If you are asking yourself the question,“How to start a business in Australia” then you have come to the right place. As in most countries, Australia has its own set of rules and regulations when it comes to setting up a business.
You need to comply with the various requirements set out by the government in order to operate legally and maintain compliance in Australia. In this guide we’ll look at fundamentals of starting a business, such as creating a business plan, choosing a business structure, a business name, applying for your ABN, funding, software and taxes. Let’s get started.
Create A Business Plan
You have an idea and you are ready to take that leap of faith. Creating a business plan is one of the most critical first steps when considering how to start a business in Australia. A business plan outlines your business goals, strategies, and the steps you need to take to achieve those goals. The key ingredients include:
Executive Summary
An overview of your business, it covers things like, what services or products you offer, your business name, location and why you think your business will be successful.
Company Description
Detail who your target market is and how your business will add value to its customers.
Organization & Management
You will need to decide on your business ownership and potential business structure. You will also need to note the team that will manage your business.
Service Or Product Line
Here you will describe what products or services you will offer. Include important information like the product life cycle. If your business will conduct any research and development then you will also note this in this section.
Marketing & Sales
You will need to explain how you plan to attract customers and most importantly how you will retain them.
Funding Request
This is an important section, here you will need to note how much money you will need over the next five years to effectively run your business. You will also need to note how you plan to spend this money.
Financial Projections
Based on your market research you will need to predict potential income. When asking for funding investors will want to know how the repayment period and return on investment is estimated to be.
Choose Your Business Structure
Another important consideration when asking how to start a business in Australia, is whether you have chosen the right business structure. This plays a pivotal role in the future of your business. It will affect your tax and legal obligations, and determine how much control you have over your business and the amount of liability you hold.
In Australia, we have four main business structures:
Sole Trader
This business structure means that you are the only owner of your business. You can still hire people to work for you but ultimately you make all the decisions and are personally responsible for any risks or liabilities.
Partnership
This is when you choose to open your business with two or more people together, but not as a company. As like a sole trader, you and your partners make all the decisions and are also personally responsible for any liabilities.
Company
This is a commercial business that exists separately from its shareholders. This means that you have limited liability and are not held personally liable for any debts.
Trust
This is usually the structure type used for investment purposes. It is an entity that holds property, income, or other assets for the benefit of a third party/beneficiaries.
Pick A Business Model
It’s time to decide on the type of business model you want to start. This could be an online business, a franchise, or you could work as an independent contractor. Remember that each industry has their own legal obligations and regulations.
Apply For An Australian Business Number (ABN)
Your ABN is a unique 11-digit number that the government and other businesses use to identify your business.
You can apply online via the Australian Business Register (ABR) website.
Not every business has to apply for one. If your turnover is more than $75,000 / yr (before GST), you are required to register for GST. To do that you will need an ABN. You may also choose to apply for an ABN to increase your perceived legitimacy to clients.
It is advisable to register for your ABN through a registered tax agent like Allevi8HQ to avoid any errors or penalties.
Register Your Business Name
You can register your business name via the Australian Securities & Investments Commission (ASIC) website.
Keep in mind that the business name you choose to register will be associated with your online presence and brand – so choose wisely.
Register Your Domain Name
Once you have registered your business name then you should go ahead and register your domain name. Only registered businesses in Australia can register for “.com.au” addresses.
Identify Your Funding Source
As you know, starting a business requires capital investment. Thankfully there are several loan and funding options available for new businesses (startups) in Australia. These include grants offered by the government, loans and investment from private investors.
How you choose to fund your business will depend on your financial situation and the needs of your business. So keep in mind when tackling how to start your business in Australia.
Choosing Your Software Stack
Very few businesses can operate without some form of technology and software. Choosing the right software to support your business is important. Even businesses that are not office bound require some form of software. Tradies are a good example of this and are able to benefit from online accounting software that allows them to manage their finances on the go.
Registering For The Correct Taxes
This final step on our journey on “how to start a business in Australia” is probably one of the most important steps. You will need to register for the relevant taxes applicable to your business.
The most common taxes are Goods and Services Tax (GST), Pay as You Go (PAYG) withholding tax, and Fringe Benefits Tax (FBT). Our team of tax accountants can help you through this process and ensure you register for all the required taxes.
Next Steps
Trying to figure out how to start a business in Australia can be overwhelming. For more helpful tips, take a look at starting a business checklist or Contact us for assistance.
