At Baker Tilly Staples Rodway we hear all these reasons, but the top three reasons most clients go into business are to have more time, money and control. You cannot achieve all these overnight, but they will happen if you plan, set goals and listen to your advisors, from accountants to lawyers to mentors. 

There are some key items to consider before setting off. 

Research 

This can range from talking to others in business, to deciding if there is a need for your idea in your province or online. You will also need to decide what resources and equipment you need and how much these will cost. It may worth discussing your idea with a cross-section of people to verify the need, and also consider whether it would be better to buy a business, start a new one or buy into a franchise. They all have advantages and disadvantages, including the differing costs. 

A good starting point is to set a business plan and develop a SWOT analysis to identify your strengths, weaknesses, opportunities and threats. 

How will I pay for everything? 

As they say, cash is king. There are a lot of start-up costs when setting up a new business. You will go from receiving a regular wage to no or limited income for a few months. Sometimes with all the start-up costs, there may only be enough funds to pay the bills and staff, with you working for free. You may not have any funds until you have charged your clients and then you’ll hope that they pay the 20^th of the month following. It is important to have savings that allow you to keep paying your home mortgage and living costs while you get into a cash flow cycle. 

Preparing an initial budget and then continually reforecasting can improve your planning. 

What structure do I use 

Different businesses require a different set up. You may be able to trade as a sole trader or it might be better to set up a company, partnership or trust. They all have pros and cons and the best one for you depends on your future plans or long-term goals. You need to decide whether it is better to set the right structure now, for future-proofing purposes, or make changes along the way. Again, it depends on what your business is. 

Recording transactions 

It is important to have the correct accounting software and make sure you get the correct advice before you set it up. Think about what other software you may need including Point of Sale (POS), job costing, stock and payroll systems, and how they all integrate together. 

Tax

Depending on your set up and staffing requirements, there are a number of taxes and tax-related activities to consider, from obtaining an IRD number and GST and employer registration to deciding whether you need to pay fringe benefit tax. 

You need to weigh up whether you should pay a wage to yourself from the business or take drawings and pay provisional tax instead. Also, if you make a profit in your first year, you have to pay tax on that plus provisional tax in your second year. You should regularly check your trading results in the first year and put money into in a savings account for the required taxes, therefore the funds are available when they fall due. Knowing your key dates for tax obligations is essential. 

Other items 

Other items for consideration can include, thinking about how to keep your financial records (for the seven years required by Inland Revenue), getting the correct insurance cover, keeping a vehicle logbook to record business use, and thinking about what ACC cover you need and how you will be charged for this. 

Inland Revenue has a Smart Business guide (IR320), which is an easy read and a good place to begin before you discuss your plans further with a trusted accounting advisor.