How do you set up multiple income streams? How does the tax department view it and what do you need to do with your ABN for it?
This week I was asked by a reader:
“Hi Kylie! I was wondering if you have ever done a blog post on ‘multiple income streams’ and how that works when just starting up with an abn and business name as a newbie sole trader, how to set up and manage multiple income streams, or similar? I feel clueless on where to begin, or how it works with the ATO. I want to start achieving my goals for my little family (single mum), but scared to take that first step or put a foot wrong.”
I have always had multiple streams of income and think it is important that everyone has more than one stream of income to protect against things that can go wrong and ensure financial security for your family. It’s a bit of paperwork sorting out your ABN, business structure and everything else you will need, it is worth it to get it right.
Firstly, you can have multiple streams of income and businesses coming under the one ABN. In fact, if you already have an ABN or existing application when applying, the ATO looks for this and it can delay the whole process if you apply for multiples. Also, multiple ABN’s is like a red flag to the ATO in terms of checking your tax declarations. All round, one ABN is easiest and recommended.
When setting up multiple streams of income, there are quite a few things you need to do.
1.) Decide on your businesses or multiple income streams
Do you want to have a full on business or are you looking at a few part time side hustles/making money from your bobby? The difference with this is for a business you should have a full business and marketing plan, whereas if it is multiple side hustles such as selling on Ebay, setting up an Etsy shop or similar, you might not need to do a full business plan. Decide how you want to make money, what the business names will be, check to see if they are taken and if the domain names are taken, then move forward. When doing this, also think about your exit strategy that is, do you plan to sell at some point? Are you going to appoint a new manager/CEO when you are ready to retire or how will it work? Having the end in mind helps when you are setting up as well as determines some things in how you run the businesses.
A business plan at this stage or any stage throughout the process will help guide you, make you think about what you need to do and provide a map as you move forward. The Australian government has some templates here.
2.) Decide on the business structure
Most small businesses go with the sole trader option as it is just them and when you re starting out you are unsure of how much you will make, if it will be successful and what you should do. There are other options though including a partnership or company. Each business structure has it’s pros and cons. It is up to you to decide which option is best for your needs. I discussed my needs with a business lawyer and accountant before setting up which costs a bit of money. Sole trader is the simplest business structure and how I structured my business (blogging/author/speaker fees) from 2010 until I established my company in 2014. A company has more requirements, expenses and paperwork than a sole trader. There are other protections a company offers though and if you are going big, a company might make the most sense.
3.) Get an ABN
As mentioned, you can have multiple businesses running under the same ABN. You cannot register a business name without an ABN though. Getting an ABN can be done online and it is free. Despite how daunting it can be to deal with the tax department at times, the ABN process is a simple step by step process. Check the list of what you need before you get started and it should be relatively painless. Head here to get your ABN.
4.) Register a business name and other licences
You will need to register your business name for it to be yours. Some businesses have one name, then trade under other names. In order to get a .com.au domain you will need to have proof of ownership for the business if anyone disputes it. Register the business name and secure your domain. You can register your business name here.
Along with the business name, check to see what other licences you need to register for with the business or stream of income you are looking at pursuing.
Check to see if you need to trademark you business name, your idea, your products whatever it is that you are doing or if you want to patent your creation or anything else like that. You can find information on trademarks here.
6.) Secure the domain name or names
If you can do this as soon as you have decided on the business name. People have been caught out not being able to get their domain name when they have set up their business. Buy the domain and the variations such as .com, .com.au, .net, .org, .org.au or at the very least just do .com and .com.au. You can redirect the others to the main website you choose to use. If you do not purchase all the variations there is nothing stopping someone else buying them and causing issues for you down the track.
Personally, I have quite a few domain names and have secured my kids names in various forms should they decide when they are older to have an online presence. I’ve often used CrazyDomains to get the .com.au domains or gone directly with my host which is SiteGround.
7.) Set up your site
Most income streams will require a website and social media presence. Get the handles for the social media platforms you want to be on and get working on your site. For me, I started with BlueHost, however am now with Siteground. They both have one click installs for WordPress which means you buy the hosting package, connect your domain name then click to install WordPress. It was all super easy, their customer service is fast and problems fixed quickly. I have used a variety of hosts over the years when buying and selling sites, including trying Crazy Domains as a host, but my preference has been SiteGround out of all the ones I have tried for easy of use plus affordability.
With WordPress installed you can select the theme that best suits your needs, install plug ins to protect it, increase SEO, get email sign ups, maximise speed etc. I love WordPress as an easy to use platform. Alternatively, you can pay someone else to set all this up for you.
8.) Business Insurance
Business insurance is essential from the very beginning. You cannot afford to be doing anything and risk getting sued, injured or anything else like that. I spoke to a broker to work out what I needed, what I would be covered for, potential risks etc.
Decide how you will manage the books, track what income came from where, allocate superannuation for yourself and other financial matters. Most businesses I know love Xero, others simply use a spreadsheet or outsource to a book keeper. It’s up to you how you do it, just ensure you have a system for your accounting or it can get very messy.
10.) Marketing for your business
Create a proper marketing strategy. Determine who your ideal client is and what would appeal to them. Along with a broad audience e.g. 25 to 45 year old Australian mums, create a specific sub audience that you can use for targeting ads on Facebook and similar.
For example, on another site I own, the audience was 25 – 45 year old Australian mums looking to make and save money. I tried a few different variations of a broader audience, ran some Facebook ads etc. Then, when I went deeper and decided on one exact person I was targeting to, traffic, conversions and page likes skyrocketed with my ads consistently being placed in the top 99% of similar ads on Facebook. Go deeper with your specific person. Decide on their age, location, occupation, gender, relationships status, income, if they rent or own, how they travel to and from work, podcasts they listen to, sports they play, interests they have, how they might spend their weekends etc.
e.g. Mum aged 38 with 2 kids at home age 7 and 10. Married living in Sydney northern beaches. Family income is over $250,000. Mum works part time in as an insurance broker. She drives an Audi 4, runs on the beach each day, plays netball once a week and does three pilates classes. She wears Lorna Jane and Lululemon to work out in and likes her children to be well dressed and the same. Her children play netball and soccer on weekends along with tennis during the week. On weekends the family participates in sports on a Saturday, with family BBQ’s and dinners with friends in the evening. They eat according to a paleo diet.
Get inside the head of the person you want to market your business to then create your content around them.
11.) Grants and funding for you business
Check to see if you are eligible for any grants, business funding, education or extra help such as the NEIS program to assist you financially when starting out. Banks often run grant rounds, as do various government departments and larger corporations.
12.) Go for it
With your business or income streams decided and set up, it’s now up to you to smash them out of the ballpark. Believe in yourself, work hard, put systems in place and go hard after your goals. Your business won’t grow on its own.
What business tips do you have?
For more resources and advice, check out my resources page.