What is a Micro Business?
Micro businesses represent around 25% of all businesses in Australia – a pretty hefty chunk of our business landscape when you think about it. So, what are micro business and how are they different to simply being small? Let’s take a look.
What’s the difference between a micro business and a small business?
In Australia, a small business is defined as one with an annual revenue turnover (excluding GST) of less than $2 million and employs fewer than 15 people. While micro businesses also fit into this category, they typically employ between one and four people.
Micro businesses are also often owned and operated by a self-employed individual with no employees. Freelance consultants, designers, writers, web developers, life coaches, and self-employed personal trainers are all examples of micro businesses.
What are the challenges of running a micro business?
A micro business owner usually needs to be a jack-of-all-trades. As well as being an expert in your field, you also need to be a marketing whizz, a customer service pro, a content creator, and a bookkeeper. As a result, micro business owners run the risk of spreading themselves too thin and losing focus on their core idea.
The good news is that, in recent years, technology has caught up with the needs of entrepreneurs. Today, there is a range of time-saving tools designed to support small business owners in areas where they don’t know it all.
For example, you can automate your business’s digital marketing with social media scheduling tools; chatbots and virtual assistants can shoulder some of your customer service load; and cloud-based accounting tools, such as QuickBooks Online, make accounting easy.
How do you start a micro business?
Starting a micro business is relatively easy. Creating a business plan is a smart first step. This will basically act as the blueprint for your new business. You’ll also need to register a business name and an Australian Business Number (ABN), and set up a website.
Depending on your industry, you may also need to apply for licences and permits, and purchase appropriate insurance to protect your business against potential liabilities.
What are the tax considerations for micro business owners?
Most micro businesses are registered as self-employed sole traders, which comes with far fewer tax obligations than if you register your micro business as a company.
If you expect your micro business to have an annual turnover of $75,000 or more, you’ll need to register for Goods and Services Tax (GST). And you’ll likely need to put money aside to pay your quarterly Pay as You Go (PAYG) income tax instalments. As a sole trader, you can claim most business expenses as tax deductions to reduce your taxable income.
Starting your own micro business can be incredibly rewarding. It’s an opportunity to run your own race and is relatively easy to set up. Your ongoing success will depend on your capacity for hard work and your ability to wear a lot of hats. Get it right and it could be the best decision you’ll ever make.
Source: Quickbooks