Opening an IT Company - How to Proceed - Experiences and Advice

PopCounty on 03/06/2021 - 16:57

Dear Bargainers,

I have been in IT for about sometime and I am now taking step to open up my own company. As a humble beginning.

The intentions for short term:

  • Recently accepted an IT contract (Say from company X and I would be working for banking company Y). As of now it’s on PAYG model. Intend to change this contract to my company (company Z pty Ltd) and I work as an employee of this company. The recruiting firm (X) have attested this can be done which is generating a new contract between them and my company Z.

  • Registered a company name (Z) with ASIC. Secured web domain. Need to work on it.

The middle term plan:

  • I made myself and my wifey directors of this company (Z).
  • While I contract and perform day to day job, my wife would run consulting business under same name. As a hiring firm. I have got couple to clients to start with and I genuinely believe I can fulfil 5-10 demands in next few months.
  • I support the hiring process during non business hours.

The long term plan:

  • I have plan to launch a consulting product and offer solutioning via my company (Z). Sell to clients directly and progress from there. That time, focus more on product and take a call based on success/failure of consulting/hiring which way to proceed.

I have searched and searched a lot and found these.

  • I need to hire accountant which I will.
  • I may need to hire Lawyer to validate or write contracts. However not sure which phase I may need to hire.
  • I need to work on website thing and I shall take this on priority.

Could OzB family here guide me based on their experiences.
There are lot of dodgy accounts and I am worried of that. Good reputable accountants have top level fees which I believe at this stage wouldn’t sustain. Any advise on any accountants? What time should I be engaging with lawyer? Any trustworthy website design company whom I can contact? Any odd things I should consider while taking these steps.

I am Melbourne based if it may matter.

Thanks a ton for helping out.

Computing

Comments

  • knasty on 03/06/2021 - 17:07
    +1

    I highly recommend reading through this:

    https://business.gov.au/guide/starting

    Also there are multiple ways you can structure yourself, as an individual trader with an ABN, as a trust, as a company. All have pros and cons. I'm not going to tell you what's best as there's no single answer.

  • 87percent on 03/06/2021 - 17:07
    +6

    Really wouldn’t be seeking advice on here for what you’re doing.. seek professional advice. End thread

    • PopCounty on 03/06/2021 - 17:13

      Absolutely agree. And sure I will. Part of the question here is to know more about any recommendations around accountant or web designing company or any experience which simply can’t be searched or thought upon.

  • salmon123 on 03/06/2021 - 17:16
    +2

    There are lot of dodgy accounts and I am worried of that. Good reputable accountants have top level fees which I believe at this stage wouldn’t sustain. Any advise on any accountants?

    Well, some people like dodgy accountants. The reputable ones tend to play by the books and that can cost you a lot more in taxes, than accounting fees.

    Your immediate plan of just going from a PAYG situation to a sole employee of your own company means you'll likely need to deal with the PSI rules.

    My advice is to speak to a few accountants and go with one that has a work around for the PSI rules.

    What time should I be engaging with lawyer?

    When you need a legal agreement reviewed. That's not to say that every agreement should be reviewed by a lawyer. Lots of agreements aren't negotiable, so there's no point having them reviewed. It's either take it or leave it.

    Also need to engage a lawyer if you need agreements drafted.

    Most small businesses don't need lawyers.

    Any trustworthy website design company whom I can contact?

    You said you've been in IT … shouldn't be hard to find some contacts for website design, no?

    Honestly though, I wouldn't spend a whole bunch of money on a website for a business like yours, at the start. Just use a template site.

    • PopCounty on 03/06/2021 - 18:09

      Well, some people like dodgy accountants. The reputable ones tend to play by the books and that can cost you a lot more in taxes, than accounting fees.

      Whoa, what a perspective. I would certainly now include the hunt for 'Accountants' rather than 'Reputable Accountants'. Thanks for that.

      You said you've been in IT … shouldn't be hard to find some contacts for website design, no?

      Yes, being in IT I have some references wherein I can approach to some web designing companies. At this point, I do not wish to get these details disclosed to my friends or in circle. Treat this as personal reason but sure for now, no. Getting with those companies may mean my info/plan getting detailed to my friends.
      Now before someone judges me, I had certain ideas proposed to my very closed friend(s) who got excited, planned and then ditched. Money wise I was willing to fund 90% so less risk for them. It hurts. So now hv decided to go solo and I really want to have the business be tried. And if established bgg, would then decide to disclose to friends.

      Thanks for the suggestions.

  • MrHyde on 03/06/2021 - 17:27
    +4

    I have gone through a similar journey and can say for myself, that it was one of the best decisions I made. My company on well into its 5th year now with a growing customer base and employees. I am at the stage where I can focus on company growth and not the day to day delivery as that is handled by other employees now.

    Some key things when starting out.
    - If you are just doing contracting at the start, be mindful of the PSI rules.
    - Make sure your wife is a proper real employee and not just a sham to split income. ATO looks very carefully at IT Contractors and such companies.
    - You will need a lawyer when negotiating contracts with customers or suppliers or partners. For just contracting; the contracts will be mostly non negotiable; so don't need lawyers.
    - Don't forget insurance. You'll need PI / PL and some companies also require you to have Cyber Liability cover as well. I use Bizcover. Also have a look at Express Insurance, although they didnt have cyber insurance.
    - PM me and I can recommend some web site developers who are very very good. However, for me, the website is not that important. Its something you need so that when the procurement part of a client looks it up, they can see you are real. But from a sales/marketing perspective; in my field; going out there and meeting people is more important. I don't think I've had a single lead come from our website yet.
    - Marketing and Sales is the most important part of your business. It does not matter how good a product you have or how good your skills are - if you cannot get the word out there - it does not matter.

    • PopCounty on 03/06/2021 - 18:17

      Wow.. so happy to learn your business is growing. Congrats.

      • I have registered a Pty Company and surely intend to make my wife an employee. She would also record all details about consulting so that ATO can be given records to be this a genuine business catering two parts. If everything goes well, plan to employ more people at certain level of business needs.

      Don't forget insurance. You'll need PI / PL and some companies also require you to have Cyber Liability cover as well. I use Bizcover. Also have a look at Express Insurance, although they didnt have cyber insurance.

      This, can't thank you enough for. I am aware of PI/PL and would start those right now.

      I shall PM you to learn about web designers.
      Agreed, marketing and sales play most crucial part and hence would focus on that.
      Thanks heaps for your help.

    • rollin on 03/06/2021 - 21:07

      Sorry to hijack the thread but If you dont mind me asking, what kind of IT companies do you and @popcounty have? I work in IT and would love to be able to work for myself. I just need to figure how to make this a go-go!

      • MrHyde on 03/06/2021 - 21:09
        +1

        I'm in IT Consulting specialising in B2B Integration and Analytics

      • PopCounty on 03/06/2021 - 21:36
        +1

        I am planning to build/launch product for resourcing. I come from Data and Cloud background so something within this line as well. I must agree I need to start building/executing. So all these from my end, are far away from eventuality. Hoping to get there soon. Hope that helps.

  • netjock on 03/06/2021 - 17:31
    +2

    There are lot of dodgy accounts and I am worried of that. Good reputable accountants have top level fees which I believe at this stage wouldn’t sustain. Any advise on any accountants?

    Why don't you use this as a test, call them up and talk them through what you want to do. Then ask them the fee structure (fixed and variable for ad hoc advice). There will be the ones who will give you the time for free and talk you through in detail. Others will hurry you along to get you off their back or just tell you to sign on and they will sort out the rest. If your clients want to pay you rock bottom rates would you expect to give them top quality service? Works both ways.

    Same deal with lawyers. You don't want a property lawyer doing your commercial contracts just because they are slightly cheaper (they will miss things that might cost you).

  • Muzeeb on 03/06/2021 - 17:47
    +2

    The only 2 things I can offer:

    • Don't call your wife wifey
    • Good luck with your business
  • BuyoTheCat on 03/06/2021 - 19:04
    +1

    Can't help with anything, but I do like your short, med and long term plans.
    Wish you well. Good luck

    • PopCounty on 03/06/2021 - 20:08

      Wish it works out. Thank you dear sir.

  • Htu08 on 03/06/2021 - 19:51
    +1

    Good luck :)

    • PopCounty on 03/06/2021 - 20:09

      So humbled. Thanks.

  • slow on 03/06/2021 - 22:12
    +1

    Make sure you have something in place for getting paid for your work as you go, so that you don't end up having to spend a lot of time chasing payment for large amounts of work you have already done.

  • miwahni on 03/06/2021 - 23:19
    +1

    Good luck with the business.

    You're right, accountants are expensive, but for the most part you can get by with a bookkeeper rather than an accountant. Bookkeeper hourly rate will be less than an accountant's fees. An accountant may be of use when you're first setting up, and at tax time, but a bookkeeper will do the basics for you, create your reports, keep your PAYG and SGC on track, and if they're a registered BAS agent and if you're registered for GST they can even lodge your BAS for you. Then at the end of the financial year they can put it all together for the accountant, so the fees for service there will be much reduced.

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