Are you in business and have decided to run your business through a Company?
This sounds like a great idea, but are you aware of your obligations as the director of a company?
As one example, did you know you can’t spend the earnings of the business without drawing it as a wage? Along with this, when you draw a wage, you are also liable for associated costs. To start with, there is PAYG payable which will need to be reported on your BAS either quarterly or monthly depending on your obligations.
You are also liable to pay yourself superannuation. This needs to be paid on time or there are penalties and interest that are payable on top of the initial super requirement.
Directors liabilities extend further into the business as they are obligated to ensure that the business is able to pay its debts, as and when they fall due. Do you know how to do this? Or are you just taking a guess and hoping for the best?
Do you know what steps to take to ensure you are running a profitable business?
Knowing and understanding your numbers is key.
Having a set of quarterly accounts prepared or even having your books completed at BAS time should give you an idea of how the business is travelling.
Preparing budgets based on expected outcomes can also help you work out how your travelling in comparison to any expected expenses. This can be the simple solution to solving big cash flow problems before they arise, meeting your obligations and ultimately increasing business profits.
