Basic checklist for your new business

The basic checklist that you can work from

The following notes summarise the initial “Quick To do” list of various areas for your business:

  1. Arrange Tax Number:
    The tax number you already use as an individual is the no IRD will also use to identify your contracting activities as a self-employed sole trader. If you find that you need to incorporate a limited liability company or trust for your business to operate under, a new tax number will be organised for the selected entity at that time.
  2. Register for GST (if you are required to register)
    Registration for GST is required by you if your gross turnover (sales) for the following 12 months will be over $60,000. You can register yourself or you can ask your accountants to do it for you under their Tax Agency. They will receive full notification of registration from the IRD system within 5 working days. You can register for GST on the “Payments or Cash basis” or the “invoice or accrual basis”. You’ll file a GST return either every 1, 2 or 6 mths (you can select which option suits your business best) Your GST number must be displayed on all your tax invoices.

  3. Set up with an Accounting system or software
    Set up of your business system on a reliable easy to use accounting software package so it’s ready to accept your transactions for financial, tax and GST reporting. Instruction on how to use these types of simple tools are simple to follow once you’ve settled into your new direction of self-employment and after things have settled down for you. Change usually mean initial stress so wait awhile until you have settled and can relax.

  4. ACC (Accident Compensation Commission).
    You will already be registered for ACC when you register for your business’s tax number with IRD (IRD links up directly with the ACC system). This NZ ACC scheme covers you for all accidents both business and personal (non- business) including claims for cause of accidents.

  5. Business name.
    Settle on a name for your business. You can continue to run under you own individual name (and IRD number) if you are running as a sole trader. The name of your business can be changed if you move to a company or trust structure at a later date.
  6. Insurance:
    Arrange insurance for your business. Make sure you are covered for all plant & equipment, machinery, fixtures & fittings, office machines (computers, monitors, laptops) printer, fax, vehicle etc. that you’ll be using in your operation.

  7. Contracts.
    If you need someone to run an eye over any agreements or contracts you have to sign, contact a good accountant or lawyer who will be able to do that for you. If you feel a lawyer needs to be involved your accountant will discuss that with you. There’s usually no need to need to see a lawyer unless necessary if you wish to keep your costs down.

 

Remember to organise and set in place the following things early

  1. Bank Account – Trading.
    Open a new bank account for your business under its business name. If you are a sole trader your new business bank account can simply be an additional sub account to the personal account you may already have but noted “Trading as …………..”. Each bank has its own way of arranging these.Your bank will not require any documentation if your business is a sole trader. If it is a company they would want to see the company’s Certificate of Incorporation and if a Trust, the Trust Deed papers. If a company or trust then you would need to set up totally new bank accounts in the entity’s legal name.They can’t be a sub account of your personal bank account as the company is a separate legal person in the eyes of the law from you as an individual and the Trust also is a separate entity controlled by trustees.If you want to use cheques for business payments then the account will need to be a cheque account. Today most payments are made online via internet banking as well as Eftpos cards, credit cards and debit cards.
  2. Bank Account – Tax & GST.
    It is a good idea for you to set up a special account for depositing funds into for GST and Tax (funded as you receive your fees in each month) If so, open another account for this purpose called “GST and Tax Provision Account”.This recommendation is very, very important.Many business owners who fail to set up a separate provision account for GST and Tax invariably struggle to find the funds for GST and tax when IRD requires payment. They miss the due dates because of this and are hit with heavy penalties and interest by Inland Revenue. One client we knew costs himself more in penalties and interest than the actual GST/Tax he owed – around $45,000 + in total penalties & interest for the taxpayer’s previous 3 years, so it can hurt.

    It’s been many people’s suspicion that IRD are happy for taxpayers to be late with paying GST and tax because the extra funds the Govt receives from non-compliant firms run into the multi millions. It’s a huge cash cow for Government. True or not that’s the view that quite a few taxpayers hold to.

  3. Business Credit Cards.
    It’s up to you whether you want to set up separate cards for your business. There is no need for them however as you can pay business costs with your own card. Business related costs thru your personal cards are tallied and brought into your business accounting software so it’s not missed.
  4. Other things.
    Domain name, emails, letterhead, business cards – all these tasks need to be attended to early so things like your printed stationery is available for use the day you open for business.
  5. Assets list.
    List all assets you own that will be used in your business. These include car, computers, laptop, tablet, printer, mobile ph, desk, office furniture, office equip. Put their details into a spreadsheet and note their estimated market values or their original cost price plus date of purchase. These details will be needed when it’s time to complete your depreciation schedules for calculation of deprecation cost which you can claim against your business income as an “expenses” when working out your taxable profit that will attract tax.
  6. Invoices – You will need a template for your invoicing if you don’t already have something printed to use. The invoice should be headed “TAX INVOICE” in bold. In accordance with tax regulations the tax invoice must have your GST number displayed and show the amount of GST when calculating the total invoice amount. The document should also contain all the other standard invoices information as well.


Step by step start-up summary for you to follow


The following is a basic checklist of the steps or process involved in starting up a business from scratch. Most points apply to all types of businesses. This checklist sets out the general matters that would concern any new entrepreneur. Be aware that there may always be other points not listed here that are specific matters applying to your own type of business alone.

  1. First thoughts
  • Think everything through first.
  • Are you really serious about starting up a business and are you clear on what it could entail?
  • Have you talked with a professional adviser, such as an accountant, lawyer or other business coach?
  • You will need to set out clearly whether running a business will suit your character.
  • You will need to analyse your strengths, weaknesses and assess the ways your weaknesses can be improved.
  • You need to look at your financial situation and assess the financial risks.
  • You will have to work out the cost of your proposed business venture and check on all the resources you have available and others you may be able to call on if necessary.
  1. Investigate:
  • Decide on the type of business you will be operating.
  • Look at the potential location you will need.
  • Finalise your startup costs and the level at which your business will break even.
  • Who are your customers? Do some research on your target market and find out a little about your competition.
  • Be clear on the market. Are you really sure there is a market for your product or service and do you have knowledge and information on other comparable products in the marketplace.
  • Do some outside research on the industry. How are other businesses like yours doing? Are they profitable or are they struggling?
  • Be fully aware of all the regulations and requirements under law. This could involve not only what is needed when setting up your business, but also your obligations, e.g. to the IRD if you employ people to work for you.
  • There are many other areas needing investigation and these can be discussed with your financial adviser.
  1. Talk to advisers:
  • Do not finalise anything until you have discussed everything with a good accountant who has experience in business matters, especially with the setting up of new businesses.
  • You will need to speak to a lawyer to get information of your legal obligations.
  • You will need to discuss the tax implication with a good accountant.
  • You will have to talk to an insurance adviser to get advice on insurance requirements of your business.
  • You will need to set up an account with a good bank in your location.
  • You will need to talk to all your advisers and listen to what they have to say or recommend before you start.
  1. Develop a business plan:
  • You will need to develop a business plan for your business and may need the assistance of your accountant or financial adviser.
  • Your financial plan will outline what your business is looking at doing, the goals of your business and how those goals will be achieved. It will attach a financial plan, a marketing plan, a personal plan and if necessary, a production plan. Some financial projections will also be attached because these will be important if you are looking at funding through a bank or other financial institution.
  • Develop a strategic plan. This type of plan will cover the objectives of the business operation, as well as identify opportunities and potential threats. (Do a SWOT analysis.)
  1. Check your initial requirements:
  • Finalise a business name and if you are looking at forming a company to run your business under, then organise a reservation for that company name.
  • Finalise the type of business structure you are going to run under (either sole proprietor, partnership, trust or company).
  • Form or register that business structure so it will be ready to use as soon as you open your doors. If you are going to run your business under a company, then you will need to incorporate that company and if you are going to run under a partnership, then a legal agreement should be drawn up.
  • Find out if you require any permits or licences to operate the business and meet all requirements of the law, as well as your local council.
  • Find a suitable location for your business and attend to all the requirements of your business within those premises. If necessary, a lease agreement will need to be drawn up between yourself and the landlord if you are leasing the premises.
  • You need to open up a bank account and arrange for cheque facilities and other banking requirements.
  • If you are looking at financing your business, put together all necessary proposals and documentation for your bank or financial institution as soon as possible. If you are unable to get finance, this can cause major problems at the beginning, so don’t go too far down the track until you have finalised your business funding.
  • Once you start, you will need to advise the IRD for allocation of an IRD number for the business. If you are going to employ staff then also register as an employer.
  • Have your lawyer look over all documentation involving legal obligations and obtain your accountant’s advice on all your accounting requirements.
  1. Set up your business:
  • Arrange for telephones, computer lines, and electricity for the premises.
  • If your premises need to be fitted out for your requirements, this needs to be done.
  • Purchase all the furniture and equipment you need.
  • Purchase and install computer systems and hardware.
  • Attend to your stationery requirements, including letterheads, business cards, envelops and with compliment slips, etc.
  • If you are carrying out promotion and advertising, then a brochure and other leaflets will be needed.
  • Arrange accounts with the potential suppliers of products your business needs.
  • If employing staff, organise through an employment agency or attend to this yourself.
  • Put in place agreements with any potential contractors who will work with your business.
  • Finalise your accounting and other administration systems so that your records will be accurate and up to date.
  • Finalise any insurance policies for the business, such as standard cover for contents and equipment, as well as insurance for public and professional liability etc.
  1. Do the final checks and last requirements:
  • Purchase all the necessary material or stock you need.
  • Purchase all the necessary office stationery and other office equipment.
  • Finalise sign writing and discuss the required promotion with your advertising consultants.
  • Finalise the costing and pricing of your product or service.
  • Join up with the local business group so they will be aware that you are opening for business. This networking is important.
  • Go through your checklist and make sure that every area has been completed and that nothing further needs to be done before commencing operations.
  1. Start your business:
  • You are now ready to commence business and open your doors for trading.
  • You are happy with the final checklist and everything has been completed.
  • Commence the launch of your business, which will include the advertising and promotion plan in place.
  • Make sure all the staff are in place and that you have managers to assist you in the control and management of your business. If it’s a small operation you are managing yourself, you will need to carry out all duties normally covered by an outside manager.
  • You are now ready to start – best of luck!

 

2017-08-28T03:43:32+00:00