How To Set Up A Business In Australia

Unless you can fund your business operations and then generate enough revenue to make a profit, your business is destined for failure eventually. You need to determine if your business is viable and how you’ll attract customers or investors.

It’s wise to develop a business plan that articulates your core goals and how you’ll achieve them. You can do this independently or seek the guidance of a professional business consultant.

A business plan might cover:

• What you’ll offer and how, your target market, your unique selling points, and pricing.
• Market research, branding, marketing plans, sales channels and customer service strategies.
• Location, equipment, inventory, software, payment systems, and suppliers you’ll need.
• The high-level legal, compliance and risk management facets of running your business.
• Whether you’ll have employees and how they’ll be recruited, paid and managed.
• Establishment and overheads costs, funding/loans, sales and cash flow projections.
• The timing, people, resources and activities needed to make your plan a reality.

Business Queensland and Business Victoria both provide helpful business plan templates.

Another critical aspect of business set-up—once you know your business idea has legs—is choosing a business structure that aligns with how you’ll operate. The structure you chose will affect how you’re taxed and your administrative burden.

There are four business structures in Australia:

• Sole trader: This gives you full control but also means you’re personally responsible for all business liabilities. It’s simpler too: you’ll report your business income in your individual tax return.
• Partnership: Two or more people who share control and business liabilities. Partnerships must prepare a separate partnership tax return.
• Trust: A separate legal entity where a single person/entity, the trustee, holds the business’ assets and is responsible for how its run—on behalf of others, known as beneficiaries. Requires a formal trust deed and can be more costly and complex to set-up. Liability is limited where the trustee is a company.
• Company: A separate legal entity. While your personal liability is limited with a company, it’s also more expensive and complex, requiring registration with ASIC and placing legal responsibilities on the director/s.

It generally pays to seek professional advice if you’re not sure whether a sole trader, partnership, trust or company structure is right for you.

There’s a multitude of different registrations needed to stay above board. Fortunately, you can do many in one online application process via the government’s Business Registration Service.

Here are the key registrations for Australian businesses:

Australian Business Number (ABN)

An ABN is a free, unique identifier you’ll need to:

• Add to your invoices to show clients and suppliers you’re legitimate.
• Avoid having businesses you invoice withhold tax.
• Be able to claim tax credits on business expenses.
• Set up a domain name with ‘.au’ in the URL.
• Register for GST and pay as you go (PAYG) withholding.

You’ll need an ABN before you can register your business name—but you can apply for both at once.

If you choose a company structure, you’ll first need to apply for an Australian Company Number (ACN) and company name. Be aware that fees apply.

Note, you’ll receive a separate Tax File Number (TFN) for your business—automatically issued by the Australian Tax Office (ATO)—once you apply for an ABN for a partnership, company or trust.

Business Tax Registrations

Common tax registrations include:

• Goods and Services Tax (GST)
• Pay as You Go (PAYG) withholding

As soon your annual business turnover cracks the $75,000 mark, you’re required to register to collect the Goods and Services Tax (GST). So, if you think you’ll be on track to earn more than that in your first year of operation—registering for GST up-front is smart.

According to the ATO, you also must register for GST if:

• Your business charges passengers for taxi services or limousine travel (including ride sharing).
• You want to claim Fuel Tax Credits (FTC) or need to register for the Wine Equalisation Tax (WET) or Luxury Car Tax (LCT).

Once you’re registered for GST, you’ll need to complete regular business activity statements (BAS).

If you’ll be employing people or have company directors to pay, you’ll need to register for PAYGW so you can collect tax from the income—and then report and pay this tax to the ATO. You’ll also need to register for PAYGW if you’ll be paying businesses that don’t provide you with an ABN.

[pro_tip As soon your annual business turnover cracks the $75,000 mark, you’re required to register to collect the Goods and Services Tax (GST). So, if you think you’ll be on track to earn more than that in your first year of operation—registering for GST up-front is smart

[/pro_tip

Business Name Registration

Your business name isn’t necessarily how you brand or market yourself. It’s the legal entity name of your business and allows you to operate Australia-wide.

ASIC’s fees for registering and renewing a business name are:

• $42 for one year
• $98 for three years

ASIC will send you a reminder by email 30 days before you need to renew your business name registration. A common and misleading tactic targeting business owners is unofficial letters or emails reminding you to renew and pay for your business name registration.

If it isn’t official correspondence from ASIC, you can ignore it. They’re either trying to scam you (the letter or email is fake), or profit from providing a service you don’t need (they add a charge on top of ASIC’s fee). Of course, some people may prefer to deal with a private service provider, accountant or solicitor to manage registrations and renewals—but carefully check their fees and legitimacy beforehand.

Trademark

Registering a trademark isn’t required, but it could be a savvy way to protect your brand. For example, if another business owner trademarks a similar name to the one you use for your business, they could bring legal action against you.

Trademarking comes at a cost—a minimum of $250 and up to $600 through IP Australia.

You may wish to search existing trademarks before you settle on a business trading name.

Business bank accounts are critical for clean record-keeping for your business, even if you’re a micro business or sole trader. Keeping business funds separate is also a requirement if your business is structured as a company, trust or partnership.

Learn more in our guide to the best business bank accounts for Australians.

In addition to a business account, you might also explore accounting software that links to your bank transactions and helps you streamline invoicing, budgeting and organising your tax obligations.

Managing risk and staying compliant should be high on your list. It’s important to familiarise yourself with national and state fair trading laws and Australian Competition and Consumer Commission regulations that you’ll be subject to, so you’re not in conflict with industry standards, consumer law, safety rules or ethical practices.

Other legal matters to investigate include:

• Privacy and data collection laws. If you collect people’s details through a contact form on your site, you should also provide a privacy policy link.
• Employment, superannuation and workplace health and safety laws.
• Legal requirements around importing and exporting.
• Environmental protection laws, depending on your business kind.

Insurance can also provide a solid foundation for your business. Consider your need for:

• Workers’ compensation insurance (mandatory if you employ people).
• Public liability insurance (compulsory for some companies).
• Equipment or stock insurance.
• Income protection insurance.
• Management liability insurance.
• Cyber risk insurance.

Online shopping and research is the default nowadays, so one of the first steps you should take when setting up your business is securing your online presence. Regardless of whether you sell flowers from a market stall, have a bricks-and-mortar clothing store, or you build mobile apps—you’ll likely need a website for your business, and use social media for promotion.

Remember, you’ll need an ABN if you want to register a domain name for your website that indicates you’re Australian-based, such as ‘.com.au‘, or ‘.net.au‘. You may opt for .com if you’re selling into overseas markets.

Once you’ve determined the channels you want to focus on (e.g., Facebook, TikTok, LinkedIn), you should set up accounts and choose a username that aligns closely with your business name. It’s probably unrealistic to have your business on every kind of social platform—you’ll need time to create content, engage with audiences and monitor messages.

Don’t forget your online presence on major marketplaces and search engines—such as a Google My Business profile, or dual listings of your products on sites like Amazon or eBay.

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