Unit 2 AOS 1 - new Flashcards
Key Legal and Government regulations:
Explain key legal and government regulations
There are many licences, permits, approvals and authorities which must be taken into account by business owners. All business owners have a legal obligation to observe the statutory regulations when commencing and operating a business. Fulfilling all legal obligations can be frustrating and costly. However, a business that does not obey the law can risk losing customers and their reputation.
Key Legal and Government regulations:
Explain when and why a business must register a name
Businesses need to register their name, except when it is that of the owner, then it is optional. If a business has the phrases such as ‘PTY LTD’, ‘Motors’, ‘and associates’ or ‘and co’, then the business name must be registered. This is to prohibit anyone else from trading under a similar name, and to protect consumers by allowing them to identify the owner of a business name.
Key Legal and Government regulations:
Explain what must be taken into consideration when registering a domain name
A key element of a business’s online
presence will be the domain name, which is the address of its website on the internet. It is important that the business chooses a unique domain name that represents its activities. It also helps if the domain name is easy to remember and spell, so customers can find the website without difficulty.
Explain income tax - taxation compliance
Income tax:
levied on the taxable income of an individual or a business. Companies who have a annual turnover of less than $50 million pay a flat tax rate of 25%, companies earning higher than that figure pay a flat tax rate of 30%.
Individuals pay a progressive tax rate.
0 to $18 200 Nil
$18 201 to $37 000 - 19c for each $1 over $18 200
$37 001 to $90 000 - $3572 plus 32.5c for each $1 over $37 000
$90 001 to $180 000 - $20 797 plus 37c for each $1 over $90 000
$180 001 and over - $54 097 plus 45c for each $1 over $180 000
Explain other federal and state taxes and outline GST and land tax - taxation compliance
There are many other federal taxes that apply to businesses, depending on their activities.
GST:
Goods and services tax is a broad-based tax rate of 10 percent on the supply of most goods and services consumed in Australia and is imposed on all consumers. Businesses only need to register for GST if they earn $75,000 or more in a finical year.
Land tax:
Land tax is annually levied on the owner of the land.
Outline what a business activity statement is - taxation compliance
Any business registered for GST must complete a business activity statement (BAS). This is a form submitted to the ATO to report a business’s taxation obligations. Businesses can remit tax due on income earned during the period as well as any GST and employee PAYG withholding obligations.
Explain zoning - Local government legal requirements
Local government ensures that business activities do not infringe on residential areas. Each council has a local planning scheme that describes the types of activities or developments that may occur in different areas of a suburb or district. Land is zoned for particular uses, such as residential, industrial, business or other. Business must consult with local council before commencing.
Explain health services - Local government legal requirements
Local government also ensures compliance with health regulations under the Food Act 1984 (Vic). Each local council supplies businesses with the regulations and standards they must meet in order to obtain a licence to operate. A health officer will inspect premises regularly, often without warning, to ensure the business owner maintains standards. If problems occur, then the business is given a period of time to rectify the situation or it will be closed down.
Explain what WorkSafe Victoria does
WorkSafe Victoria a government
agency that aims to reduce
workplace injuries and support
injured workers. WorkSafe provides WorkCover insurance, which is a compulsory expense for Victorian
employers. It provides employers with insurance cover if workers are injured or become ill as a result of their work.
Outline the tasks of bookkeepers - professionals
Bookkeepers assist a business in keeping and processing a business’s financial records. This helps a business to meet all its taxation and legal obligations. Bookkeepers often charge a hourly rate, varying depending on the skills of the bookkeeper and complexity of the task, at an average of $40 per hour.
Outline the role of freelancers - professionals
Freelancers can be any type of independent worker who charges
businesses or individuals for work on a per-job basis. Businesses often engage the services of freelancers that specialise in photography, design, copywriting and web design.
Outline the role of sales professionals - professionals
Sales professionals are trained and experienced in finding and persuading people to consume a product. External sales professionals will often charge a business a percentage or commission for every sale they bring the business.
Identify factors to consider when choosing a bank account
Bank fees, Interest rates, Overdraft facility, credit cards, convince and support
What is ‘seperate entity’ and why is it useful
Seperate entity - accounting
principle recognising that the
owner’s finances are separate
to those of the business and
therefore business transactions
should be recorded separately
Advantages:
- Easier to monitor financial performance and position of business
- easier to calculate expenses
Explain why financial control systems are useful for a business?
The importance of financial control systems is it can help to prevent problems and losses such as lack of cash flow, damage to assets or fraud. If these problems persist the business’s financial performance may be hampered or the business may be forced to shut down.
Outline Budgeting - Financial control systems
Budgeting is estimating the
business’s financial performance
for a given period in the future. By comparing actual with planned results, the business can ask questions about why certain targets were not reached or why results were better than anticipated.
Outline Inventory control - financial control systems
Inventory control ensures that
costs are minimised and that the
business has access to the right
amounts of materials when required. Control can occur through physical control of inventory and through accounting control - e.g. using an inventory control system. It can also occur using bar codes and computerised stock records which can help minimise loss or theft of stock and it provides precise, up-to-date information about stock levels.
Outline accounts receivable - financial control systems
Accounts receivable refers to the outstanding invoices or payments that a business has. Accounts receivable represent cash waiting to come into
the business. Collecting accounts receivable is
vital in a business to ensure cash flow. Bonuses and rewards to pay early and late payment fees could be incentives to make a customer pay on time.
Outline the purpose of record keeping strategies.
Without accurate records, an owner has a restricted understanding of how the business is performing and where improvements need to
be made. Furthermore, investors and financial institutions are unlikely to invest in or make
loans to a business that cannot demonstrate its financial position.
Outline source documents - record keeping strategies
Source Documents are written documents that provide evidence of a financial transaction. Cash register dockets, credit card or EFTPOS vouchers and purchase invoices are all examples of these records. As well as handing these to a customer, a business will keep a copy to produce financial reports.
Outline what a cash book is - record keeping strategies
A cash book normally consists of two sections, with cash receipts recorded on the left-hand side and cash payments recorded on the right. The main benefits of a cash book is keeping tight control over cash, being able to monitor the business’s cash-flow position and determine cash balance.
Outline an income statement - record keeping strategies
An income statement is used primarily to help a business calculate how much profit it has made over a period of time. It can help to know if the business is making an adequate profit or if revenue is high enough to cover expenses.
Outline Price - factors to consider when choosing a supplier
For a business to remain profitable it must keep costs low where possible. The price of raw materials will often be the deciding factor for a business that competes on price.
Outline Quality - factors to consider when choosing a supplier
The quality of the goods and materials provided by suppliers will generally determine the quality of the final product offered by the business. If a business wishes to develop the reputation of offering quality goods and service to its customers, it needs to source quality inputs from its suppliers.
List 2 benefits of using suppliers who consider CSR
- May reduce business costs —
savings are achieved through
‘green’ initiatives such as
reducing the use of energy. - Improves the reputation of
the business — members of
the community, including
consumers, are likely to
perceive that the business is
meeting wider community
expectations.
Outline reliability - factors to consider when choosing a supplier
Businesses that have a fast turnover of stock often rely on quick and timely delivery from their suppliers. If a business doesn’t receive the goods that are needed to continue its operations, it may not only lose sales but also its reputation may suffer as a result of not being able to deliver to its customers.
List 2 disadvantages of using suppliers who consider CSR
- Increased costs associated
with sourcing socially
responsible suppliers – socially
responsible suppliers are likely
to pass increased costs of
production on to the business. - Maintaining a supply chain
that sources sustainable
materials will be expensive and
time-consuming – checking and
maintaining checks on all
suppliers claiming to be socially
responsible is likely to take
costs
List 4 policies
- recruitment policies
- occupational health and safety policies
- anti-discrimination, equal opportunity and harassment policies
- drug and alcohol policies
- customer service policies
- risk-management policies
- supplier policies
- environmental policies
List 2 advantages of policies and procedures
- Help employees to know what
is expected of them with
respect to standards of
behaviour and performance - Allow the owner or management to have an accepted method of dealing with complaints and misunderstandings
List 2 disadvantages of policies and procedures
- Researching and writing policies and procedures may require legal expertise, and so can be costly.
- It can be difficult to communicate policies throughout the business,
particularly a large one.
Policies need to be properly
implemented, enforced and
monitored - time consuming
Explain the difference between policy and procedure
The difference between a procedure and a policy is that a policy is written set of guidelines to be followed by all employees, where as a procedure is a series of actions that enable a policy to be put into practise.
Identify the role of external professionals when establishing a business.
External professionals such as accountants, solicitors and bank managers can support owners undertaking business planning by providing financial and legal services.
Explain technological issues
A business that can
incorporate such advances into its operations successfully will thrive, while those that are too
slow to take up the change or invest in the wrong technology are unlikely to experience much success. Technology not only affects how a business creates its goods and services, but it also plays an increasingly important role in the administration
and marketing of a business.
Explain global issues
The globalisation phenomenon has presented many opportunities as well as problems for businesses in the twenty-first century. The removal of trade barriers has allowed Australian businesses access to a wider range of overseas suppliers and resources, customers and overseas retailers, as well as competitors.
Explain overseas suppliers - Global issues
Overseas suppliers and resources can be used in a business as Australian businesses now have access to a global supply network. The advantages of this are materials may be cheaper due to factors such as lower costs of labour and a business may be able to source materials which are not locally available. However, there may be long lead times and there may be hidden costs associated with different cultures and time zones.
