So you’ve made the leap. The fear inducing, life affirming leap of leaving your job to start your own business. The hard work starts here, but follow our ultimate guide to forming a company in Australia and you’ll be smooth sailing ‘til you’re high flying.
Forming a new business is a special moment for any budding entrepreneur, but there is also a world of responsibilities to get on top of. From applying for your ABN to registering for taxes, the to-do list is looking pretty long right now.
So we’ve teamed up with Honcho to put together a comprehensive guide to setting up a business in Australia. Honcho exists to help businesses make money faster – their online business builder packages up all the essential business products into one place, making it easier for people to become their own boss. With their tips and services, you’re in safe hands setting up a business for the first time.
1. Decide on your business structure
Australia has four main types of business structure: sole trader, company, partnership and trust. The structure you choose is vital as it will impact the level of control you have in the company, the tax you pay, your health and safety requirements, and much more.
Here’s Honcho’s quick breakdown of the main types of business structure in Australia:
- A sole trader is usually the easiest and least expensive way of setting up a business, making you the sole owner and responsible for all legal aspects.
- A company is a commercial business with a team of internal directors and finances that exist separately from its owners and shareholders.
- A partnership is when 2-20 people run a business together with each partner personally liable for the business’s profit, loss and taxes.
- A trust – otherwise known as a beneficiary – is an entity that holds assets such as income, property or stocks for the benefit of another party.
2. Apply for an ABN
“This 11 digit number is one of the most important aspects of setting up a business in Australia,” says Honcho, “As it identifies your business to the government and community.”
Applying for an ABN is pretty easy – many online services can turn your application around in under an hour. Once you have an ABN, you’ll be able to make product orders at wholesale prices, create invoices, avoid Pay as You Go tax and claim GST credits. You also need an ABN to obtain a business name and to rent a flexible office space.
3. Register a business name and web domain
Let the fun stuff begin! Choosing a business name and web domain is an exciting part of the process, but it’s daunting knowing that they’re pretty permanent parts of your business. It takes only a minute or two to actually register them so get creative and take your time before deciding on anything.
“Avoid using your own name as your business name,” says Honcho. “While it can project your business as more personable and humble, it can lead to legal issues and ruin any future exit plans.”
“From a marketing perspective, you also want to steer clear of generic names that will make it hard to be found online”, says Rebecca Philipp, Brand Manager at Office Hub. “If you sell pink pyjamas and your name is Pink Pyjamas, you’ll be competing with other businesses to appear on searches for your name. A big no-no in the digital world of business.”
4. Set up a business bank account
It’s not a legal requirement for sole traders to set up a business bank account, but it will help you organise income and expenses while projecting a professional image to your customers and partners. Most banks offer specific services and solutions for new businesses, so check in with yours and see what they can offer you.
5. Register for the correct taxes
There’s never a convenient time for taxes, as the saying goes, but this one can’t be avoided. As a new business owner, you must register for the correct taxes to avoid any potential legal implications.
The main types that new business owners should be concerned with are:
- Goods and Services Tax (GST) is compulsory if your business has a turnover of $75,000 AUD or higher.
- Pay as You Go (PAYG) withholding tax is necessary if you need to withhold money for tax purposes, such as paying wages or salaries.
- Fringe Benefits Tax (FBT) is required if you offer perks like a company car to an employee.
6. Protect your business with insurance
Some types of insurance are compulsory for Australian businesses and others are simply well advised – either way, spend some time looking into protecting your business and your intellectual property. Workers’ compensation insurance, public liability insurance and third party personal injury insurance are the three compulsory types of insurance for businesses in Australia.
7. Set up business operations
The next step after this is setting up the operations of your business, from hiring staff and launching marketing to choosing suppliers, setting up invoices, marketing your firm and finding office space. It’s what you’ve been waiting for – the freedom to work on your passion and grow your success as your own boss. Congratulations!
With all this checked off, you’ve got a real-life business on your hands. But it’s all easier than it seems, so check out Honcho’s wide range of business services if you get stuck. They exclusively partner with world leading specialists in business formation, legal, financial and marketing services so you can get help in just one click, plus they offer business support from 8am to 11pm (AEST), 7 days a week. 100,000 businesses in the last year alone started making money from Honcho’s proven products.
And if you’re looking to move out of the spare room, explore our wide selection of coworking spaces, shared offices and serviced offices across Australia. With workspaces starting from just $80 per week in major cities, our flexible offices help startups, sole traders and new businesses boost productivity and make connections without breaking the bank.