UNIT 2, AOS 1 KK1, KK2, KK3, KK4, KK5 & KK6 (11).pptx

UNIT 2, AOS 1 - Legal requirements and financial considerations KK1 an overview of the role of external professionals when establishing a business KK 2 an overview of key legal requirements for esta...

UNIT 2, AOS 1 - Legal requirements and financial considerations KK1 an overview of the role of external professionals when establishing a business KK 2 an overview of key legal requirements for establishing a business such as registering the business name, registering a website domain, trade practices legislation, business tax compliance and work safe insurance  KK 3 the importance of establishing bank accounts, financial control systems and record-keeping strategies  KK 4 the importance of choosing appropriate suppliers including the benefits and limitations of suppliers that meet the corporate social responsibility objectives of the business  KK5: the need for policies and procedures to achieve compliance with legal requirements and establish business routines  KK6: technological and global issues that may affect decision-making when establishing a business, such as generating customer databases and contacts with overseas suppliers and retailers  KK 1 The role of external professionals when establishing a business An accountant is a professional who manages, updates, analyses, and reports a business’s financial information. When establishing a business, business owners should consider hiring an accountant to assist in creating and maintaining financial statements. It can be difficult for a business owner to understand and make sense of financial information if it has not been presented in a clear manner, or if they lack the relevant accounting knowledge required for its interpretation. Therefore, hiring an accountant can allow a business owner to make sense of, and analyse the financial position of the business, assisting them to determine areas for improvement. The role of financial advisers A financial adviser is a professional who provides expert advice to individuals and businesses in relation to monetary matters, personal finances, and potential investments. When establishing a business, business owners may choose to seek the advice of a financial adviser to assist in both personal and business-related monetary decisions. By understanding a business owner’s personal and business monetary goals, financial advisers can help create a financial plan to increase the businesses’ profits, while protecting and maximising personal wealth.  The role of ICT specialists An Information and Communications Technology (ICT) specialist is a professional who develops and maintains the technological systems that are used by businesses to store and retrieve data. As technology has transformed the way businesses operate, business owners should consider hiring an ICT specialist when establishing their business. An ICT specialist can help a business develop and maintain a website that allows customers to purchase products online, whilst they can also create a customer database to track the searching and purchasing habits of its customers. The role of legal advisers A legal adviser is a professional who provides expert advice to businesses regarding their legal responsibilities. Unlike lawyers, legal advisers work directly for a business and provide legal advice to that particular business. As there are many legal requirements when establishing a business, business owners should consider hiring a legal adviser to ensure they are compliant with laws and regulations that are relevant to the business. As business laws are often highly complex and constantly changing, a business owner may hire a legal adviser to provide general legal advice.  The role of marketing advisers A marketing adviser is a professional who provides expert advice to businesses in relation to promoting and selling their products. When establishing a business, business owners may choose to seek the advice of a marketing adviser to effectively understand and cater to the wants and needs of their target market. Marketing advisers are required to conduct extensive market research of the business’s target market and gain an understanding of the business’s objectives.  KK2 an overview of key legal requirements for establishing a business such as registering the business name, registering a website domain, trade practices legislation, business tax compliance and work safe insurance Registering a business name A business name is the title that a business operates under and what customers use to identify the business. It is a legal requirement for all businesses to obtain an Australian Business Number (ABN) and to register a business name with the Australian Securities and Investments Commission (ASIC). Registering a business name ensures that no two businesses are operating under the same title. One exception to this legal requirement is when a business owner decides to operate their business under their own name. In this case, the owner does not need to register a business name. Registering a website domain 2.1.1.2 A website domain is a website address that identifies a business’s online site. As society becomes increasingly reliant on technology, it is very common for businesses to establish an online presence. A necessary step for businesses operating online is to create a website domain. Before creating a website domain, a business owner should determine whether the business’s chosen domain name has already been used or trademarked. If the domain name is available, the business owner should register for the domain through auDA (.au Domain Administration) Trade practices legislation Trade practices legislation is the law that governs how a business interacts with customers and competitors. A business should refer to trade practices legislation to ensure its activities align with legal obligations within its relevant industry. Specific industry-related legislation is created to ensure that businesses are engaging with competitors and customers fairly. The Competition and Consumer Act 2010 (CCA) governs how Australian businesses operate. This Act led to the establishment of the Australian Competition and Consumer Commission (ACCC) which governs business operations and enforces punishments if a business breaches legislation. Business tax compliance Tax compliance is the extent to which an individual or business meets tax obligations. It is a legal requirement for all businesses to pay tax. The tax requirements of businesses can vary depending on the business type and value of earnings, however, all businesses are governed by the Australian Tax Office (ATO). To ensure tax compliance, a business should consider referring to government bodies and documents, or hiring a registered tax agent for advice. If a business does not meet its tax obligations, it may face penalties, fraud charges, or be forced to stop operating. Some tax obligations a business must comply with include income tax and pay-as-you-go (PAYG). Most businesses must also comply with Goods and Services Tax (GST). Work safe insurance Work safe insurance is compulsory insurance that assists employers to meet their obligation of financially compensating and supporting employees who become injured or ill because of their work. While all businesses are legally required to maintain a safe working environment, employees may still become injured or ill when completing their roles within the business. WorkSafe Victoria aims to ensure that businesses are providing a safe working environment for employees by enforcing  KK3 the importance of establishing bank accounts, financial control systems and record- keeping strategies The importance of establishing bank accounts A bank account is an arrangement made with a bank where a business or individual can deposit and withdraw money. Having a bank account can enable a business to manage and track all the money coming in and out of the business. By establishing a business bank account, owners create a bank account separate from their personal bank account. The ATO (Australian Taxation Office) requires owners operating private limited companies or public listed companies to create a separate bank account for their business. The owners of these incorporated businesses are considered a separate legal entity from their business, and are thus taxed independently from the business.  The importance of establishing financial control systems Financial control systems are processes and procedures used to direct and monitor a business’s finances. These systems help a business oversee its transactions and financial position. Financial control systems can establish and assess business practices to prevent fraud and errors. These systems enable business finances to be used appropriately and categorised accurately while helping plan out future financial activities. Correctly categorising types of financial transactions contributes to a business creating accurate financial statements and business reports. Budgeting and auditing are some of the most common types of financial control systems used by businesses to understand and monitor their finances. The importance of establishing record-keeping strategies Record-keeping strategies are methods used to keep track of the financial transactions of a business over a period of time. By making use of these strategies, a business can categorise its transactions, providing it with information that is used for business reports. Most small businesses record transactions in cash books, which is the simplest form of record-keeping used to prove cash transactions. Record-keeping can be completed electronically or manually, however, the ATO requires a business to archive written records of transactions for a minimum of five years. If there is no proof of these transactions, a business may face legal consequences. KK 4 the importance of choosing appropriate suppliers including the benefits and limitations of suppliers that meet the corporate social responsibility objectives of the business Price A business needs to consider how much its various suppliers will charge for their resources and delivery. The price charged by suppliers can quickly increase the expenses of the business, which may impact how much customers have to pay for the business’s goods or services. Suppliers that charge low prices can enable a business to lower overall production costs and increase its profit. If the cost of supplies is low, a business may be able to charge customers a lower price. Reduced prices could attract cost-conscious customers and increase a business’s competitiveness.  Quality Quality refers to the degree of excellence in a product or service. The quality of resources or materials provided by suppliers influences the overall quality of a business’s output. Customer satisfaction is generally based on the level of quality of the goods or services customers receive. If the quality of a good or service fails to meet customer expectations, customers may be less satisfied and less likely to purchase from the business in the future. In turn, the business’s reputation may be negatively affected, which can decrease its sales, market share, and competitiveness.  Location It is important for a business to consider where suppliers are located. Suppliers that are nearby can reduce the costs a business incurs due to transportation. Businesses that aim to be environmentally friendly may choose local suppliers to minimise transportation emissions. Choosing local suppliers also enhances the wellbeing of the general community by creating more local employment. On the other hand, a business may choose suppliers that are located further away from the business, such as suppliers located overseas, to obtain certain inputs or access cheaper resources.  Socially responsible suppliers Corporate social responsibility refers to a business going above and beyond legal obligations to improve social, economic and environmental aspects of society. It is important for a business to review its corporate social responsibility (CSR) objectives when deciding which suppliers to source its inputs from. Businesses should consider the sustainability of their suppliers’ activities, as well as how they treat their employees, the environment, and the local community. The reputation of a business could be impacted by the suppliers it chooses to use.  KK5: the need for policies and procedures to achieve compliance with legal requirements and establish business routines Policies are written statements that outline the expected performance and behaviour of employees. The policies of a business inform and guide employees to make decisions that meet the business’s expectations and legal requirements. A business will often create policies to abide by relevant legislation. Many laws impact how businesses operate so it is important to create policies that meet legal obligations. A business can also create policies to establish business routines. These routines are designed to encourage employees to achieve business goals and to share workplace responsibilities. Policies designed to establish positive workplace routines should clearly align with a business’s values and goals. The need for procedures Procedures are a series of actions that employees must follow in order to abide by the business’s policies. The purpose of procedures is to provide employees with a step-by- step guide on how to act in specific situations or events. Procedures are usually designed to encourage employees to behave in a predictable and routine manner. Employees must follow business procedures to meet legal obligations and support the achievement of business goals. A business should review its procedures to make sure they align with the most recent legislation and are consistent with changes the business has made to any policies. Businesses should also consistently assess whether employees are following their procedures.  KK6: technological and global issues that may affect decision-making when establishing a business, such as generating customer databases and contacts with overseas suppliers and retailers A customer database is a collection of information about existing and potential customers. To establish a customer database, businesses collect and track customer data, such as personal information, past purchases, and buying habits. Customer data can be collected internally by a business when an individual makes a purchase or is browsing through its online website.  Contacts with overseas suppliers Overseas suppliers are individuals or businesses that sell raw materials or resources in a country overseas. A business owner may wish to source its resources overseas to gain access to cheaper and/or higher-quality resources which it can then use to produce goods and services. Globalisation has enabled businesses to establish contacts with overseas suppliers in a much more efficient manner. Contacts with overseas retailers Overseas retailers are individuals or businesses that sell goods and services directly to customers overseas. As a result of globalisation, competition between businesses has increased. In order to remain successful, businesses need to consider how they will effectively compete with both domestic and international retailers. Establishing contacts with overseas retailers enables businesses to sell their goods and services to international customers.