How to start a business in Australia · 2021

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What's in this article?

IntroductionAre you eligible to start a business?Are you ready to do this?Business structureApply for an ABNChoose & register your business nameRegistering for GSTGet a tax file numberUnderstanding tax Register a domain nameGet a good accountantHire a financial advisorLicensing and permitsUnderstanding business insuranceLegal essentialsOther things to considerUseful booksUseful podcasts

Introduction

My first business, circa 2002.


There’s nothing more exciting and scary than starting your own business. I started my first business in 2002. I started a cleaning company, and I had no idea about starting a business.

With this article, I want to give you the tools to help start a business in Australia. I’ve tried to do it in a logical order to make sense of it all. If you feel it is missing anything,  please email me at guy@founderoo.co

Are you eligible to start a business?

This seems like a strange question at this point, but if you’re not eligible, it’s better to know now.

Certain people can’t run and operate businesses in Australia. This list isn’t exhaustive,  but here are the main groups of people who can’t start a business in Australia:

Are you ready to do this?

I don’t want to put you off, but starting a business is a big deal. It takes lots of time, effort and money, so be sure that you're happy to dive in and really commit.

 A few things I would consider before starting a business:

Sydney city. Photo by Nile Suan

Business structure

The structure of your business is essential and has a direct impact on:

Note: When choosing your business structure, you need to select the one that fits your needs. Different structures have different liabilities that you need to be aware of.


The four main business structures are:

1. Sole trader

This is the simplest structure and is what many people start with when their business is small. It’s easy to set up and run, and you have complete control over the company. In essence, YOU are the business, and you are legally responsible and liable for all areas of the company. 

I started my cleaning company like this and kept it like that for a few years. I didn’t realise my liabilities and wished I’d changed my business structure to a company earlier. 

Advantages
Quick and easy to set up.
Full control.
You can use your personal tax file (TFN) for tax returns.

Disadvantages
You have full liability.
Your personal assets can be at risk if things go badly.
You personally pay tax on all income.

2. Partnership

This is a business structure of two or more people—those involved split income and or losses between themselves.

There are 3 main types of partnerships (I’ve taken this from business.gov.au)

Advantages
Pretty straight forward, and cheap to set up.
Not too much reporting needed.

Disadvantages
All partners are responsible for the Superannuation.

3. Company

More complex than a sole trader, but it limits your liability. A company is a separate legal entity from yourself, unlike a sole trader or a partnership.

You are a member of the company. You’re not personally liable for the company’s debts unless you are breaking the legal rules.

Advantages
Less personal liability.
You can offset any losses.

Disadvantages
Higher set up costs.
Need to follow the Corporations Act 2001.
There are rules to follow as Director.

4. Trust

A trust is a business structure where a trustee (a trustee can be an individual or a company) carries out the business on behalf of the trust’s members.

Advantages
Your assets are protected.
Very flexible for distributing assets and income.

Disadvantages
Business trusts can be expensive to set up and to look after.
Profits incur penalty taxes.


Notes on business structures:

More details on business structures in Australia.

Melbourne. Photo by Weyne Yew


Apply for an Australian business name (ABN)

An ABN is an eleven-digit number that is unique to your business. Your customers, suppliers and the Australian Tax Office (ATO) use this number to help identify your business. Registering for an ABN number is free. You will need an ABN for various tax reasons and to apply for any business finance, you might need.

Notes: Make sure to decide your business structure before applying for your ABN. You will need an ABN to buy a .com.au domain name.

Register your ABN

More tips on ABN’s

Choose & register your business name.

You will need a name for your business. If you’re a sole trader and you use your own name,  you don't need to register a business name; otherwise, you need to.

To register a business name, you will need to see if it is available. Check if your name is available.

There are a few things to consider before registering your business name:

Go to register.business to register your business name. You can do this and apply for your ABN at the same time.

Steps for registering a business name.

Registering for GST

What is GST? It stands for ‘Goods and services tax.’  It’s a broad-based tax of 10% on most services/items sold or consumed in Australia.

You can register for GST online at abr.gov.au

You do not have to register for GST. It is only required if your business does the following:

Notes: You can register for GST at the same time as your ABN and business name. 

More details on registering for GST.

Brisbane. Photo by Zachary Staines

Get a Tax File Number (TFN)

Whatever business you’re starting, you need to have a Tax file number (TFN).  If you’re a sole trader using your personal tax file number is fine. 

If you’re running a partnership, a company or a trust, you’ll need to register a separate tax file number for your business.

Understanding tax when starting a business

Understanding your business tax is vital before starting your business. Before you embark on starting your own business, it's a good idea to get to grips with what sort of tax payments, record keeping and exemptions you can expect.

Details on your business tax.

Registering a domain name

To secure a .com.au domain name, you'll need to have secured your business name and ABN.

You don’t have to have a .com.au domain name for your website, but it may be good to secure that name even if you don’t use it as your primary domain. I'd suggest that a .com is the first option then a .co or .com.au

Get a good accountant.

It’s essential to get a good accountant when you set up your business. A few tips when hiring an accountant:

Sydney city. Photo by Laura Cros

Licensing and permits

Licensing and permit is a broad subject and is very dependent on the type of business you are starting. 

To find out what licensing or permits you’ll need, go to ablis.business.gov.au

Understanding business insurance

The insurance for your business is crucial. Certain insurance companies offer tailored packages for different types of companies. 

You can get insurance to protect various things regarding your business:

Note: I'd ask a friend who has there own business for their recommendations. If this isn't an option then Google business insurance for your own industry and start from there.

Darwin. Photo by Paul Stuart McLean

Other things to consider regarding your business

There will be lots of other things to think about, here are a few of them.

A business plan
Business budgeting

Brilliant business related books

A few of these books have been recommended by our founders telling their stories.

Let my people go surfing - Yvon Chouinard.
Rework
- David Heinemeier Hansson and Jason Fried
Why people fail
- Siimon Reynolds
Rise
- Mark Bouris.
The Alchemist
- Paulo Coehlo
The E Myth
- Michale Gerber
The Lean Startup
- Eric Ries
4 Hour Work Week
- Tim Ferris
From zero to sold
- Arvid Kahl
12 months to $1 million - Ryan Daniel Moran
Business made simple  - Donald Miller
Building a storybrand - Donald Miller
Do Purpose - Why brands with purpose do better and matter more - David Hieatt
Starting and running a business - Colin Barrow

Burleigh Heads, Queensland. Photo by Patrick Ryan.


Great podcasts

These podcasts have been recommended by our founders telling their stories.

One Wild Ride podcast by Pru Chapman - inspiring interviews with successful entrepreneurs.
How I built this
with Guy Raz.
Australian Story
.
The Design Better podcast

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Hire a financial advisor?

I never hired a financial advisor when I set up my first business, but I think it would have helped.

A financial advisor can help you with your business’s financial planning if you don't feel comfortable doing it yourself. They can help with your insurances, budgeting and registering your business.

Note: Be aware of the costs before getting involved with a financial planner.

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