How your accountant and lawyer can work together to help your startup

By Vivian Michael | Startup

How your accountant and lawyer can work together to help your startup

Photo credit:  Raw Pixel, Unsplash 

Did you know that your accountant and lawyer can work together to help your startup? Below are some handy tips about how both can help. 

Your business structure

An accountant or a lawyer can help you set up the start-ups business structure.

Below are the 4 business structure as you can choose from in Australia.

  • Sole trader;
  • Partnership;
  • Trust; and
  • Company.

Now, it's a good idea to have your structure set up before you start entering into business contracts.

In particular, this is the case for the company structure.

Why?

Because when you enter into a contract as a company, you have the benefit of limited liability.

This means, your liability is limited to the value of your company assets. And, it means that you can keep your personal assets separate to company assets.

Getting through the first 6 months

Both a lawyer and accountant can help you to prioritise your setup work in your first 3 to 6 months when it's most intense. Here’s an idea of the sort of work you may need to complete: 

  • Registrations and business licences
  • Purchasing business supplies
  • Entering into vendor and supplier contracts
  • Internal agreements like founders agreements & shareholder agreements
  • Hiring staff, issuing employment contracts, payslips and record keeping
  • Registering for GST and PAYG
  • Lodging business activity statements
  • Setting up and maintaining a book-keeping system
  • Entering into supplier contracts
  • Leasing a premises and business supplies and
  • Keeping company records

Your  contracts 

If your accountant has set up your business structure and it involves a trust, or you’re just unsure, you should ask your accountant which structure to use before you enter a contract.

Using the right structure is important for tax planning.  For example, it may make more sense to use one particular company over another. 

Shares 

Choosing the right shareholder is important for tax planning purposes. So, while a lawyer may draft your shareholder agreement, you should be getting an accountant’s advice about who a shareholder should be.

Also, shareholder agreements usually have financial covenants that about the state of the company’s finances, and an accountant should check these.

Below are some examples of financial covenants.

  • the books and Accounts of the Company truly and fairly reflect the Company’s transactions, finances, assets and liabilities;
  • the Company has lodged or filed all tax and duty returns for all taxes including goods and services tax, income tax, sales tax, fringe benefits tax, payroll tax, group tax and WorkCover levies where applicable and has paid all amounts owing as they fall due and has paid all employees superannuation entitlements to the appropriate trustee where applicable.
  • no claim has or will be made against the Company for payment by the Company pursuant to the provision of the Income Tax Assessment Act 1936 of any tax;
  • the Company has met all deadlines for repayment of its debts; and
  • no petitions, notices or proceedings have come to the Company’s notice, which could result in it being wound up. No orders or resolutions have been made or passed to place the Company in liquidation or provisional liquidation.

Preparing and keeping company records

Now, when you first set up your company, you are going to need some company records that either an accountant or lawyer can prepare for you. Below are examples of these records.

  1. Officeholder register - a list of the directors and secretaries
  2. Director consents
  3. Share applications
  4. Share certificates
  5. Register of shareholders (aka members).

You can download the above templates on our resources page.

Recap 

Make the most of  your accountant and lawyer’s time by getting their help with your: 

  • Business structure 
  • Prioritising your administrative setup tasks
  • Contracts; and
  • Keeping company records.

Do you have any questions about setting up your business?





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About the Author

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to make quality business legal services accessible to Australian businesses that would otherwise DIY, rely on legacy contracts or go without.

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