Paris Finance report cards

SMALL BUSINESS FORMATS

• Report for Client: Starting a Food Truck Business

• By: Paris Rerekura

• Finance ATAR

TABLE OF CONTENTS

1. Introduction

2. Part A

3. Part B

4. Conclusion

5. Bibliography

INTRODUCTION

• Investigation of requirements and recommendations for starting a food truck business in Perth.

• Operations to include various events, markets, and weekend bookings at a local sporting complex.

• Expected first-year revenue: $92,000.

• Focus on simplifying paperwork to allow focusing on business growth.

PART A

Client Scenario

• Business Start-up: Client seeks advice for starting a food truck business.

• Location: Identified good spots for operation at events and markets in Perth.

• Long Hours: Client is willing to work hard to establish business networks, avoiding time-consuming reporting.

Legal Requirements

1. Business Name Registration

• Example Name: "Perth Bites Food Truck".

• Registration process through ASIC via the Business Registration Service.

• Steps:

  • Check name availability.

  • Pay registration fee (from $44 for 1 year).

  • Renew before expiration.

• Registering a business name does not prevent others from using similar names; consider checking for trademarks.

2. Australian Business Number (ABN) and GST Registration

• ABN:

  • Unique 11-digit number for tax and business. Apply via Business Registration Service, may require personal details such as TFN.

  • Sole traders can use personal TFN; companies need separate TFN.

• GST Registration:

  • A 10% tax on most sales, required as revenue exceeds $75,000 threshold.

  • GST registration can be done online via the ATO or GSTregister.com.au.

Business Structures

3. Characteristics of Business Structures

• Sole Trader:

  • Simplest form; one owner with all profits and personal responsibility for debts. Minimal reporting.

• Partnership:

  • Ownership shared among two or more individuals with shared profits and unlimited liability under the Partnership Act 1985 (WA).

  • Recommended to have a written agreement.

• Small Proprietary Company:

  • 1-50 shareholders; limited liability but requires more paperwork (e.g., annual financial reports).

4. Recommended Legal Ownership Structure

• Recommendation: Sole Trader.

• Justification:

  • Low complexity and costs, no separation of company tax returns required.

  • Full control over decisions aligns with client's independence plans.

  • Personal liability manageable as a new venture.

PART B

Client Scenario for Financing

• Initial Investment: New high-end food truck cost $75,000.

• Client owns a fully paid-off $200,000 townhouse.

• Excellent credit rating; first-time business owner.

Sources of External Finance

5. Two Available Sources

• Secured Business Loan:

  • Use the townhouse as security for lower interest rates.

• Personal Loan:

  • Possible due to good credit rating; typically higher interest rates.

Factors Considered by Financial Institutions

6. Three Key Factors

• Collateral:

  • Townhouse acts as security, enhancing lender confidence.

• Credit History:

  • Excellent credit score reflects reliability in repayments, improving loan approval chances.

• Business Plan:

  • Clear strategy for revenue generation from events and markets strengthens loan application.

Recommended Source of Finance

7. Recommendation for Finance

• Best Option: Secured business loan.

• Justification:

  • Utilizing the townhouse lowers interest rates compared to personal loans, saving money.

  • Greater lender confidence due to asset security, higher likelihood of loan approval.

  • Flexible repayment terms to synchronize with business income.

CONCLUSION

• Optimal Business Structure: Sole Trader for its simplicity and lower costs.

  • Allows for full control and profit retention.

• Funding Recommendation: Secured loan against the townhouse, advantageous due to lower interest rates and backing by a solid asset.

  • Client's credit score and planned bookings substantiate loan repayment capability.

• Goal: Reduce risks and facilitate business growth while adhering to legal and financial responsibilities.

BIBLIOGRAPHY

1. ASIC. (2023). Registering a business name. Retrieved 18 February 2025 from https://asic.gov.au/for-business/registering-a-business-name/

2. ASIC. (2023). Legal requirements for small business operating under a business name. Retrieved 15 February 2025 from https://asic.gov.au/for-business/small-business/starting-a-small-business/legal-requirements-for-small-business-operating-under-a-business-name/

3. ASIC. (2023). Before you register a business name. Retrieved 15 February 2025 from https://asic.gov.au/for-business/registering-a-business-name/before-you-register-a-business-name/

4. ABLIS Business.gov.au. (2023). Goods and Services Tax (GST) Registration. Retrieved 15 February 2025 from https://ablis.business.gov.au/service/ag/goods-and-services-tax-gst-registration/78

5. Business.gov.au. (2022). Business structures. Retrieved 15 February 2025 from https://business.gov.au/planning/business-structures-and-types/business-structures

6. Australian Taxation Office (ATO). (2023). GST guidelines. Retrieved 15 February 2025 from https://ato.gov.au/Business/GST/

7. Government of Western Australia. (1985). Partnership Act 1985 (WA). Retrieved 15 February 2025 from https://www.legislation.wa.gov.au

8. Government of Australia. (1966). Bankruptcy Act 1966 (WA). Retrieved 15 February 2025 from https://www.legislation.gov.au

9. Small Business Development Corporation. (2023). Business structures in WA. Retrieved 15 February 2025 from https://www.smallbusiness.wa.gov.au

10. IP Australia. (2023). Trademark registration guide. Retrieved 16 February 2025 from https://www.ipaustralia.gov.au

11. Business Australia News. (2022). Secured vs unsecured loans: A comparative guide. Retrieved 17 February 2025 from https://businessaustralianews.com.au

12. GST Register. (2019). GST and ABN guide for small businesses. Retrieved 17 February 2025 from https://www.gstregister.com.au