Dooley Blog

We often see people with great ideas wanting to go into business for themselves but are overwhelmed by the enormity of the step into self-employment. Whilst we are here to guide you through the legal aspects of your business, below is a list of practical tips which may see you survive your first year with a smile until your business is up and running, paying you a salary and the figures are appearing on the correct side of the balance sheet.

• Save diligently in the time prior to going out on your own

• Pay utilities or other regular outgoings in advance so that they are one less expense you have to worry about during the start up period of limited income, if any

• Keep your day job as long as you can through the set up period to enable you to still earn a salary as you may not earn a wage during the first 12 months

• Take on a part-time job which allows you some time flexibility to focus on your new business but also brings in some income

• Check with your home loan lender and know what re-draw facility you may have available

• Search out the best deals on the expenses for your new business

• File your GST returns by the due date. Expenses in the early months will most likely outweigh the income so you may be due a refund

• Keep good lines of communication with your clients open and ensure they are paying on time for the goods or service you are providing. As a small business it is difficult to deal with overdue accounts or long payment periods. Follow up deliveries or service with a call to ensure they have the invoice and understand your terms for payment.

It’s all in the planning and if you fail to plan, you plan to fail. If you have a desire to start your own business, take the time to get professional legal and commercial advice prior to setting out on the road to independence. Our Commercial Lawyers can assist you on your new path to financial freedom and help your business avoid meeting with unwanted legal issues.

Anyone who has applied for any form of credit over the past seven years, has a credit file. Your credit file records details of the credit you have applied for, it’s purpose and the amount of credit you’ve applied for during that time. It outlines any payment defaults, personal information and information relating to things such as bankruptcy and the like. A good credit rating along with a steady income are essential factors in obtaining loans, credit cards, interest free retail offers and even securing a rental property.

The credit rating agencies obtain information about your financial history from multiple sources, including you.
The information in your credit file dictates your credit risk which banks, retailers and other credit providers will check prior to deciding if they are prepared to lend you money or give you credit. The providers have their own methods of assigning a credit rating to you from the data held depending on their own profiling of clients.

If you have a negative credit rating brought about by overdue accounts or defaults, fraudulent use of your credit card, or incorrect information in your credit file, it will be very difficult to borrow money.  You may not qualify for a loan or may have to pay a higher interest rate or put down a greater deposit or bond in order to qualify.

Often, if you do not pay an account with a service provider, your credit rating is at risk. Irrespective of other recovery methods and whether you eventually pay the account the service provider may still have reported a default on your credit rating.  This default will stay on your file for between 5 and 7 years. Even if you subsequently pay the amount, your file will reflect that you have defaulted in the past but it has since been paid. Repairing a bad credit rating is far more difficult than maintaining a good credit rating.

If you find yourself in a situation where you have incurred a cost but now have difficulty paying the amount due, keep the communication channels open with the creditor. Don’t dodge the debt or their contact with you. Consider your options and the potential outcomes of each option before the matter goes too far. When many people find themselves in financial difficulty their first instinct is to stop communicating. This often makes creditors nervous and more likely to act harshly against the debtor. Often once something is entered onto your credit file it is very hard to remove

If you find yourself in a situation where you feel your credit rating may be at risk here are five (5) tips to help you out:

1. Check to ensure your credit report is accurate.If it is not contact the credit rating agency and rectify the situation urgently.

2. Select the autopay option for your monthly or regular bills to avoid costly oversights.

3. Consider voluntarily including information on your credit file which will reflect positively on you – ie marital status, length of continuous employment etc.

4. If you have multiple debts, take some professional financial advice and consider a facility such as a debt consolidation loan before your ceditors move against you.

5.  If you have signed up as a guarantor for someone else keep tabs on their payments to avoid a default against you for someone else’s tardiness.