Commencing a business is a thrilling journey. It can also be demanding, arduous, and at times, overpowering. The multitude of factors to contemplate and the challenge of retaining all necessary tasks in mind can pose a difficulty.
Rest assured, we are here to assist you. This article presents a comprehensive guide regarding how to start a small business in Australia. This list will be a valuable tool to ensure that every essential aspect is noticed as you progress from conceptualization to establishing your startup.
How to Incorporate a Small Business in Australia
If you are looking to set up your small business in Australia, you need to follow the given steps which are mentioned below:
Prepare a Business Plan
To establish a small business in Australia, the initial step involves the compilation of a comprehensive business plan. This essential document offers a concise summary of the business’s nature, operational procedures, market potential, key personnel, financial forecasts, and other crucial aspects.
Furthermore, your business plan serves as a valuable tool when seeking financial support in the future. Investors appreciate the evidence of thorough research and analysis, which a well-crafted business plan provides. Particularly for first-time entrepreneurs lacking a proven track record, a meticulously written business plan holds significant value.
Select your Business Structure
The selection of the structure for your business holds significant importance, as it directly impacts various aspects including:
- The extent of control you possess over your business operations.
- Compliance with regulatory requirements.
- Ensuring health and safety measures in the workplace.
- The tax obligations you are liable to fulfil.
- The level of personal liability you may encounter.
There are 4 types of business structures which help you to start your small business in Australia:
- Sole Trader: Setting up and operating a sole trader business structure is a straightforward process. Although sole traders have the option to hire employees, the sole owner bears full legal responsibility for the business, encompassing any debts or losses incurred.
- Partnership: In a collaborative venture, a group of individuals, numbering two or more, jointly operate the business without establishing a formal company structure. They allocate the business’ profits and losses among themselves.
- Private Company: This is a commercial enterprise or organization that possesses an independent legal existence from its shareholders.
- Trust: This is a commercial enterprise or organization that possesses an independent legal existence from its shareholders.
Register your small business with ASIC
Once you have decided to establish your small business, the subsequent task is to officially register it with ASIC. This can be conveniently done through an online process. Following successful registration, you will be provided with an Australian Company Number (ACN) and a certificate of registration.
Choose your business name
If you or your business partner are not trading under your first and last name, it is necessary to register your business name in Australia. The process of registration can be either enjoyable or challenging, depending on your viewpoint.
Ensure that you select a name that aligns with your brand and sets you apart from your competitors. Subsequently, verify its availability and proceed with the registration to secure exclusive rights to use it in Australia.
Choose your registered address
It is essential to possess a legitimate address for your business during the registration process. This address should serve as your primary location of operation, making a PO box address unsuitable. The Australian Securities and Investments Commission (ASIC) will utilize this address to dispatch your official documents.
Apply for an Australian Business Number (ABN)
An ABN, or Australian Business Number, is a distinctive 11-digit number assigned to your business as an identification tool. It is essential for monitoring business-related operations within Australia. It should be noted that an ABN is distinct from an ACN, or Australian Company Number, which is solely mandatory for businesses registered as companies.
Obtain Tax File Number (TFN)
If you run a partnership, company, or trust, it is necessary to obtain a Tax File Number (TFN) for your business. Sole traders, on the other hand, can utilize their personal TFN when submitting their tax returns. Applying for your business TFN can usually be done simultaneously with your Australian Business Number (ABN), streamlining the entire procedure.
Register for Goods and Services Tax
Upon reaching the GST threshold, which currently stands at a turnover of $75,000, it becomes necessary for your business to undergo GST registration. The Australian government allows a grace period of 21 days for businesses to complete this process. To ensure compliance, most businesses should obtain an ABN and promptly register for GST if they anticipate their turnover to surpass the GST threshold within the initial year of operation.
Register your small business name with ASIC
Registering your company with ASIC is distinct from registering your business name. After obtaining your ABN, you can proceed to register the business name you have selected with ASIC. To complete this process, you will be required to provide your ABN, name, contact details, the principal place of business’s name and contact details, your chosen name/s, payment information, and additional details.
Obtain Business License
To legally operate in Australia, businesses are required to obtain specific business licences, permits, and other necessary documentation. The exact documents required may differ depending on the industry. To determine the specific requirements for your business, it is advisable to visit the official government website for the Australian Business Licence and Information Service. This resource will provide you with comprehensive information regarding the licences and permits you need to obtain.
Open a bank account
After setting up your small business in Australia, you need to open a separate business bank account to regulate your business’s financial activities. However, mixing business and personal accounts unnecessarily complicates many aspects of managing finances.
Documents required to start a small business in Australia
- Australian Business Number (ABN)
- Business Name
- Business License
- Business Plan
- Business Registration Certificate
- Tax Registration
- Registered Business Address
Why register a small business in Australia?
- By registering your business as a company or partnership, you can enjoy the benefits of limited liability. This means that your assets, like your home or car, are protected from business debts.
- Registering your business offers the advantage of limited liability. This means that if your business incurs debts, your assets, such as your home or car, are safeguarded. Creditors cannot seize your personal belongings to settle business debts.
- When you register your business as a company or partnership, you gain the benefit of limited liability. This shields your assets, like your home or car, from being targeted by creditors in case your business faces financial troubles.
Smooth Incorporation with OnDemand International
OnDemand International offers a valuable solution for small businesses in Australia looking to seamlessly and effectively incorporate their operations. Services offered by them are:
- 100% remote incorporation process
- Cost efficient solutions
- Accounting and bookkeeping services
- Flexibility and Convenience
Determining the appropriate business structure for your business is contingent upon several factors such as liability, tax implications, and growth aspirations. It is advisable to seek professional guidance to make an informed decision.
Certainly, if your business name is not the same as your name, you will need to consider that.
Keep detailed records of your income, expenses, assets, and liabilities for at least five years.