Introduction: Business Start Up
In this article I will be discussing the way to start a new business. For this case study I have chosen to follow the steps to starting an accounting practice. After working for an accounting practice for over 6 years I have decided to start my own small business and document the way to starting a new business. The steps may not align exactly to the new business that you may be interested in starting. However, it can provide an insight into some of the steps that are required to start a new business.
Qualifications: Starting a new business
One of the first steps to starting your own business is ensuring that you have the right qualifications for starting a new business. Your skills or product needs to be in demand to ensure that you have a market that you can provider a service or sell a product to the right target audience. In accounting, this would be gaining a degree in Accounting and even getting a Graduate Diploma of Chartered Accounting. After completing my degree with a university I set out to gain the rights skill for the job completing further study as I worked full time. By achieving a Chartered Accounting qualification it enabled me to gain industry experience and knowledge that is needed when starting a new accounting practice. This may not apply to every business however gaining experience on the job can be a great foundation to getting the right skill to specialise in a certain industry when starting a new business.
Licence: Applying for your Licence
Gaining any licences in your profession can enable you to practice in that field offering the service. In accounting I had to register with the Tax Practitioners Board to enable me to start lodging tax returns with the Australian Taxation Office. This requirement is used to verify experience and knowledge in the area that I practice in. Without it I cannot operate the business and therefore is a requirement as part of setting up a new business. There are other licences that could apply such as being admitted to the Bar for permission to practice Law in Australia. Registering can take a while as they are required to review you application and verify your experience with other industry professionals or supervisors based on your experience.
Software: Choosing the Right Practice Management Software
There are a many different options available on the market to enhance the productivity of your business. Choosing the right software to enhance and scale your business can ensure that you are staying on top of the tasks that need to be completed. A management software can enable you to track and delegate client tasks to collaborate with team members and ensure tasks are completed on time. Time reporting, billing, third party software integration can all help to streamline business processes and procedures.
One of the more popular softwares on the market is Xero Practice Manager (XPM). This software enables the practice to track the monthly tasks and workflow. At over $160 a month this is not the cheapest offering however can provide a customised approach to managing your practice workflow. The software is also free once Silver and above status is obtained. To progress from bronze to silver status you must earn points that are allocated based on new subscribers and number of subscriptions registered in your practice.
A cheaper alternative that is still offered by Xero is Xero Tax. This is a tax solutions for small business accounting practises wanting to functionality to lodge tax returns with the ATO. You can use Xero Tax for all clients, submitting schedules electronically. Information can be shared from the client Xero file and Xero tax to ensure that the data is accurate and up to date when transferred to the tax return.
Legal: Documents for a new business
Setting up a new business you need to be aware of different legal obligations for the business. Firstly, an employment agreement would need to be in place for any new staff members that you employ in your business. A website disclaimer would also be required. Access to legal documents and online legal services can be obtained through many different providers. Some examples include Legal Vision and Lawpath who can provider annual subscriptions or consultations for services.
Streamlined services such as Xero sign can enable clients to electronically sign documents with an e-signature. This could replaced the need to manually sign in person and reduce the amount of paperwork required when completing a job. Drop Box could be used to store documents and client receipts that relate to the preparation of the tax return. This would ensure the documents are secured and can be easily accessible by both the clients and accounting practice.
Costs: Start Up Costs
When creating a new business one of the biggest considerations is the start up costs required to get the business up and running. In order for an accounting practice to lodge Standard Business Reports (SBR) they require the software that can lodge tax returns and activity statements with the Australian Taxation Office. These software subscriptions and other platforms all come at a start up cost to the business and need to be considered in a budget. This can include a review of the following costs:
- Licence
- Registrations (Tax Agent Registration, BAS Agent)
- Software (Xero, Myob, Quickbooks)
Xero Tax: Accounting Practice Software
Xero Tax can assist with the preparation and lodgement of clients tax returns and activity statements. Lodging returns online and exchange data with the ATO can streamline the business processes when completing jobs. Some of these products/services also offer discounts and promotions if your practice can bring on clients. For instance, if you are a Xero Partner there is no charge for Xero Bronze status and above. Alternatively new partners pay $71.50 a month for the service as a single user. Xero Workpapers also come with the offer making it easier to keep all the supporting documents in the one program. Knowing different offers in your industry can assist to keep costs lower and secure the right produce or service for your needs. If you don’t require advanced functionality you can wait until the business starts to grow. This can assist with cashflow of the business which is important when starting out.
The Partner Benefits Program can allow accountants using Xero Practice Manager software partner subscription discounts. There are different level in the Xero Partner Program including Bronze, Silver, Gold, Platinum and Group Platinum. Partner status can offer a free Xero file to run the accounting practice software. Bronze partner status level is achieved by maintaining 25 – 74 points. This offers additional ways to grow your practice over time.
Pricing Structure for Services
Developing a pricing structure for services can enable clients to better understand the services you offer and the price paid for the services. In accounting fixed fee pricing structure is favoured over charge per hour basis as it can provider better value for clients leading to more ongoing work.
Summary: Starting a new business
Starting a new business can be challenging however you can develop new skills and knowledge over time. The benefits of getting to manage your own client base whilst growing a practice can have long term rewards. Although it may seem challenging to begin with getting professional advice can assist with getting setup and started. The information provided in this article is general in nature and not financial advice. Please consult with a qualified professional to meet your unique circumstances.
