The Complete Guide to Starting a Small Business in Australia

Starting a small business in Australia

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As of June 2022, there were 2,569,900 businesses actively trading in Australia.

Business ownership is a major goal for a lot of people, but it’s not easy. There’s a lot of competition out there, so you need to know what you’re doing if you want to succeed when starting a small business in Australia. It’s important to learn about business before you get started, so you can develop a plan and make the right decisions.

In this guide, we’ll cover everything you need to know about starting a business in Australia. Keep reading for more.

Choose Your Business Structure

The structure of your business is one of the most important elements. It will determine various aspects including:

  • The level of control you have
  • Regulations you need to follow
  • Business tax
  • Your personal liability

In Australia, there are four main business types.

Sole Trader

If you’re starting a home business on your own, you might want to be a sole trader. This will make you personally responsible for all aspects of the business. 

All profit is added to any other taxable income that you have, and you pay tax at personal rates. The main benefit of operating as a Sole Trader is the simplicity. The main drawback is that it will make you liable for any debts and legal claims that the business incurs and you are likely to pay more tax, especially if your business is successful.

Company

A company is a common choice, and a business that’s structured in this way operate as separate legal entity from it’s owners known as shareholders. A company can purchase a car or property in the same way as an adult individual.

Managing a company can be easy. A good business Accountant can help you get started in the right direction.

A company can help manage your tax and protect you from legal claims. But it is more expensive to set up and maintain so be sure to check that the benefits out weigh the costs.

Partnership

A partnership is operated by more than one person and/or entity, but not as a company. It’s easy to set up and dissolve/exit if needed.

Like a sole trader business, you’ll be responsible for any debts including any incured under the partnership by your partner. Under normal circumstances we do not recommend setting up as a partnership. 

Trust

Trusts were once the preferred business trading structure. However, changes to tax law over the last decade or so have seen a heavy taxation burden for most trusts. Trust remain a great option for holding and protecting assets.

Pick a Business Type

We have touched on some of the main features of each structure. Each business is different and your industry, location and other factors will influence your choice. Be sure to obtain professional advice before choosing a business structure. Book a Free meeting with us at Accountants to Business and we will explain all that you need to know, obligation free!

Apply for an ABN and Register Your Business Name

You need an ABN (Australian Business Number) to legally start a business in Australia. It works as a government identifier, and you are required to have this before you start trading. You can register your business and ABN separately, but doing them at the same time is typically easier. Your business name should contain keywords to help it rank in Google search. For example, if you’re a plumber, a name like ‘Bills Home Services’ puts you at an immediate disadvantage. A name like ‘Bill’s Plumbing Norther Beaches’ is more likely to succeed.

Register Your Domain Name

Once you’ve secured your business name, you can register your domain name and create a website. This is incredibly important for modern businesses. Even if you don’t sell products or services online, you’ll need a website if you want to compete. And you need to be sure that your competitors cannot register the same domain. Your domain name should ideally be the same as your business name and contain keywords.

In every industry, marketing your business online is essential as people will look online when they have a problem they want to solve. Your business website design can vary a lot, and it’s best to get a professional web designer to ensure your website is secure, reliable and visible. Build yourself options can look acceptable but are unlikely to rank well on web search.

Identify Your Funding Source

Cash flow is a major concern for most new businesses. No matter how good your business plan is, you won’t be able to execute it if you don’t have suitable funds.

There aren’t too many government grants that you can apply for. Unfortunately, the best source of funding is you. Yes, the sad truth is that you will need to save the funds to start your business. You might want to maintain some employment until your business becomes established. Couples often work together with one working in the business and the other maintaining external employment so that living expenses are safely available.

Choose Your Software Stack

Almost any business will make use of various software tools. Making the right choices here can make running your business a lot easier. The software you go with will depend on your business type.

CRM (Customer Relationship Management) software is vital to most businesses and has various uses. There will likely be other tools you’ll want to use. Make sure you take the time to research the best platforms available.

Register for the Correct Taxes

No one likes paying tax, but it’s a key part of running a business. The type of business you’re starting will determine the particular tax that you need to pay. Some common taxes are:

  • Goods and Services Tax (GST)
  • Pay as You Go (PAYG)
  • Fringe Benefits Tax (FBT)
  • Income Tax

Tax can be one of the most complicated elements of running a business, but it’s essential that you handle them correctly. It’s a good idea to work with a professional accountant as they’ll be able to guide you so that you don’t make any mistakes here.

Starting a Small Business in Australia

Starting a small business in Australia can help you achieve your dreams, but you need to do things right or your business could fail. Make sure you plan things out in advance so you know what structure you’ll use, the type of business you’ll run, the tax you’ll need to pay, and more.

Accountants 2 Business can help you with all your accounting needs. This includes paying the right taxes, determining common business expenses, and any other advice that startups may need. You can book a free meeting where you can ask us anything you want to about how to start a business in Australia.

Or take our Free Online Course!

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