Companies come in all shapes and sizes, and might not always be what your perception of them might be.
So what is a company then? Just for the record here is the official definition for the most common small company set up here in the Land Down Under:
A private company is a company that is registered as, or converts to, a proprietary company under the Corporations Act 2001 (C’th). Directors of proprietary companies have legal duties and responsibilities under the Corporations Act.
Under the Corporations Act, a proprietary company must:
- be limited by shares or be an unlimited company with a share capital;
- have no more than 50 non-employee shareholders;
- not do anything that would require disclosure to investors under Chapter 6D of the Act; and
- have at least 1 director.
The terms “company limited by shares” and “unlimited company” are defined in the Corporations Act – Section 9. Unlike public companies, proprietary companies cannot sell shares to the public.
Most small businesses registered as companies in Australia are proprietary companies limited by shares. Private companies are regulated by the Australian Securities and Investments Commission (ASIC).
Small Proprietary Companies
In summary, a small proprietary company is one where 2 out of the following 3 criteria are met:
- consolidated revenue for the financial year is less than $25 million;
- value of consolidated gross assets at the end of the financial year is less than $12.5 million;
- the company has less than 50 employees.
You may be looking for advice on setting up your own company, successfully running it, expanding it or closing it down. My passion is giving the best guidance possible in running a successful company. I have had over 25 years of providing operative and strategic advice to small and medium sized companies.
How to run a successful company
Owning a company is like raising and nurturing a family. You have created the company now you need to give it plenty of hard work and TLC to help it grow and evolve over it time of existence.
In my experience whether it’s been working with the major corporate or the smaller one man band style companies there does seem to be some common key ingredients.
The passion and love for what your company does. The ability to evolve and change strategies to improve your business. Mix with other successful business owners, sharing ideas and keeping your mind clear, sharp and focused.
Stay on top of your taxes and legal obligations. If you are getting bogged down in Company tax, Super, GST, PAYG, FBT, Payroll tax etc don’t. This is a specialised field so pay the professionals to do this for you. This is one business head ache you don’t need to take on.
Make sure you know your break even point, ie what income you need to produce to cover your costs, surprisingly not all small companies know this figure, it’s critical.
Do what you do best. Make sure your key skill sets are being utilitised whenever possible.
A really important point.
You don’t have all the answers and skills to run the entire operation successfully, outsource or employ the skill set you require. Don’t get bogged in time wasting and frustrating activities that take your eye off the ball and your key skills.
Whilst it’s not everyone’s cup of tea have relevant procedures and structures in place to ensure your product/service is delivered with the level and skill and aim to beat expectation.
Too many times I have seen businesses fail to deliver there product due to poor management and not the product itself. Don’t take your business processes for granted, they have to stay up to date to remain in competitive advantage.
In a nutshell to really run a successful company you will require these qualities.
Passion, honesty, hard work, tough decisions, self improvement and most importantly a trusting working relationship with your staff, customers, suppliers and the community at large where ever your company interacts with the community. Staying on top and making sure you have access to accurate financial performance results.
Financial performance tracking relevant to your business
Many smaller sized companies have financial tracking and reporting systems in place.
One of the problems I have encountered with the performance reporting is that the information is not accurate, timely or even relevant.
I believe that if you own and run a company it is absolutely critical to have key performance indicators that are relevant to your company.
There is not only legal requirement for providing the correct information for tax reporting but without relevant accurate information you really want understand where your business is at.
The minimum reporting should be monthly reviews of the company’s performance. Most companies will use profit and loss reporting which is a great start. Sales margin reporting, stock levels, aged debtor and creditor reporting should be all part of monthly performance reviews. These reports are generally historical in nature.
Then taking reporting to the next level will be a more forward strategic format.
Performance forecasting, tracking key performance indictors relevant to your business, growth and expansion decisions should be become part of your regular reporting functions.
I swim in this stuff, I have created and implemented many varied strategic tracking reporting systems. If you are serious about running a successful company, you need to be forward focussed and have access to reporting that helps manage and maintain strategic competitive advantage.
There is some great off the shelf style reporting packages available. Myob has been a major player with Xero accounting software really gaining a strong market presence. Most of my clients have converted to using Xero including myself. As your tax agent I can play a more active role in your business, by accessing Xero online. It’s almost like having your own virtual CFO when I operate with you in this capacity.
For the more strategic and complex reporting I would recommend meeting up face to face. I can to gain a thorough understanding of how your business operates and what can be implemented to improve this.
Note I work actively with my larger corporate clients on contractual basis. I can take these highly invested (expensive) strategies and implement them into your business. It’s a real passion of mine to help give my clients strategic advantage in the market place especially when they are a relatively new business.
For more information on what I can offer flip over to the Virtual CFO Revolution page
It’s worth touching base and contacting me for a free discussion on possible solutions for your business if you are looking to improve, grow and expand, after all that’ why you are in business isn’t it.
A standard company tax return will start from $660 (Inc GT). I can provide your business with a quote before proceeding.
This is just a rough guide, companies can range vastly in size and the time required for complete tax return lodgement.