Australia is one of the best places in the world to start a business. With a stable political environment, well-established business infrastructure, and a strong economy, Australia offers many advantages for entrepreneurs looking to launch their ventures. However, some key factors to consider when establishing a business in Australia exist. Being prepared and informed can set your company up for success down under.
Business Structures
One of the first decisions you’ll need to make when starting a business in Australia is choosing your business structure. There are several options to consider:
Sole Trader
This is the simplest business structure. As a sole trader, you will be fully responsible for all aspects of the business, including taxes, records and reporting. Sole traders have unlimited liability, which means your assets are at risk if the company gets into debt. This structure works well for freelancers, contractors and home-based businesses.
Partnership
In a partnership, the business is owned by two or more people who share responsibilities. Partners share the profits and liabilities for the business debts and risks. Formal partnership agreements are recommended to outline the ownership stakes, responsibilities and profit/loss distribution for each partner.
Company
A company structure limits owners’ liability and separates the business assets and finances from the owners’ assets. It’s more complex and expensive to set up but offers more protection and credibility. There are two main types:
- Private or Proprietary Limited companies – owned by shareholders and shares are not publicly traded. This is the most common type for small and medium enterprises (SMEs).
- Public companies – can trade shares on the stock exchange and raise funds through an Initial Public Offering (IPO).
Trusts
In a trust, a trustee holds and manages assets for beneficiaries. It can help with estate planning and asset protection. Popular for family businesses to pass ownership from one generation to the next.
Business Registration
All businesses in Australia must register with the government. Registration ensures you meet legal and tax obligations. It also provides access to an Australian Business Number (ABN) and Tax File Number (TFN), which are required for many business activities, such as opening a bank account.
The requirements vary slightly by location:
- Businesses in Queensland register with the Office of Fair Trading.
- New South Wales and Victoria use the Australian Securities and Investments Commission (ASIC).
- South Australia and Western Australia have different Business Names Registration.
- The Australian Government Business Register can also be used for federal-level registration.
Registration typically requires a unique business name, owners’ details, contact information, business address, structure and primary location of operations.
Licenses and Permits
Depending on your industry, you may need additional licenses and permits to legally operate your business in Australia. Common examples include:
- General Sales Tax (GST) Registration – Required if annual turnover exceeds $75,000 for most goods and services. This allows you to charge GST and claim GST credits.
- Business or Trade License – For service providers like electricians, builders, plumbers, etc., verifying proper qualifications.
- Health and Safety Permits – For manufacturing, construction, food businesses, childcare services, etc.
- Liquor License – To sell alcohol on a premises.
- Import/Export Permit – To import or export certain products, wildlife, drugs, firearms etc.
Always check federal, state and local requirements before starting operations. Failing to obtain proper licenses can result in hefty fines or be grounds for business closure.
Finance and Accounting
Proper financial management is vital to small business’ success. Essential functions like bookkeeping, accounting, payroll, tax reporting and day-to-day finances must be handled effectively.
Some options to consider:
- Hiring an in-house financial manager or bookkeeper
- Using accounting software like Xero, MYOB or QuickBooks
- Outsourcing to a freelance bookkeeper or registered accountant
- Working with financial services firms for more complex needs
Be sure to open a separate business bank account to separate personal and business finances. This also makes accounting and reporting easier.
Insurance
The right insurance coverage protects your business assets and mitigates risks. Common policies include:
- Public liability insurance – covers claims of injury, death or property damage to a third party.
- Professional indemnity insurance – For advice and consulting businesses against claims of negligence or breach of duty.
- Product liability insurance – For manufacturers and retailers against claims of faulty or defective products.
- Workers compensation insurance – Covers costs related to employee illness, injuries or death in the workplace. This is mandatory for most employers in Australia.
- Property insurance – Covers damage to business vehicles, equipment, stock and premises.
- Income protection insurance – Replaces lost income if the business owner becomes ill or injured.
Shop around and work with an experienced insurance broker to find the right policies at competitive rates for your new venture.
Hiring Employees
As your business grows, you may need to hire additional staff. There are important legal considerations around employing people in Australia:
- All employees must have a Fair Work Information Statement outlining their rights.
- Minimum wage, overtime, leave entitlements, termination notice periods etc., are set by Fair Work Australia.
- Superannuation (retirement contributions) must be paid for eligible workers.
- Payroll tax may apply if your business exceeds the wage threshold in your state.
- Workplace health and safety obligations protect your employees.
Additionally, adequate systems and processes should be in place for recruitment, training, performance reviews, record keeping and general HR administration.
Conclusion
Launching a successful venture takes research, planning and hard work. Following the proper steps for structuring, registering, financing and staffing your business provides a solid foundation. Stay organised, be thorough and don’t hesitate to seek expert advice – this will help set your new Australian business up for prosperity. With passion and dedication, you can turn your entrepreneurial dreams into reality down under. Make sure to choose an excellent company name Australia when establishing your business.
