Chapter 5 Flashcards
Registering a business name
Must be registered if it is anything other than the owners full name (e.g john smith is acceptable but j.smith is not) this avoids similar or the same name for multiple businesses
Three federal taxes a business may pay
Income tax - a percentage of profit goes to the government
Group tax - employees wages and salaries are taxed
Goods and services tax - imposed on consumers, tax of 10 % of the supply of most goods and services
Two state taxes a business would pay
Stamp duty - placed on documents that provide evidence of transactions
Land tax - annually imposed on owner of land
Worksafe victoria
An organisation that aims to decrease the number of work related injuries and support injured workers. They enforce the occupation health and safety laws and provide insurance (work cover)
Work cover insurance
Paid for by employers and it covers
Replacement of lost income
Legal costs
Medical and rehab costs
Lump sum compensation for serious injuries
Issues covered by the fair trading act
Warranties and guarantees
Unfair contracts
False advertising
Separate entity principal
States we should always record transactions of business and owners separately
- calculating is easier
- monitoring financial performance is easier
Bank overdraft facility
Allows for withdrawal of cash over the amount in the account, vital for when a business is experiencing a temporary low cash flow
Financial control systems
Allows businesses to accurately monitor, manage and report financial performance
Auditing : internal and external
Auditing is the process of testing and evaluating a businesses accounting processes and internal controls
Internal - members of the business evaluate
External - someone outside the business evaluates
Strategies for maintaining record keeping
Use bookkeeping software
Establish a good filing system
Do not mix business records with personal finances
Seek assistance when needed
Record keeping
Must keep records of transactions for tax purposes for at least 5 years
5 considerations for a business choosing suppliers
1- price 2- quality 3- reliability 4- proximity 5- corporate social responsibility
Maintaining a positive relationship with suppliers
1 - settle debts on time
2- allow adequate lead time for orders
3- maintain regular communication and contact
Policy development
Identify the issue Research and analyse Consult Create a draft policy Revise and modify policy Approve the policy Monitor and evaluate
