If you’re a business owner, I’m sure you’ve already learned that the to-do list never ends! Now, unfortunately I’m going to add a few things to your list, but I promise you’ll thank me later. Here are four things you need to be considering in the early stages of business.
1. Do you need liability insurance?
There are two types of liability insurance: public liability and professional indemnity. Public liability insurance helps protect you and your business against the financial risk of being found liable for negligence. Professional indemnity insurance can help professionals cover the cost of litigation for something like a breach of contract, or a mistake providing a service. A business insurance broker can give you the ins and outs.
2. Do you need a loan?
A lot of people quit their jobs to start a business and then decide they want to refinance their home to access equity. Well, after you’ve quit your job you’re unlikely to have any luck refinancing! Unfortunately personal loans are off the table too as they are not intended for business use. Most banks like to see a minimum of two years of trading as well as some sort of collateral before they will lend to a business. So what are the options? There are private and peer-to-peer lending options, but they generally require a business plan and several months of bank statements to show consistent cash flow.
3. Do you need to register for GST?
In general, you are not required to register for GST until you earn a certain amount, but it can sometimes be beneficial to register anyway. You get the benefit of 10% GST back, and it can make you more attractive to clients, but be sure to weigh this up against the cost of more time and effort spent doing the “books”.
4. Will you still contribute to super?
When you run your own business, your retirement is completely in your hands. So think carefully about how you’ll manage your superannuation when you’re self-employed. Some people continue to contribute to their fund as they always have, some start their own funds and some rely on the value of their business to fund their retirement. Make sure you actively decide which option is best for you.
As always, a financial adviser or accountant can help you get everything set up correctly, so schedule some time to speak to someone you trust.
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The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.
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