Below is me (Guy) and 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 email@example.com
If you'd rather watch a video to get some quick tips on starting a business in Australia, watch this video below:
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:
- If you’re bankrupt, you can’t run a company during the period that you’re bankrupt. For more on this, have a look at this page.
- If you‘ve been involved in two or more liquidated companies, The Australian Securities & Investments Commission (ASIC) can ban you from running a company for around five years. Liquidated in simple terms is when a company assets are liquidated, and the company is closed.
- Suppose you’ve been convicted of certain criminal charges such a fraud. In that case, you’ll not be able to run a company for a certain period since the charge. Go to ASIC to find out more about this.
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:
- Are my partner, family, friends supportive? This is not a deal-breaker, but it’s essential to run it by your nearest and dearest to get a sense of their thoughts. A partner who disagrees with what you're doing could make things challenging.
- Are you doing this as a full-time gig, or is it a side business? Sometimes it can make sense to keep working while you get the company up and running.
- Are you starting this on your own? If you are doing it with others, have a big think about this. Running a business with a friend or a family member can go either way. I’ve seen people lose friendships and break up families working together, so consider this.
The structure of your business is essential and has a direct impact on:
- The amount of tax you’ll pay.
- Specific regulations you need to follow.
- Your personal liability.
- Legal requirements.
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.
To read a more detailed article on business structures read our article:
The 9 main business structures in Australia
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.
Quick and easy to set up.
You can use your personal tax file (TFN) for tax returns.
You have full liability.
Your personal assets can be at risk if things go badly.
You personally pay tax on all income.
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)
- General partnership (GP) – is where all partners are equally responsible for the business’s management, and each has unlimited liability for the debts and obligations it may incur.
- Limited partnership (LP) – is made up of general partners whose liability is limited to the amount of money they have contributed to the partnership. Limited partners are usually passive investors who don’t play any role in the business’s day-to-day management.
- Incorporated Limited Partnership (ILP) - is where partners in an ILP can have limited liability for their debts. However, under an ILP, there must be at least one general partner with unlimited liability. If the business cannot meet its obligations, the general partner (or partners) become personally liable for the shortfall.
Pretty straight forward, and cheap to set up.
Not too much reporting needed.
All partners are responsible for the Superannuation.
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.
Less personal liability.
You can offset any losses.
Higher set up costs.
Need to follow the Corporations Act 2001.
There are rules to follow as Director.
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.
Your assets are protected.
Very flexible for distributing assets and income.
Business trusts can be expensive to set up and to look after.
Profits incur penalty taxes.
Notes on business structures:
- You need to choose the structure of your business before you register, (registering details are coming below).
- Your business structure can and probably will change as the business evolves.
- It is wise to talk to an accountant regarding your choice of business structure.
To read a more detailed article on business structures read our article:
The 9 main business structures in Australia
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.
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:
- What domain names available for the business name?
- If you need social media names/handles for Facebook, Instagram etc., what is available? To check your social media handles, go to Namecheckr or Namechk.
- Do any other businesses have similar names in Australia?
- Is the name trademarked by someone else?
- Is the name an offensive word in certain cultures?
Go to register.business to register your business name. You can do this and apply for your ABN at the same time.
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:
- Has an annual revenue turnover of AU$75,000 or more (this is gross/total income minus GST).
- Is it a non-profit organisation that has a turn-over of $150,000
- If you have a taxi or limousine service regardless of your turnover. If you want to claim tax fuel credit for your business, you need to register for GST.
Notes: You can register for GST at the same time as your ABN and business name.
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.
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:
- Can the business that does your personal taxes do your company tax? Can they give advice on business tax in your state?
- You need to have a good relationship with your accountant. It can be a significant relationship that can be very beneficial for your business if they’re good.
- Does the accountant deal with other businesses your size?
- Get a referral to their existing clients. It is great to talk to a few of the accountant’s clients to get a feel for how good they are.
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:
- Your earnings.
- Your assets (vehicles, machinery etc.)
- Your employees.
- Your properties.
- Your customers.
- Your work.
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.
Legal essentials for your business
Your business needs to comply with lots of legal stuff, such as registrations, contracts, insurance, employment, and employment. The legal world is highly complicated and can change regularly, so you must have good advice on this.
Other things to consider regarding your business
There will be lots of other things to think about, here are a few of them.
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
These podcasts have been recommended by our founders telling their stories.
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.