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    It’s Official: Setting up your Australian Consultancy Practice Properly
    It’s Official: Setting up your Australian Consultancy Practice Properly
    It’s Official: Setting up your Australian Consultancy Practice Properly
    Ebook88 pages43 minutes

    It’s Official: Setting up your Australian Consultancy Practice Properly

    By Cindy Tonkin

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    About this ebook

    It can be overwhelming to start a new consultancy business. This book outlines all you need to know to set up your practice in the Australian context.
    When you start your business you need to:
    - decide what sort of entity you will set up to make the money
    - let the officials know you’re in business (especially the Australian Tax Office)
    - insure yourself against major risks
    - find professionals who can give advice
    - let clients know you’re in business
    - have somewhere to put your money (and borrow money if necessary).
    You’ll find tips on all of these things outlined in this book!

    Each method is described step-by-step, with Cindy Tonkin’s classic stories from the real world of consulting.
    The Australian Consultant’s Guide was published in 1999 and sold more than 7000 copies. In 2014 the book was separated into a number of shorter e-books, so that you can buy just the parts you need.
    There is no hard copy of this book, although you can try borrowing the original hard copy from your local library (good luck! we only just had the internet then!).

    LanguageEnglish
    PublisherCindy Tonkin
    Release dateOct 18, 2015
    ISBN9781311442628
    It’s Official: Setting up your Australian Consultancy Practice Properly
    Author

    Cindy Tonkin

    Cindy Tonkin is the consultants’ consultant – specialising in working with people whose consultative skills differentiate their product and service. Managers, sales people and consultants. A qualified NLP-trained trainer she combines an extroverted, energetic presentation style with a strong understanding of what makes people tick. The results are fun, dynamic ways to make your sales force, your management team or your cultural change program work.Her solid background in consulting and training means she can design a change program with whatever change elements you need – coaching, training, workshops, action learning projects, whatever suits your organisation’s culture and outcomes!With more than 20 years experience in reengineering and productivity improvement, she has the project management skills to deliver your requirements on time, on budget and in the way you need them to work long term with your organisational culture and market. As a comedic improviser, Cindy can link anything to anything, and surprises often result.Her first book, The Australian Consultant’s Guide, was an Australian Institute of Management bestseller. She has written more than a dozen other books for consultants and managers since then

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      Book preview

      It’s Official - Cindy Tonkin

      Introduction: Getting official

      If you enjoy solving crime problems, like to be paid, and would love clients to easily be able to find you, then this is the book for you.

      It’s all about one of the important, but less engaging aspects of your new consultancy: the official stuff.

      When you start your business you need to:

      • decide what sort of entity you will set up

      • let the officials know you’re in business (especially the Australian Tax Office)

      • insure yourself against major risks

      • find professionals who can give advice

      • let clients know you’re in business

      • have somewhere to put your money (and borrow money if necessary).

      That’s what this book is about.

      Of course, since I am not a lawyer or an accountant (thank goodness), and because the rules change, you will need to check the current requirements with an accountant or a lawyer (or both). At the end of this book you will find a list of questions to ask.

      My aim is to simplify what you need to do, and keep it in one place. Follow along, and we will go through it together. You will find a summary at the end of each section and a series of checklists and helpful questions at the end of the book.

      Creating the entity that makes money

      Firstly you need an entity to make money.

      This is important because what you choose will influence how much tax you pay, when you pay it and how much liability your client has outside of your fee. Clients may insist on you having a certain types of entity.

      There are three major options for business entities. The three options you can choose are:

      • incorporating (creating a proprietary limited company)

      • going into partnership

      • employing yourself (working as a sole trader).

      By putting together a business entity, no matter which one you choose, you are establishing that you are not your client’s employee. This is important because in an employee relationship, the employers (or clients) are liable to:

      • provide Workers Compensation to cover you in the event of a workplace injury

      • take pay-as-you-go tax from the money they pay you and pay it to the Australian Tax Office (ATO)

      • pay payroll tax for you if they have a big enough payroll and it applies in your state.

      The laws on what constitutes an independent contractor or an employee in Australia are constantly changing, and are driven by the Australian Tax Office, Workers’ Compensation law and by unfair dismissal legislation. They revolve around the degree of control the client has in determining how, when and where you work. There are over thirty different tests to determine that relationship. Some indications of being an independent contractor include whether you:

      • have more than one client in a year or more than one person working for your business

      • charge for work by the piece or outcome rather than for time

      • have a contract with the client which allows you to sub-contract the work if you choose.

      All of these things must be true whether you choose to operate as a company, a partnership or a sole trader. The tax office has a lot more information and a checklist/questionnaire to determine when someone is a contractor or an employee.

      Your accountant and lawyer can update you on any changes to these rules. You can find out quite a bit by visiting the tax office site by reading about personal services income (PSI).

      So which business entity best suits you? Here are the details of the three options.

      Incorporating (operating as a Pty Ltd)

      The first option to set up your business is to create a proprietary limited company. Of the three options for setting up a business entity this one looks more ‘professional’ and serious.

      The pros and cons of operating as a proprietary limited company (Pty Ltd)

      The major advantages of operating as a Pty Ltd are:

      • it sends the message that you are serious about being in business (to clients, to banks and to other companies)

      • it offers clients protection from liability for Workers Compensation and Superannuation

      • it provides tax advantages because the company rate is lower than the top personal rate of tax (assuming you plan to earn more than $80,000 per year)

      • the company can take out Workers Compensation to protect you in the event of an injury at work – sole traders and partnerships can only protect their employees, not themselves

      • you can be protected, in theory, from being personally sued for the company liabilities – there are, however, exceptions to this so don’t rely on it!

      • other consultants can more easily use you as a subcontractor. My accountant has advised me, for example, to limit my liability by only using Pty Ltd subcontractors

      • if you

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