Thinking of starting a business in Australia but not sure where to begin? Setting up a start-up can feel overwhelming. In this guide, we’ll break down the essential steps to set up your start-up, from choosing the right structure to managing finances and tax obligations.
Choosing the Right Business Structure
When setting up a start-up in Australia, the first big decision is your business structure. Should you choose sole trader, partnership, company, or trust? Here’s the thing – each has its pros and cons, especially when it comes to tax and liability.
Sole Trader
If you’re running solo, becoming a sole trader might look appealing. It’s simple, cost-effective. But keep in mind, you’re personally liable for debts, meaning your assets could be at risk if something goes wrong.
Partnership
Got a partner? A partnership can be an easy way to get started, especially if you’re sharing responsibilities. However, be cautious: each partner is personally responsible for the debts of the business, so if one person slips up, everyone’s assets could be on the line.
Company
For more protection and scalability, consider a company structure. A company is a separate legal entity, so personal assets can be protected. Yes, it’s more paperwork and costs, but might be worth it if your start-up aims to grow.
Trust
A trust is less common for start-ups, but it’s a smart choice if you’re managing investments. It’s also more complex.
Registering Your Business
Once you’ve chosen your structure, it’s time to register. You will need an Australian Business Number (ABN). Without it, you can’t invoice or claim GST credits. Make sure the ABN matches your business structure.
Consider registering a business name with ASIC. And don’t forget to check your desired domain name availability as well. It’s essential to align your online presence with your business name.
Tax Registrations You Need
Tax obligations are a critical part of starting a business. Register for GST if your turnover is expected to exceed $75,000 annually. Even if you don’t reach that mark, registering can enhance your business credibility.
If you plan to hire employees, register for PAYG withholding. This means you’ll need to deduct tax from employee wages and report to the ATO.
Setting Up Business Banking
Keeping personal and business finances separate is crucial. Open a business bank account under the correct name to manage transactions. This will make bookkeeping much easier and ensure accurate record-keeping.
Essential Licenses and Permits
Depending on your industry, you might need specific licenses. Use the Australian Business Licence and Information Service (ABLIS) to check requirements based on your location and business type.
Insurance – Don’t Skip This!
Insurance isn’t just an option – it’s essential. Cover your start-up with public liability, professional indemnity, and workers’ compensation. And if you are working from home, check with your homeowner’s insurance to ensure you are covered. You should speak with an experienced insurance broker to be sure that your don’t miss something.
Accounting Software and Bookkeeping
Setting up a start-up means getting your finances sorted from day one. Choose accounting software like Xero, QuickBooks, or MYOB to manage your books efficiently. These integrate well with business bank accounts, simplifying tax time and business management .
Growth and Employment
Most start-ups begin small but plan to grow. If you’re thinking of hiring, know your obligations. Set up Superannuation, follow Fair Work guidelines, and ensure you issue compliant payslips. Speak to us we can recommend a cost effective HR consultant.
Planning for Success
Setting clear goals and managing cash flow are crucial. Revisit your business plan regularly and adapt as your start-up evolves. Whether it’s improving profitability or expanding your team, planning ahead will make the journey smoother.
Conclusion and Next Steps
Starting a business can be daunting, but with the right approach, it doesn’t have to be. Take the time to get your structure right, register properly, and keep your finances in order.
Looking for more guidance? Book a meeting with one of our experts. Or download our comprehensive business guides from our resources page.
