Business Management

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Legal & Government Regulations

Legal & Government Regulations

Regulations that business owners must follow otherwise they risk losing customers, reputation and their ability to continue trading.

Business Name Registration.

ASIC - Australian Securities & Investment Commission.

• All businesses must register their names. Optional if the business name is the name of the owner but if adding something to the name then it must be registered.

• By registering, prohibits anyone else from trading under a similar name and protects the customers from consuming from the wrong business.

• Crucial to business operations, should also be registered as a trademark.

Registering a domain name

The key element of an online presence, should be unique and clearly represent the business activities.

• Can register multiple domain names as it helps customers and prevents other businesses from registering a similar name that confuses customers.

• Costs between $10-$100 per year.

• Can be registered by visiting Australia Domain Administration website.

Taxation Regulations

Compulsory component, different taxes applied to different types of businesses.

• Companies pay 30% or 28.5% if business turnover is less than $10 million.

• Individuals pay a progressive tax rate.

• PAYG: Taken from employees salary or wage directly.

• GST: 10% on supply of most goods or services, only register for GST if they earn $75,000 or more in a financial year.

• FBT: Fringe Benefits Tax,a tax that employers pay on benefits paid to an employee (or their associate, such as a family member) in addition to their salary or wages e.g./ Car for private use, the business pays the tax.

State taxes

Stamp duty: placed on documents that gives evidence to transactions.

• Land tax: levied annually on the owner of the land.

Local Government Requirements.

Any businesses using a premises or land must seek local government approval. Failure to do so results in closure of the business which wants time, money and effort.

Fire Regulations & Parking Regulations & business signs.

The Fire Precautions (Workplace) Regulations required employers to identify risks and take steps to remove or reduce them. Such as using fire escape and signs or a fire extinguisher.

Parking Regulations - To ensure the locals do not trespass properties and are able to get to the business safely. e.g. the provision of parking by new business.

Business signs - size, location, and shape of business signs are important to avoid unseen accidents and that they do not go past the standards of an expected sign.

Zoning Regulations

Ensures that business activities do not impact residential areas.

• Each council has a local planning scheme that describes the types of activities or developments that may occur in different areas e.g. suburb or district.

Land can be zoned as either residential, industrial, business or other.

• Must consult with the local council to find out which zoning regulations will affect the business now and into the future.

Health Services

Ensures compliance with health regulations. Under the food act 1984.

• Each local council will supply business w/ regulations & standards. Includes: Cafes, Restaurants, butches, bakeries and so on.

Health inspectors will inspect the premises often&without warning to ensure business owners are compliant.

• Council can also register to inspect other businesses e.g. accomodation, hairdressers to ensure they meet standard hygiene and safety requirements.

Consumer protection and fair competition

- Australian Competition and Consumer Commission (ACCC): It’s a national law enforcement agency designed to protect the rights of consumers and businesses. The ACCC administers the Trade Practices Act. The ACCC promotes competition & fair trade in the market place to benefit consumers, business and the community. It also regulates national infrastructure services.

- Consumer Affairs Victoria: Provide information& advice to consumers, tenants, businesses and landlords on their rights, responsibilities and changes to relevant laws. register and license certain businesses and occupations. enforce and ensure compliance with consumer laws.

Work Health & Safety Regulations

Provides constant/consistent framework nationally to protect workers. Objectives are:

• Protect workers against harm to their health, safety and welfare arising from work.

• Encouraging unions and employer organisations to promote improvements in work health&safety practices.

• Promoting the provision of advice, information, education & training in relation to work health&safety.

WHS Obligations for business

Business owners have legal responsibilities to implement healthy&safety practices. Need to ensure that the business doesn’t create healthy&safety problems for the employees, contractors, volunteers, visitors, customers or the public.

Obligations include:

• Providing safe work premises by assessing risks and implementing appropriate measures for controlling.

• Ensure safe use and handling of goods and substances, provide and maintain safe machinery and materials.

• Have insurance and workers compensation workers insurance for employees.

• May be costly to implement safe practices and install safety equipment, however, effects of not taking action can be severe and costly.

Complying w/ WHS requirements prevents you from being prosecuted and helps you to retain skilled staff.

WorkCover Insurance

They aim to reduce workplace injuries and supports injured workers.

• Provides insurance. Compulsory for all Victorian employer, provides cost for benefit if employees falls ill or becomes injured.

• Covers replacement of lost income, medical & rehab costs, legal costs, lump sum compensation in event of serious injuries.

Trade Practices Legislation

Ensures business and consumers are protected from unfair practices. Each major industry has their own code of practice, failure to abide by laws can result in heavy fines for a business.

Trade Practices Legislation - Federal

Competing/Competition & Consumer Act specifies acceptable behaviour by businesses regarding product safety and pricing as well as competition.

• The ACCC (Australian Competition & Consumer Commission) administers this.

Trade Practices Legislation - State

Fair trading act is administered by Consumer Affairs Victoria. Issues include warranties, guarantees & refunds, vouchers, false advertising and product safety.

External Professionals

Includes professionals such as accountant, solicitors, and back managers can support new business owners. Others include free lancers, bookkeepers, recruiters, safes professionals, marketing consultants and IT technicians.

Freelancers

Independent workers who charge business or individuals for work on a per job basis.

• Businesses will often engage w/ freelancers that specialise in photography, design, copywriting and web design.

• works on per job basis.

Bookkeepers

Assists a business in keeping and processing a business’s financial records.

• keep and record the financial records of a business.

Recruiters

Business’s hire Human Resources & recruitment professionals are often used to find the right staff.

• will often charge a fee based on the salary of the person employed.

Sales Professionals

Trained and experienced in finding people and persuading them to consume a product, businesses will often engage them when they are finding difficulty to find their customers.

Marketing consultants

Responsible for raising awareness of a business’s products and brand with their target markets/ Often ran campaigns that involves advertising & other forms of communication w/ potential customers.

Successful campaigns will increase brand awareness among consumers & result in increasing sales.

Information Technology (IT) technicians.

IT services exist to support the needs of the businesses as they all run some for of information technology.

can range from there setup of servers and software to troubleshooting problems that arise on a daily business.

Establishing seperate Accounts

Essential and highly recommended to have two seperate accounts as one is for business and one is for the owner themselves.

Transactions performed through the accounts would be much more easier to track.

• easier to comply w/ ‘seperate entity’ accounting principle

• easier to monitor the financial performance and position of the business.

• easier to calculate business expenses, such as bank fees & revenue, such as interest earned and it’s simpler & less time-consuming. Costly to prepare tax returns for the business.

Choosing the Right Bank account

Factors to consider:

• Look out for hidden and not so obvious fees, banks legally require to state this in the product disclosure statement.

• interest rates: Determines how much a business will have to make on the amount they have in their accounts or how much they have to reply on any loans.

• Overdraft facility: When bank allows a business to withdraw more money than they have available in their account.

• Credit cars: Can be convenient, different cards have different features including the maximum amount used.

• Convenience and support: smaller brands & credit unions offer lower interest rates bc/ they have less infrastructure e.g physical banks and ATM’s.

Financial Control Systems

Used to help the business monitor, manage and report its financial performance. Can vary from business to business depending on it’s size and nature, more common financial control systems relates to accounting and record keeping systems, auditing and cash flow management.

Budgeting

Refers to predicting or estimating the business’s financial performance for a give per inn the future. Used to control the business.

Compares actual w/ expected results, the business can then ask questions as to why certain goals were not reached.

Helps in estimating benchmarks against which to compare actual events.

Cash Flow Management

Crucial to survival of the business, regardless if they’re making profit. If they don’t have the cash needed to pay for it’s day-to-day expenses, it will likely fail.

Strategies:

• Keeping track of money owed to business.

• Hiring account staff to ensure customers pay in full and on time.

• Offer discounts to customers who pay early.

• W/hold items to customers who owes money.

• Arrange short term loans and a bank overdraft.

Control of Accounts Receivable

It’s the money that a business is owed by its customers who have purchased on credit terms. Vital to ensure cash flow & the ability to pay bills and purchase stock.

Strategies:

• Offering discounts, bonuses or rewards to prompt payment may be used to ensure this money is received as quickly as possible.

• Business needs to consider in credit terms will be offered to regular customers and carefully check who is offered these terms.

• Sales → Accounts receivable → Cash flow

Inventory Control

A system businesses use to ensure that costs associated w/ maintaining an inventory of materials are kept to minimum.

Why?

• Costs can be minimised as there are no idle assets.

• Inventory only arrives when it is needed/demanded.

How?

• using barcodes and computerised stock records

• physical stock takes

• Security staff, cameras, security tags

• Just in Time (JIT)

Auditing

The process of testing& evaluating a business’s accounting processes&internal controls. An internal audit is performed by employees of a business. An external audit is performed by another business.

• Contracting experienced external auditors can provide business w/ valuable feedback, however, it is often costly.

Record- Keeping systems & securities

Businesses are required by law to keep records of financial transaction for at least 5 years for tax purposes. Accurate records are an invaluable tool for decision making.

• investors and financial institution are unlikely to invest or provide loans to a business that can’t demonstrate it’s financial position.

• Rights systems& strategies can cut down& simplify the workload of managing accurate records.

The accounting process.

Source documents → Records → Reports → Advice.

Source Documents

They are written documents that provides evidence of a financial transaction.

Features include:

• The date.

• The names and address if applicable of the parties involved.

• The nature of the transaction

• The amount of money involved.

Records

Record: Records the source documents into the cashbook. Cashbook provides of all business’s cash receipts (sales) and cash payments. Allows the business owner to:

• keep a tight control on the cash

• monitor the business’s cash flow

• Determine the balance of cash in the business.

Reports

Process of information from the cashbook to create reports.

Two main reports:

• Income statement: Use to help a business calculate how much profit has been made over a period of time.

• Balance sheet: Show’s a business’s assets and liabilities (the financial position of a business) at a point of time.

Advice

Where professionals, such as accountants, analyse the information and provide recommendations for the business owner to implement or improve the business.

Choosing suppliers

When choosing the suppliers, you need to consider the:

• Price

• Quality

• Reliability

• Proximity

• CSR - Corporate Social Responsibilty.

Procurement

Basically the process of researching and selecting suppliers, establishing payment, negotiating contracts and the purchasing of resources that are vital for maintaining the production of the business’s good or services.

Crucial to developing businesses.

Affects the ability of a business to supply goods/services to their customers.

If the the supplier doesn’t act in a socially responsible manner, it can dmg their reputation of the business by association.

Price

If a business is to remain profitable, it must keep costs low, and suppliers can be in a close area to reduce costs.

• Whilst supplier prices shouldn’t be the only consideration when choosing a supplier, it has a large impact.

Quality

Goods supplied by suppliers will heavily impact the quality of the final good/service. If a business prides itself on quality, it must source highly.

If business purchases from international suppliers, they must ensure they meet w/ Australian quality and standards.

Reliability

If a business has a high turnover of stock, they often rely on quick and timely delivery from suppliers. If a business doesn’t receive goods needed, they will lose sales and their reputation may suffer.

Proximity

Being close can save time and money(delivery costs). Sourcing supplies locally is more environmentally friendly and help to support the local economy, which is more socially responsible.

CSR - Corporate Social Responsibility

If business’s uses suppliers that are not socially responsible than their reputation may be tainted by association which is why they must be careful when selecting suppliers.

Benefits:

• Reduces business costs - savings are achieved through ‘green’ initiatives such as reducing the use of energy. Improves reputation of the business, customers may more likely purchase form business.

Limitations:

• Increased costs associated with sourcing socially responsible suppliers; maintaining a supply chain that sources sustainable materials will be expensive and time-consuming. Business will need to work w/ suppliers to ensure quality is on par w/ competitors.

Policy

A policy is an established set of broad guidelines to be followed by all employees.

Benefits include:

• Promoting good practice

• Helping to ensure employees are working within the requirements of the law.

• Helping to establish a positive culture within the business, which will in turn, improve its financial performance.

E.g./ All equal opportunity policies in Victoria must conform to the provisions of the Equal Opportunity Act 2010.

• All businesses have policies relating to discrimination (based on federal and state laws.)

Procedures

A series of action (or step-by-step instructions) that enable a policy to be put into practice. Can also be used to provide a means of resolving a dispute brought about by a branch of policy.

e.g/

• Paying Accounts

• Handling grievances

• Prepare budgets

• Dealing w/ customer complaints.

Or it can be procedures related to a Diversity&Equal Opportunity. Policies include: How to record a customer complaint, the process used to investigate an allegation of sexual harassment, bullying or discrimination and the steps to be taken when an allegation is found to be untrue.

Policy Development

Having policies and procedures helps a business achieve its objectives, however, it must be reviewed regularly.

Management can guide the development of policy to reinforce positive aspects of corporate culture. If policy is needed to be changed, the cause may be because of:

• An issue or problem that needs to be resolved.

• A change to the law that necessitates the introduction of a new policy into the workplace.

Policy development process:

Identify an issue/problem → Research&Analysis business environments → Consult Stakeholders → Develop a draft of policy for review by stakeholders → Revise the policy → Approve & distribute the new policy → Monitor & evaluate the policy.

Advantages of Policies & Procedures

• Employees recognises what is expected of them w/ respect, behaviour & performance.

• Provides a clear view/mind for constant decision-making & clear actions, no longer needs to ask for help.

• Allows owner/management to have an accepted method of dealing w/ complaints & misunderstandings.

• Can prevent legal problems, including complaints & misunderstandings.

• Provide the owner/management w/ means to communicating information to new employees.

Disadvantages of Policies & Procedures

• Writing Policies & procedures can be costly

• Can be difficult to communicate policies throughout the business, particularly a large one.

• Employees might view policies as a substitute for effective management.

• Can restrict innovation and flexibility.

Types of Policies

·      Recruitment policy

·      Privacy policies

·      Customer service policies

·      Anti-discrimination policies etc.

Technology

(Both a blessing and a curse)

Can use advances in technology to produce a higher-quality product, saving costs and increasing profit.

If they’re not able to keep up w/ the developments in technology, unlikely to be successful. Affects how a business makes its products and services, but also in how a business markets itself to customer.

Technology in Marketing&Manufacturing

-Marketing: Important to develop social media advertising strategy when establishing a business. Can have positive and negative results include what the online consumers write about the business products.

• They have freedom to discuss, review, criticise and even ridicule the product or business.

-Manufacturing: Increasingly complex robotics are being developed that can perform a wider range of tasks to a greater degree pop precision than is humanly possible.

• When a business owner is planning their business enterprise, they will need to decide whether the technology available is cost-effective or traditional ,methods are more practical.

• Most interesting tech developments is the 3D printing & robotics.

• Even if robotics may be initially expensive, it’s long run may be less expensive than the cost of manual labour and human error.

Globalisation

Basically a name given to a variety of factors that is turning the whole world into one big market.

Impacts include:

Suppliers - Can find cheaper materials/products due to reduction in quotas and tariffs.

Customers - Exporters now have greater access to international customers.

Competitors - Overseas competitors also have more access to local customers.

Technological and global issues

- Technology:

• Technology in manufacturing e.g. 3D printing, robotics etc.

• Technology in administration

• Technology in marketing

• Customer databases

- Global issues:

• Overseas suppliers and resources

• Customer and overseas retailers

Technology in Administration

When planning a business, the owner must consider what website and applications they will use. Smartphone applications & web-based software for business have progressed substantially over the past decade.

e.g./ viewing live camera to email correspondence & web-based conference reduced w/ options to outsource such work to cheaper international IT contractors.

Another example is remote work, workers are more flexible in working at their home and reduces overhead expenses associated with providing additional office space.

Customer Databases

It’s a bank of information on exisiting and potential customers, including such details as their personal details, past interactions, buying habits, preferences.

Often created and sold to companies by market research companies. Advance in technology allows more details to be added.

Privacy

Businesses needs to ensure that the private details of their customers are well protected from hackers who may profit from identity theft if they are able to steal information from customer databases.