First off, congratulations for getting your business off the ground. You’re one in a million. Actually, you’re one in 2,100,162 or so businesses operating in Australia right now, according to the latest figures from the Australian Bureau of Statistics. Right now is a great time to grow your business, as more and more potential partners (or competitors) are growing theirs alongside yours. Take a breath and step back for a moment to look how far you’ve come already. Then take a look ahead toward some plateaus that may be in your very near future.
Here are four critical turning points in the growth of any small business, along with suggestions on how you can prepare for them. Just like your customers, these stages could show up at once and swamp your decision-making process, so now’s the perfect time to put the right gears into motion.
Stage One: Budgeting for Growth
After the relatively intense period of the business launch, you will start settling into a routine. There are still fires to put out and business basics you need to find funding for, but this stage requires you to work toward a larger goal. The business needs to grow and operate more profitably. Cash flow analysis and financing options should be at the top of your agenda.
Stage Two: Hiring Your 20th Employee
This is the big one. Your 20th hire changes your tax status from a small business to a “medium to larger employer” in the assessment of the ATO. That also means you are required by law to start meeting the SuperStream requirements, which involve the superannuation system for your employees. Due to the complexity of these issues, tax professionals are the best ones to guide you on what you need to do at this stage.
Stage Three: Arranging Safeguards to Avoid the ATO Audit
Experts in the finance field say that the ATO audits are becoming more aggressive. Do whatever you can to avoid this because an in-depth audit can hobble your business at a time when you need access to all of your resources. It can take an emotional toll in addition to being a drain on our money and time. Get your records in order now and secure back up with accounting professionals to make sure you could handle it if the ATO turns its eye on you.
Stage Four: Searching for Asset Protection Strategies
If everything goes to plan, you should have more money coming in than you comfortably spend. How are you going to protect it? You have to choose carefully what kinds of financial entities will best serve your current needs and unpredictable changes in the future. Each entity comes with its own set of financial management and accounting requirements. Growing your wealth, protecting it and minimising your tax strategies must be planned far in advance. Get started now with understanding what to do with the profits you have and those to come.
You’ve probably already noticed that each one of these stages is correlated in some way to establishing a solid tax position for your business. To get to this point, you’ve done good job so far with the operational side. As your business grows, you’ll need to offload more of the financial and tax responsibilities to professionals in these fields. There’s no better time to prepare for that day than right now.
These are the thoughts and opinions expressed by Kris Prasad