on your side at all times. Remember, if you try and take all of these tasks on yourself and get involved in other areas of the business that are not your area of expertise, you'll quickly find that your new job is even more punitive than your old!
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