What Are the Legal Requirements to Start a Business in Australia?
Starting a new business means there are certain rules to follow. It’s not always as simple as opening your doors and then beginning to operate. And in Australia, there can be some important legal requirements to follow to make sure you’re operating the way you’re supposed to.
The good news is we put together a guide that outlines all the necessary steps and information to take when starting a new business. We’ll cover everything from financial regulations to tax obligations and employment laws.
You won’t get caught off guard once you start operating so you can focus on growing your business.
In this article, we’ll cover:
Everything You Need to Know for Legally Starting a Business in Australia
If you’re just starting a business or thinking about starting one, you have come to the right place to find out everything you need to know. Here are all the legal requirements to know about when starting a business in Australia.
You Need to Choose a Business Structure
Your business can’t just operate as a free-flowing entity, which means that you’ll need to decide on a type of business structure to operate under. In Australia, there are a few different types that you can choose from.
- A sole trader - This means you operate your business yourself and you are the one that makes all the decisions. It can be a great choice depending on the type of business you operate, however, there are a few risks that can be associated with a sole trader.
- A partnership - If you want to go into business with another person, or multiple other people, then a partnership can be a good option. You share business profits based on what’s included in the partnership agreement you would create before starting operations.
- A company - This type of business structure has many more regulatory requirements to follow compared to a sole trader or a partnership. However, a major benefit is that it’s a separate legal entity which means you aren’t held personally responsible for debts or liabilities.
Registering Your Business Name
After deciding on a business structure, you’re going to need to register the name of your business. It’s important to choose a name that reflects what your business does and isn’t already taken by another business in Australia.
Once you know what you’re going to call your business, you register the name with the Australian Securities and Investments Commission. To do this, simply head to their website and complete the registration process.
During the registration, you’ll have a few options for how long you want the name to be registered, such as for one year or three years. Keep in mind that there is a cost associated with registering your business name, so make sure all your details are properly inputted before submitting.
Apply for an Australian Business Number
Operating a business in Australia means that you must register for an Australian Business Number (ABN) before you can begin trading. It’s an 11-digit number that identifies your business, which includes the name, location and type of business activities.
It’s a fairly quick process to complete and it’s free to do. You’re also going to need to have your ABN before you can work with or create accounts for suppliers or issue invoices to customers and vendors.
Get the Right Business Permits and Licenses
The specific business permits or licenses your business needs will vary depending on the state or territory where you’re located. As well, they’ll depend on the business activities you conduct and the type of business you operate.
To get the most up-to-date information, visit the Australian Business License and Information Service website. They have a complete breakdown of any permits or licenses you might be required to have.
Look Into Business Insurance
Again, the type of business insurance you get might depend on your location or the type of business that you operate. However, this can often get overlooked early in the business’s life and can cause financial issues in the future.
Explore options for coverage that includes basic things such as fire, natural disasters and theft. You can also look deeper into a policy that includes legal liability if you’re a sole trader or a partnership.
It can be incredibly important to have relevant business insurance to protect yourself against the possibility of getting sued or if another legal matter arises.
Open a Bank Account for Your Business
Since your business is going to have money changing hands it’s important to have a bank account that’s separate from your personal one. If you’re a sole trader it’s not mandatory to have a separate bank account, but it can be easier to keep track of everything and make things a little simpler when it comes to tax time.
You can easily track and control any expenses and income and you can clearly see business finances that are separate from personal ones. Plus, it’s the most accurate way to have the right information to meet the reporting and tax obligations of your business.
If you’re a partnership or a company, it’s mandatory to have a business bank account for tax purposes.
Ask a Professional
Since this might be the first business you’ve started in Australia, it can be beneficial to discuss everything you need to know with a professional. This can include an attorney, an accountant or a business professional.
They have the experience and knowledge to help guide you through the process of starting a company and can help ensure you have all the proper documentation and information. It also gives you a good opportunity to ask any questions that you might have so you don’t get caught off guard in the future.
It’s a great way to help ensure you’re covered both from a legal standpoint and a financial standpoint.
Are You Able to Start a Business Without Registering?
In Australia, you can technically start a business without registering it, but you can’t earn any income or begin trading without first registering for an ABN. If you choose to start trading without an ABN you can face large fines and other penalties.
So, it’s important to make sure you register your business in the proper way. Plus, complying with all the legal and statutory requirements means you can then focus all your time on growing your business in the ways that matter most.
Starting a new business means there is a lot to consider. And even though it’s an exciting time, you must follow all the rules and regulations so you don’t have legal or financial issues in the future.
Once you choose a company structure, you can then register your business name and receive an ABN. This lets you legally operate a business and begin trading. And depending on the type of business you’re operating it’s important to look into specific types of permits or licenses that might be required. Use the guidelines outlined in this article to get a jump start for everything you need to legally start a business in Australia.
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