They say if you aren’t working on your own dreams, someone will recruit you to work on theirs, so if you’ve thought about starting your own business – congratulations, you’re on the right path to self-fulfillment. But, breaking through as a business can be a lot like a little plant pushing through a sidewalk crack. So, what are the 6 stepping stones of starting a successful sole proprietorship?
1. Get your financials in order
Sole proprietorships are the most popular way to set up a new business as an individual and that’s because the system is so simple. The only catch? You’re entirely responsible for all your business’ financials (and this includes debts). That’s why the right accounting software is so important. Acquiring the means to manage your financials allows you to look after all your concerns in the one place, as your very first priority.
2. Know your rights and responsibilities
A sole proprietor signs his or her name as the business itself. That’s because this kind of entity has has no separate identity under law. You are the business and the business is you. This means you’ll need full clarity on your income and expenses. If you have employees, matters on this account will, of course, have to be managed right down to the letter.
As a sole proprietor you are responsible for any losses or liabilities incurred by your business. You’ll need to look into your rights and obligations under Australian law. One necessary component is to register for an Australian Business Number (ABN) as a part of this process.
3. Get insurance
Insurance is a must for any sole proprietor. Yes, you need insurance – even if it’s just you, and you work from home. Did you know that your business equipment isn’t covered by your home insurance? If you have a business premises you need to cover any potential damages that could happen – whether by accident, fire or theft etc. If you have employees you are responsible for workers compensation should anything untoward befall them during their time at work.
Then there’s the whole matter of your online security. You might want to consider a cyber insurance policy to protect your digital assets. These days technology is the backbone of most businesses, so you can never be too careful.
4. Learn about taxation regulations
Long before it comes around to tax time, you’ll need to know how to manage this element as a sole proprietor. At the very least you need a Tax File Number (TFN), and you might want to consider registering for Pay As You Go Tax Withholding (PAYG) depending on the scope of your business. There are certain regulations that you’ll need to review and comply with (according to whether your particular situation is applicable).
5. Consider your intellectual property
Registering as a sole proprietor does not equal the protection of your intellectual property. If you want to become a become a business with a name that no one else can use, you’ll need to look into getting a trademark.
It allows you to distinguish your goods and services from those of your competition’s. Only a trademark – not a business name, nor a domain name – can grant legal rights over your branding.
While you don’t have to pay yourself superannuation as a sole proprietor, you certainly don’t want to leave yourself with nothing to live off when you become too old to continue working. You’re going to have to figure out just how much you might need in order to support yourself when you retire. You can make personal super contributions that allow you to manage the gap that comes with the nature of being a sole proprietor.
We’ve covered most of the practical stepping stones in becoming a sole proprietor. But, there’s one left that doesn’t come down to money or regulations. It’s to do with your head and your heart. It’s about keeping motivated. Once you have your business up and running, the secret to success is to never, ever give up. You need to stay the course to see your business dreams thriving as a full-fledged operation.
Once again, congratulations about taking the leap to become your own boss. If you take methodical steps and apply a firm mindset the sky really is the limit in reaching your potential as a self-made innovator. At this point, it will be about considering where to position your next business (perhaps in a chain or franchise?) Even the biggest tree in the forest was once a tiny sapling. Happy growing!
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