Starting a business in Australia: what you need to know

Starting a business in Australia isn't easy, but WMC Accounting is here to help you put together the pieces of the puzzle.

Are you considering starting a business in Australia? If so, now could be the ideal time to take the first step of your entrepreneurial adventure, with business confidence and conditions both on the rise in 2018.

In fact, Australian business conditions jumped to +19 on National Australia Bank's Monthly Business Survey for January, which is significantly higher than the +5 long-term average. The confidence index recorded a +12 score, its best performance since April last year.

Business plans should include a SWOT analysis – a review of your strengths, weaknesses, opportunities and threats.

But where should you start when setting up a new business? Here is our step-by-step guide on what you need to know.

Step 1: Write a business plan

You may have a great idea and the enthusiasm to make a start, but you'll also need a comprehensive business plan to keep you on track and convince lenders to provide finance.

Business plans should include a SWOT analysis, which is a review of your strengths, weaknesses, opportunities and threats. Consider both internal and external factors, such as your team's knowledge and skills, any local competitors and the existing market for your products and services.

Your business plan should also include:

  • A marketing strategy;
  • The intended pricing and positioning approach; and
  • Financial forecasts and targets.

Step 2: Choose an appropriate business structure

Once you have a plan in place, you can start thinking about what business structure will best fit your objectives. The four most commonly used Australian business structures are:

  • Sole trader;
  • Partnership;
  • Trust; and
  • Company.

Identifying the right one for your circumstances enables you to limit liabilities, minimise your tax outlay and plan for growth more effectively.

For example, setting up a company offers better scalability, lower personal liability against claims or legal action and more finance opportunities. However, a company also faces higher costs and regulatory scrutiny, as well as less control over the business for the founder.

Step 3: Register your business name

A memorable business name can give a small business a big identity, but you'll need to make sure the Australian Securities and Investments Commission (ASIC) accepts your choice – and the name isn't already taken.

You may also want to establish a trade mark to legally protect your name and logo, preventing other businesses operating under the same brand.

Patents, copyrights and other avenues exist to further preserve your intellectual property, so check whether or not your organisation needs to explore these options.

Step 4: Register for an Australian Business Number (ABN)

ABNs are 11-digit numbers that operate as a unique identifier for your organisation. However, not everyone is entitled to an ABN; you must either be a Corporations Act company or carrying on or starting an Australian enterprise.

More details on your eligibility and how to apply can be found on the Australian Government website by clicking here or by contacting the Australian Taxation Office. After receiving an ABN, you will be able to:

  • Claim Goods and Services Tax (GST) credits;
  • Establish your business identity to suppliers and customers;
  • Secure an Australian domain name; and
  • Avoid PAYG tax on payments you receive.

If you intend to start a company business structure, you must apply for an Australian Company Number (ACN), which you can obtain from the ASIC.

Step 5: Learn the relevant laws and get licensed

There is an abundance of Australian laws, regulations and standards with which your business may need to comply. This could include:

  • Consumer laws;
  • Work health and safety;
  • Environmental restrictions;
  • Fair trading expectations;
  • Employment obligations; and
  • Privacy requirements, among many others.

Identify which legal requirements apply to your business and ensure you obtain the correct licences, registrations and permits to run your enterprise.

The potential ramifications for breaching the law are not small. You should therefore seek professional advice on legal issues and other risk management areas, including insurance, before you start a business.

Step 6: Register for tax

The taxes you are required to pay will depend on the size and business structure of your enterprise, although some tax registrations are compulsory for all organisations.

For example, every business typically requires a Tax File Number (TFN) and an ABN/ACN. You will also need to register for GST if:

  • Your business earns $75,000 or more a year in GST revenue;
  • Your non-profit organisations turns over more than $150,000 a year; or
  • Your business provides taxi services, regardless of turnover.

Furthermore, you may need to register for PAYG withholding, payroll tax and fringe benefits tax if you employee staff. A number of industry-related taxes, such as the Wine Equalisation Tax for wine producers and importers, may also apply to your organisation.

Do you need help starting a business in Australia?

Pursuing your entrepreneurial dreams is exciting, but it can also be daunting when you are faced with the administration, tax and legal realities of setting up a new business.

Fortunately, we are here to help. WMC Accounting offers extensive business advisory options in addition to sophisticated tax and accounting services, providing end-to-end support for your start-up venture. Contact us today to book an appointment.

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