Starting a new business is both exciting and risky at the same time.
You have to put together a team of talented employees & adhere to the legal terms and regulations that apply to your business operation. This includes tax regulation, following financial guidelines, and complying with similar employment laws.
It is easy to miss out on a few things while starting your small business. These legal obligations, if not followed properly, can hurt your business. Moreover, in a country like Australia, where consumers are heavily protected, you’ve got to ensure you adhere to the government regulations to see your business no just survive, but thrive.
So, you may ask: “How do I get started?”, “What are the important aspects I can’t afford to miss?”.
Before you start fretting over such questions, take a breath! We’re here to help.
This article contains essential steps you can’t ignore while starting a small business in Australia.
Have a look.
Essential Requirements For Starting a Business In Australia
Choose The Business Structure
The first step is to decide your business structure. It can be a Limited Liability Company (Pty Ltd) or a sole trader business. Let’s look at these two in detail.
This Business structure is an incorporated entity that protects shareholders (ie: you) from personal asset loss in case your company goes bankrupt or, in legal terms for a company, goes into liquidation. In this case, your company will be a separate entity to you. It offers excellent personal protection from liabilities. Moreover, having a Pty Ltd also gives you options in terms of tax as you separate your personal tax from that of the company and company tax is calculated differently to personal income tax.
This is a completely different business structure to that of a corporation. In this case, you are operating in business as a sole trader and taking on all of the risks of the business in your personal capacity. That is, you will be personally sued if the business is sued.
Both the business structures have their merits and demerits. You need to consider your team size, plans for the business and business requirements before finalising any business structure.
Bottom line: Even if you are a one-person business, a Pty Ltd would be ideal but is more costly than working as a sole trader.
Register Your Business Name
Your business’ name should reflect the brand vision. Moreover, it should be unique (not claimed by any other party) and easily understandable.
There are many ways to register a business name and to use a business name in trade but not all ways of use or registration give you enforceable rights:
- Trade Mark: A trade mark registration secures your business name Australia wide and gives you legal rights you can enforce for your registered goods and services.
- Domain Name: A domain name is a lease only and leases a business name on the internet. It does not give you enforceable rights against others.
- Entity Name: Secures your business name Australia wide but does not provide you with enforceable rights.
Register TFN, ABN & GST
If you wish to start a business in Australia, you should register an Australian Business Number (ABN).
An ABN is an 11-digit number registered with the government which records the name of the trader operating the business name. You need to apply for an ABN number and can do so by clicking here.
We’d also suggest applying for the GST simultaneously. If you are starting a business in a partnership, trust or as a Corporate, you’d need to file a Tax File Number (TFN).
Note: The company TFN will be different from your personal TFN.
Start a Business Account
You should also ensure that your business has a separate bank account to your personal bank account. This also assists when you want to sell your business to prove the income for the business.
To start a business bank account you will need to supply to your bank:
- A copy of the certification of the company incorporation or business name registration along with your ABN
- 100 Points of ID
- Any trust deed if the business is owned by a trust or is a trustee.
Also consider opening a Stripe or Paypal account to help customers make payments easily. This will translate to better conversions and more sales and less bad debts – which is great for small business.
Contact Legal Advisors
Legal issues can hinder the work of any business irrespective of its type or size. As a registered business, your business would need many types of legal protection. Intellectual property lawyers & Technology lawyers can help in this regard.
We’d advise consulting them to ensure the seamless functioning of your business.
Starting a business isn’t always straight forward and there are alot of legal issues to consider. From ideation to legal obligations and securing and keeping customers, a lot goes into the process. You’d want to be sure legal hindrances do not affect your business’ growth and scalability.
We hope the above-stated tips will be useful for you!