You’re about to open your first inner city florist. It’s a small store, and you will probably only need one other staff member. You’re trying to determine the size that your business will be legally classified as, and what this means for you. Are you running a small business?
For legal guidance regarding your small business, it is recommended that you engage a business lawyer.
What is a Small Business?
‘Small business’ can be defined in either terms of turnover or number of employees.The reason for this is because the definitions provided by differing government organisations vary. For example, the Australian Taxation Office defines a business as ‘small’, if it’s annual revenue is less than $2 million. In contrast, Fair Work Australia defines a business as small if it has less than 15 employees. The Australian Bureau of Statistics, however, says a business is small if if has less than 20 people working for it; a definition which has informally been adopted.
So if your florist will employ fewer than 20 employees, and is expected to have a turnover of less than $2 million a year, it will be legally defined as a small business.
What does the size of a business determine?
As a small business owner, you are responsible to comply with your tax and superannuation obligations.
The size of your business will determine the taxes that you pay. This is because small businesses are eligible for government tax breaks. If your small business is a company, you will receive a 1.5% tax cut. If you are a small business operating under any other structure you will receive a 5% tax discount.
As a small business, you the employer, will also need to personally make super contributions on behalf of your employees.
Benefits of being a small business.
Being a small business, you will have a number of advantages over your larger competitors.
Your small business can be lean. This is because you will have fewer employees than larger competitors, and will have fewer layers of management. Chances are, it’s just you managing all of your employees. This means that you will have greater control, and will be able to implement change quickly.
Greater customer contact
You will be able to interact with customers more frequently than your larger competitors. As a small business you will have fewer departments and your business will be less hierarchical. This means that your customers can have a closer relationship with your business. For your florist, this means a customer can walk into the store and get in contact with the business owner, directly. For a multi million dollar floral delivery network, chances are a customer will never get the opportunity to speak with the business director. This has benefits in terms of getting feedback from your customer, and handling complaints more personally.
Your business will be smaller, and as a result will have greater flexibility to respond to competition. Larger companies will often need to go through lengthier and more complex decision-making processes before they can make a change. Your small business will have fewer people involved in the process. If the florist in the suburb over implements a promotion, your business will be able to implement a similar promotion without having to consult a marketing team. Similarly, if a customer gives feedback about the product, you won’t have to consult a development team before altering your product.
You’ve opened your florist, your flowers are blooming and hopefully so was your choice to become a small business.
LawPath can find the right business lawyer for your small business needs. Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from one our network of 600+ expert small business lawyers or any other legal needs.