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Successful IT Consultant: Small Business Operator

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You need to consider yourself as a small business. This is how the government and the Australian Tax Office (ATO) view you.

To operate as a small business you must obtain an Australian Business Number (ABN). All small businesses are required by law to have one. You can apply for an ABN from the Australian Business Register (ABR) at http://www.abr.gov.au/ABR_BC/. It takes about 30 minutes to fill out the online form. You’ll need your Tax File Number as well as your personal and business details. Don’t delay, get one TODAY. It can take up to 3 weeks to receive your ABN. You don’t want to be without one when starting your first project. An ABN is free.

If you’re going to be earning more than $50,000 per year you’re required by Australian law to add 10% GST to all fees you charge. You must also fill out a Business Activity Statement (BAS), either quarterly or yearly. If you register for GST you can claim the GST you pay on materials and services you buy for your business. GST and BAS are very complicated and you need to find a good accountant to help you with all your business tax and financial business. Ask your friends or associates if they know a good one.

You must keep good financial and business records. This is essential for running a successful small business, and you don’t want the ATO asking you for information you don’t have. There’s no getting around it. Even if you can’t stand it, you have to do it and you have to do it well. Your accountant will require you to provide details of your income and expenses. The more structured you make that information the cheaper your accountant’s bill will be.

The second reason for keeping records is for your own information. In order to run your business you need to know how much money is owed to you or how much you owe, who hasn’t paid and how much money you really have in the bank. Reconcile your bank statements against your financial records to make sure there are no discrepancies. If you have no bookkeeping experience it is a good idea to take a course.

Always keep receipts for any business expenses. These can be claimed on your tax return. If you use a car keep a car logbook. This can be in actual book or on computer. Record in the logbook details of both private and business journeys. Your accountant can then decide whether to claim a percentage of expenses or a kilometre rate as a tax deduction. Record dates, times, to and from destinations, and odometer readings at the start and end of each journey.

Reasonable expenses include the purchase of computer equipment and software, stationery and books, electricity, gas and telephone (including Broadband) bills and insurance. If you work from home you can claim part of your home as office space, and even such things as cleaning products. If in doubt, keep the receipts. Ask your accountant what you can claim. A good one will make sure you claim everything you’re entitled to claim for.

To operate a successful business you need to have good cash flow. You need to make a profit, that’s obvious. Your income must exceed your expenses. But that’s not the only thing you have to worry about! You have to be paid! And some clients will take a long time to pay. It’s a fact of doing business. That’s why you need to have a few clients at any one time with projects at different stages of completion, so that it won’t be long before you receive payment from someone.

Have a variety of payment methods. People find credit cards payments easy, especially if they have no ready cash. Online payments can be good too, so consider doing it from your website. You can also use online payment systems such as PayPal.

There are many legal issues associated with operating a small business. Especially relevant to IT consultants is the contract. This needs to be done professionally and thoroughly, and should be fair to both parties. You should seek legal advice before preparing your first contract. You can find more information from the Legal Issues Guide for Small Business, at the Commonwealth Dept. of Employment Workplace Relations and Small Business at http://sblegal.industry.gov.au/.

Greg is a respected freelance writer whose
work is published on Get Somebody Now, the site for IT
contractors and consultants – http://www.getsomebodynow.com.au
Finding IT contractors online, FAST.

Successful IT Consultant: Small Business Operator
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About Greg Fitzgerald
Greg is a respected freelance writer whose work is published on Get Somebody Now, the site for IT contractors and consultants - http://www.getsomebodynow.com.au Finding IT contractors online, FAST. WebProNews Writer


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