BuSINESS U2AOS1 SAC

Why do businesses have legal requirements?

To promote fair business practices and protect workers, consumers and businesses.

What can happen if a business breaks the law?

• Lose customers

• Lose reputation

• Be fined

• Lose the right to trade

What does ASIC stand for?

Australian Securities and Investments Commission.

What does ASIC do?

Registers business names and companies.

When must a business register its business name?

When trading under a name other than the owner's personal name.

Why register a business name?

To stop others from registering the same or nearly identical business name.

What is needed before registering a business name?

An Australian Business Number (ABN).

What is an ABN?

Australian Business Number.

What is an ACN?

Australian Company Number issued by ASIC.

What must public and private companies include in their name?

Ltd or Pty Ltd

Give three examples of unacceptable business names.

Names that:

• Suggest government links

• Suggest Royal patronage

• Are offensive

What is a trade mark?

A type of intellectual property that protects a brand, logo, words or images.

Who registers trade marks?

IP Australia.

What is the difference between a business name and a trade mark?

Business name:

• Allows you to trade under a name.

Trade mark:

• Gives exclusive legal rights to use that name or logo.

Can you have a trade mark without registering the business name?

No. You still need to register the business name with ASIC.

What is a domain name?

The address of a website on the internet.

Why is a good domain name important?

It should be:

• Easy to remember

• Easy to spell

• Unique

• Represent the business

What is taxation?

The way the government raises money to pay for public services.

What does ATO stand for?

Australian Taxation Office.

What does the ATO do?

Collects and administers taxes.

What is a TFN?

Tax File Number

Who needs a business TFN?

Partnerships and companies.

What TFN do sole traders use?

Their personal TFN.

What is PAYG withholding?

Tax taken directly from an employee's wages.

Who pays PAYG?

The employee.

What does GST stand for?

Goods and Services Tax.

How much is GST?

10%.

Who pays GST?

Consumers.

When must a business register for GST?

When annual turnover is $75,000 or more.

Name four GST-free foods.

• Fruit and vegetables

• Bread (plain)

• Meat

• Milk

(Also acceptable: eggs, flour, tea, coffee, bottled water.)

What is Fringe Benefits Tax (FBT)?

Tax on benefits given to employees instead of wages.

Who pays FBT?

The employer.

What is stamp duty?

Tax on legal documents such as property purchases.

What is land tax?

An annual tax on land owners.

What company tax rate do large businesses pay?

30%.

What company tax rate do businesses with turnover under $50 million pay?

25%.

Formula for company tax?

(Tax rate ÷ 100) × Earnings

What is a progressive tax rate?

A tax rate that increases as a person's income increases.

What does BAS stand for?

Business Activity Statement.

Who must complete a BAS?

Businesses registered for GST.

What does BAS report?

• GST

• PAYG

• Tax obligations

Why must businesses comply with local government laws?

To legally operate on land or premises and avoid closure.

What are the two major state taxes that apply to a business.

Stamp Duty and Land Tax

What are the three major federal taxes that apply to a business.

PAYG, GST, FBT

Name six things local councils regulate.

• Land zoning

• Development approvals

• Fire regulations

• Parking

• Health regulations

• Business signage

What is land zoning?

Rules about what land can legally be used for.

Why are fire regulations important?

To keep employees and customers safe.

Why do councils regulate business signs?

To control their size, location and appearance.

What must food businesses do?

• Register with council

• Meet health standards

• Get a licence

• Pass inspections

What can happen if a food business fails inspections?

Temporary closure or loss of licence.

What is the purpose of the Occupational Health and Safety Act 2004 (Vic)?

• Protect employees' health and safety

• Eliminate workplace risks

• Protect the public

• Promote safe workplace standards

Who administers workplace health and safety in Victoria?

WorkSafe Victoria.

What does WorkSafe Victoria do?

• Inspects workplaces

• Prosecutes businesses breaking safety laws

• Provides compulsory WorkCover insurance

What federal law protects consumers?

Competition and Consumer Act 2010 (Australian Consumer Law).

Who enforces the Competition and Consumer Act?

ACCC (Australian Competition and Consumer Commission).

What Victorian law protects consumers?

Australian Consumer Law and Fair Trading Act 2012 (Vic).

Who administers consumer protection in Victoria?

Consumer Affairs Victoria.

What is misleading or deceptive conduct?

Giving customers false or misleading information.

What is unconscionable conduct?

Acting unfairly or taking advantage of vulnerable customers.

What are unfair contract terms?

Contract conditions that unfairly favour the business.

What are false or misleading representations?

Making false claims about products or services.

What is bait advertising?

Advertising cheap products with little stock to attract customers.

What is a pyramid scheme?

Making money mainly from recruiting people rather than selling products.

What is referral selling?

Offering rewards if customers recruit others.

Name the five consumer guarantees.

• Clear ownership

• Match description

• Acceptable quality

• Fit for purpose

• Repairs and spare parts available

What does "acceptable quality" mean?

The product must be safe, durable and free from defects.

What does "fit for purpose" mean?

The product must do the job it was sold for.

What is Fairtrade?

An organisation that promotes fair pay and better working conditions for farmers and workers.

Give three Fairtrade principles.

• Fair payment

• No child labour

• Respect for the environment

What are the three levels of government?

• Federal

• State

• Local

Give two responsibilities of the Federal Government.

• Taxation

• Defence

Give two responsibilities of the State Government.

• Education

• Transport

Give two responsibilities of Local Government.

• Zoning

• Health regulations

Why do businesses use external professionals?

To access specialist skills and save time.

What does a bookkeeper do?

Records day-to-day financial transactions.

What does an accountant do?

Analyses financial information and prepares reports and tax returns.

Difference between a bookkeeper and accountant?

Bookkeeper → records transactions.

Accountant → analyses finances and gives advice.

What does a recruiter do?

Finds and hires employees.

What does a marketing consultant do?

Promotes the business and plans advertising.

What does a sales professional do?

Finds customers and sells products.

What does an IT technician do?

Maintains computers, software and networks.

What is the Separate Entity Principle?

Business and personal finances must be kept separate.

Why should businesses have separate bank accounts?

To keep business and personal transactions separate.

Factors when choosing a bank account.

• Fees

• Interest rates

• Overdraft

• Credit cards

• Convenience

What are financial control systems?

Processes used to monitor and manage business finances.

Why are financial control systems important?

Prevent losses and improve financial performance.

Name five financial control systems.

• Budgeting

• Cash-flow management

• Accounts receivable

• Inventory control

• Auditing

What is budgeting?

Estimating future income and expenses.

What is cash-flow management?

Managing money coming into and leaving the business.

What are accounts receivable?

Money owed to the business by customers.

What is inventory control?

Managing stock efficiently.

What is auditing?

Checking financial records for accuracy.

Why is record keeping important?

Required by law and helps businesses make decisions.

How long must businesses keep financial records?

At least 5 years.

Give three record keeping strategies.

• MYOB/Xero

• Hire a bookkeeper

• Good filing system

What is an income statement?

Shows profit or loss.

What is a balance sheet?

Shows assets, liabilities and owner's equity.

What is a cash book?

Records cash received and cash paid.

Four things to consider when choosing suppliers.

• Price

• Quality

• Reliability

• Proximity

What is procurement?

Finding and purchasing resources from suppliers.