Figures released by the Australian Bureau of Statistics show that the number of actively trading businesses has risen by 3.1% since June 2016, most of them sole traders.
There are now more than 2.24 million active businesses in Australia. Experts believe the spike in new businesses is linked to strong economic growth. The National Australia Bank index of business conditions rose six points in April, which is the highest reading since the survey began in 1997. All industries are enjoying a period of growth, with the exception of retail and manufacturing, and now is an excellent time to fulfil your entrepreneurial ambitions.
All small business owners must comply with the law. It is a good idea to consult with a legal professional before registering a new business, but the following tips from DWF touch on the basics.
Choosing a Business Structure
The very first decision you must take is deciding on a structure for your business. The three main business structures are:
- Sole trader – the business is you rather than a separate legal entity.
- Partnership – your business is a partnership run with one or more people.
- Company – a propriety limited company (Pty Ltd) is the most common business structure in Australia. A Pty Ltd is a separate legal entity.
Registering Your Business
To comply with government tax regulations, you must register for an Australian Business Number (ABN). This number identifies your business. You can do this online at https://abr.gov.au/. The process takes around 15-minutes.
You may also need to register for Goods and Services Tax (GST), Pay As You Go PAYG withholding, Payroll Tax, Fringe Benefits Tax (FBT), and a Tax file number (TFN). It’s important that you consult with a tax professional if you need advice.
Under the CATSI Act 2006, Indigenous Aborigines and Torres Straits Islanders can register their business as a corporation.
You’ll also need to register your business name at http://asic.gov.au.
Licenses and Permits
Depending on your business sector, you may need specific licenses and permits to remain compliant. For example, if you are opening a bar in Brisbane, you will need a liquor license. Visit https://ablis.business.gov.au/ for further guidance.
Australian tax laws are complex, but ignorance is not a defence in a court of law. Unless you have an in-depth knowledge of tax law, it is always better to outsource your accounting to a professional. There will be an upfront cost, but in the long-term, you will save money.
Do not overlook insurance. Business insurance covers all kinds of risks, from fire and theft to legal liability in case a customer sues you. An umbrella business policy will cover the basics but speak to an insurance broker for more comprehensive advice.
Online businesses are not exempt from the above. Even if you only operate online, you will still need to register for an ABN and apply for relevant permits and licenses.
Lastly, remember that there are privacy laws regarding the collection and usage of customers’ personal information. Check the Office of the Australian Information Commissioner’s website for more information.
About the author:
Neil Buckland is a Leeds University Business School graduate and has been working in the Finance Industry for five years now. With a particular interest in Business and Tech related topics, he has been writing content for various publications since graduating. When he is not writing, you can find him on the pitch playing 5-a-side, reading or spending time with his better half, Katy.