Article by Jane Tweedy, Business Advisor, Western Sydney Business Centre
We often need to acquire the services of other businesses – landlords, web designers, accountants etc. How do you avoid pain and build a great relationship? Conversely, how do others assess you, and how can you show yourself in a good light?
Many people start by requesting recommendations from friends and acquaintances, or post on a Facebook group. Some recommendations are from people referring a friend or business network referral partner, but who have not actually used the service. Some may have had a genuinely great experience, but was it recent and doing what you require? Great recommendations don’t automatically equate to a great service! Therefore you must conduct your own due diligence.
Conducting due diligence
- Look for reviews and testimonials from real clients or review actual work completed
- Make sure the business has adequate contact details – someone that hides behind Facebook Messenger or a disposable free email address only may not be a safe option
- Check whether they have an ABN and registered business name (or trade as their full legal name) on abr.business.gov.au or on ASIC
- On the abr site check for GST registration. A business may only issue a tax invoice if they are registered for GST, otherwise it must be an invoice with no GST.
- For an expensive contract you should be speaking to customer referees and questioning the process as well as the completion
- Check for insurance and licences if required (for instance for builders or electricians)
Remember negotiation is not just on price, but also scope, value and quality. If nothing else moves, expect no move in price. Agree a contract that protects both parties.
Make it business practice to regularly check that the ABN and GST status are current. If a business does not provide a valid ABN (where required) you must withhold 49% of the payment and forward to the ATO. If you paid them already in full, you can be made to pay an equivalent penalty!
GST if it is incorrectly charged can be difficult to recoup, and you can get double hit if you also claimed the GST credits incorrectly.
Better to check than to fix later!