Questions that we regularly hear as Accountants and Virtual CFO
1. I am new to business. Can you help me?
Of course, the answer is yes.
First, we’ll need to meet (via Zoom or Teams?) so you can help us understand your business concept, what motivates you and the goals you’d like to achieve. This is vital so the correct business structure can be set up from the start. We’ll also need to establish a suitable method of accounting for all the money that goes through your business. Don’t worry, there are low-cost software packages available for this and they make it very easy.
Unfortunately, tax is something you’ll also need to consider. So we’ll discuss this in relation to your total circumstances to ensure the correct minimisation strategies are in place. In addition, we’ll need to get all the required Australian Tax Office (ATO) registrations in place.
You’ll also need a financial reporting system. Once in place, this will streamline your business and enable you to stay on top of the Australian Tax Office (ATO) requirements.
Yes, there’s a bit to do. It may not seem appealing to you… but we love getting new enterprises off the ground and making money!!
2. What structure should my business have?
Excellent question! It requires more space than we have here to answer but there are 3 main structures to consider…
- Sole Trader
Each comes with its own set of benefits and restrictions so it’s important we are clear on your overall circumstances before making a decision. There are also varying tax implications for each, levels of liability, insurance requirements and the ability to attract finance should the need arise. Let’s talk about where you are and where you’d like to be in the future.
3. What is the difference between a CFO and a CPA?
Okay, now we’re getting into it!
A virtual CFO is an outsourced Chief Financial Officer. Large firms have highly paid staff members with in-depth expertise pertaining to that business entity. Of course, smaller firms cannot afford to fund such a position yet would still benefit from the expertise. That’s when they contract someone to guide them. The virtual CFO may also take the form of an Advisory Board so multiple levels of expertise are available. Whichever form the virtual CFO takes, they tend to be strategic in nature and take a long-term view.
A CPA is a Certified Practicing Accountant and is more focused on tax minimisation strategies. Their expertise is of a more day-to-day nature and they’re involved in the preparation of various financial reports, performing audits and organising and updating records.
4. What is the difference between cash flow and profit/loss?
Cash flow is all the money going through your business on both the income and expense sides of the ledger. Every penny needs to be accounted for so you are in total control of your business.
Profit is the money left over after expenses are subtracted from sales. So this means a business can be profitable yet have insufficient cash flow. Alternatively, there can be sufficient cash flow yet the business may be making a loss. Give me a call if you need more help here.
As Certified Practicing Accountants, Cashflow and Profit/Loss projections are our bread and butter..
5. At what stage should I establish a trust?
Trusts are designed to protect your assets and those of your beneficiaries. Consequently, you need to have sufficiently valuable assets before establishing a trust is prudent. So let’s discuss this so we can work out if and when a trust will work to your advantage.