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Set Up New Business

Company, Trust, Partnership or Sole Trader
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SETTING UP YOUR OWN NEW BUSINESS

Setting up your own new business can be an exciting time. Before you start, save yourself time and money by being aware of what’s involved in running a business.

Here are some important considerations.

DECIDE ON A BUSINESS STRUCTURE

When starting a business, it’s important to choose the business structure that best suits your needs.  Your business structure, also known as the applicant or entity type, refers to the way you will operate your business.  Types of business structures include:

  • Sole trader: an individual trading on their own

  • Partnership: an association of people or entities running a business together, but not as a company

  • Trust: an entity that holds property or income for the benefit of others

  • Company: a legal entity separate from its shareholders.

It’s important to remember that you can change your business structure as your business grows.

APPLY FOR AN ABN

Your ABN is a unique number that allows you to identify your business to government and other businesses.

REGISTERING A BUSINESS NAME

You will need to register a business name if you trade in any name other than your own natural name.  For example if John Smith wants to trade as Western Blacksmiths, he will need to register the name, whereas he could trade as John Smith Blacksmiths without registering.

Applying for a business name costs $35 AUD for one year or $82 for three years.

Your business name is only your identification. Registering your business name doesn’t give you full rights over the name, so you might want to consider protecting your business name by trade marking it.

REGISTERING A WEBSITE DOMAIN NAME

Your domain name is your website address on the internet and gives your business an online identity or brand for your customers.

When picking a website name it’s best to go with a name that:

  • represents your business

  • is easy to remember, pronounce and spell

  • is three syllables or less.

If you want to buy a .com.au or .net.au web address you will need to have an ABN.

SMSF Superfund
CONCORD will set up your SMSF Superfund. You will control your future.

BUYING AN EXISTING BUSINESS

If you are looking to purchase a new business you should determine the current worth of the business and its future prospects.

When buying a new business and considering its worth, you’ll think about:

  • Vendor – Why and what are the reasons the business is being sold?

  • Sales – Can you see any patterns or trends? What is the business’ customer base? Who are the current suppliers?

  • Costs – What are the fixed and variable costs? Are there any staff costs?

  • Profits – Have you looked at previous financial records? Is the business profitable?

  • Assets – What assets does the business have? Does it have any intellectual property or leasing arrangements?

  • Inventory – Is the inventory on-hand being including in the purchase? How is the inventory managed, stored and distributed currently? Are there systems in place and what is the inventory turnover rate?

  • Liabilities – Does the business have any outstanding debts? What refunds and warranties still exist for the business? Are there debts owing on assets that are registered on the Personal Property Securities Register External Site?

  • Purchase agreement – Have you reviewed the purchase agreement carefully?

  • Tax – What kinds of tax will apply? Consider GST, Capital Gains Tax, and stamp duty implications.

  • Legal issues – What are the legal agreements on leases?

  • Business structure – What is the  new business structure? Do you need or want to change the business structure to suit your business needs? Do you know the different legal, tax and record keeping requirements of your current business structure, or the one you want to change to?

  • Partnerships  – Are you buying a business with a business partner? Do you have a partnership agreement in place before you purchase?

  • History – What has and hasn’t worked in the business for the previous owner?

  • Expectations – Do you have an idea of what expectations you’ll need to manage as a franchisee or business owner?

  • Planning – Have you written your Business plan and Marketing plan to help you document your business objectives and identify how this business will meet your goals?

For advice and protection in buying a new business we suggest that you contact Donna Zillmann CPA at Concord Tax – Kirwan on (07) 4773 4088

Tax File Number (TFN)

You must have a TFN regardless of the type of business you’re starting. If you plan on running your business as a sole trader, you can keep your individual TFN. If you’re operating as a partnership, company or trust, you’ll need to register a separate TFN for the business External Site.

Australian Business Number (ABN)

Although you can run a business without an ABN, it is highly recommended you have one. Without an ABN, other businesses must withhold 49% from payments they make to you for tax purposes.

Australian Company Number (ACN)

If you register your business as a company, you’ll be given an ACN by the Australian Securities & Investments Commission. You’ll need to apply for your ACN before getting an ABN.

Goods and Services Tax (GST)

GST is compulsory if your business has a current or expected GST turnover of $75 000 or more ($150 000 or more for non-profit organisations). It’s also compulsory if you provide taxi travel as part of your business, regardless of turnover.

Pay as you go (PAYG) withholding

You must register for PAYG withholding if you need to withhold an amount from a payment for tax purposes.

Withholding an amount from a payment is required if you make payments to employees, directors or businesses that don’t quote their ABN to you. In each case, you must register for PAYG before you can withhold that amount.

Payroll Tax

Payroll Tax is collected by each state and territory government on the wages paid by employers each month. You must register for Payroll Tax in each state or territory that your staff are location in if your monthly Australia-wide wage bill is above the $1m annual thresholds set by that state or territory government.

Fringe Benefits Tax (FBT)

Providing perks, or fringe benefits, to your employees can attract FBT. This might include providing:

  • a company car

  • discount or free car parking

  • low interest loans

  • Christmas parties

  • payment of private expenses as part of a salary package.

You should register for FBT as soon as you decide to start providing fringe benefits to your employees.

Other taxes

There may be more specific taxes that apply to your business depending on your industry. Visit our Taxation topic for information on these taxes.

Superannuation, though not a tax, is a requirement if you employ staff. Visit our Employee superannuation page for more information on paying super to your staff.

ABLIS External Site is an online search tool that helps you find the licences and permits you need to run your business. When you perform a search:

ABLIS guides you through a step-by-step questionnaire.

  1. A tailored report is generated with licence requirements for your business. The report also provides helpful information on licence fees, how to apply, periods of cover and renewals.

You can also perform a custom search if you’re looking for a specific licence for your business, or a specific piece of compliance information.Search ABLIS now

Australian, state, territory and local governments are responsible for different business licences, permits, registrations and certificates. To find those that apply to you, use the Australian Business Licence & Information Service (ABLIS).

It’s essential to arrange insurance when you’re starting out in business – this may include ensuring your company, your income, and your commercial risk. Taking out the right insurance will help protect your business and minimize its exposure to risk.

 

The types of insurance required for running your business will vary depending on:

  • the type of business you’re running
  • the structure of your business
  • its size
  • which industry you belong to.

There will also be certain types of insurance that are compulsory, such as:

  • workers compensation insurance – if you employ people in your business
  • third party personal injury insurance – for any motor vehicles you own
  • public liability insurance – for certain types of companies.

Even if insurance is not compulsory, taking out the right insurance can help protect your business and minimize its exposure to risk.

It’s a legal requirement for you to keep records of your business transactions for a minimum of five years, so it’s important that you have good record keeping practices in place. The records you must keep include all documents relating to your income and expenditure.

Keeping good records makes paying your taxation and other business transactions much easier and helps you to monitor how your business is going.

You also need to keep other important papers, legal documents and contracts in a safe place, so make sure to set up a filing system for easy retrieval.

One of the first things you need to find out when you’re starting out is what laws apply to your new business. As a small business owner, you’ll know that being legally compliant relies on being aware of rules and regulations. You may wish to consult a legal professional to help you with all the legal requirements that you must comply with, such as licences and registrations, contracts and leases.

BUSINESS REGISTRATIONS

All business owners in Australia have to register before commencing any business activities. As well as registering a business name, there are a variety of taxes that can impact on your business that you may be required to register for. These may include:

  • an Australian Business Number (ABN)
  • the Goods and Services Tax (GST)
  • a Tax File Number (TFN)
  • Pay as you go (PAYG) withholding.

LICENCES.

If you operate a business, it’s likely you’ll need certain licences to make sure you’re complying with your legal obligations.

The licence or permit you require may depend on the product or service you’re selling. You’ll need to find out whether there’s a licensing requirement for your particular business, or you may face fines or other difficulties.

Businesses selling products for consumption as food, for example, could need a Food Business Licence. However, there may be other licenses that aren’t so obvious, so it’s best to do some research into this area. Licenses and permits can vary from state to territory, so it’s best to find out this information from your local, state/territory, or federal government, to ensure you’re doing the right thing.

PRIVACY ACT

A new set of privacy principles was introduced in March 2014. The principles cover how a business handles personal information, including the:

  • handling and processing of personal information
  • use of personal information for direct marketing purposes
  • disclosing of personal information to people overseas.

Find out your Privacy Act 1988 obligations from the Office of the Australian Information Commissioner External Site

ANTI-BULLYING LAWS

People who believe they’re being bullied in the workplace can apply to the Fair Work Commission External Site for help in resolving the issue.

Bullying occurs when a person or group of people, repeatedly behave unreasonably towards a worker. The behaviour also has to be deemed a risk to the worker’s health or safety. Read our Employing people topic for more information.

INDEPENDANT CONTRACTORS

Independent contractors are self-employed and provide a service to a business.

They often negotiate their own payments and working arrangements, and have the opportunity to work for a range of clients at any given time.

Before entering into a contract, you’ll need to determine whether someone is classified as an independent contractor. Their status will affect their rights and obligations. It’s possible for someone to be an employee for some work and an independent contractor for other work.

You also need to remember that it’s illegal to fire, or threaten to fire, an employee if they don’t agree to become a contractor.

It’s important to know whether you’re hiring an independent contractor or an employee, so you can be sure you’re complying with your legal obligations.

UNFAIR DISMISSAL

Small businesses have different laws compared with larger businesses when it comes to unfair dismissal. Most small businesses (those with fewer than 15 employees) will fall under the Small Business Fair Dismissal Code External Site.

If you are planning to terminate an employee, it’s important you follow the rules outlined in the Code.

If you’d like to start a business in Australia, but you’re not an Australian citizen or permanent resident, you should know:

  • how to get the right visa

  • the legal and government requirements that apply to Australian businesses.

We’ve put together this news article to help you work out the basics and point you in the right direction for the information you need.

Business visas

The Department of Immigration and Border Protection (DIBP) is responsible for Australian business visas.

Business Innovation and Investment visas

If you have business skills and want to set up and manage a new or existing business in Australia, take a look at the Provisional Business Innovation and Investment visas External Site.

Before you can apply for these visas, you must be nominated by a state or territory government.

Generally, you’ll need to follow these steps:

  1. Submit an expression of interest through DIBP’s SkillSelect External Site online service.

  2. See if a state or territory government decides to invite you to apply for a visa. You can wait for a state or territory government to contact you, or you can contact them directly.

  3. If you receive an invitation, apply for a visa. You’ll need to meet certain requirements and provide documents to support your application.

If you’re granted one of these provisional visas, it will be valid for four years, and you’ll have completed the first step towards getting a Permanent Business Innovation and Investment visa External Site.

Business Talent visas

You may also be eligible for the Permanent Business Talent visa External Site if you:

  • own or part-own an overseas business, have net business and personal assets of at least AUD $1.5 million, and an annual business turnover of at least AUD $3 million, or

  • have obtained at least AUD $1 million in venture capital funding in Australia to develop a high-value business idea.

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