So you’ve decided to start a business.
In this free Guide on how to Start a Business in Australia, you will find the right information to help you start your business & make it into a success huge.
PLANNING FOR YOUR BUSINESS
Careful planning is essential to the success of your business. You should regularly review and revise your plans as an ongoing business activity.
A Business Plan is as simple as a document that describes what you plan to do and how you plan to do it.
Even if you jot down a paragraph on the back of an envelope describing your business strategy, you’ve written a plan.
Not having a plan is a plan to fail.
Simply stated, a business plan conveys your business goals, the strategies you’ll use to meet them, potential problems that may confront your business and ways to solve them, the organisational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.
Depending on your business type, your plan could include an executive summary, introduction, marketing analysis, Intellectual Property (IP) strategy, operations plan, management plan and financial plan (e.g. costs and cash flow projections).
Here is a Free Business Plan template to help you get started.
UNDERSTANDING BUSINESS STRUCTURES
Before starting a business, you should consider the advantages and disadvantages of each type of business structure and decide which best suits your needs.
A sole trader is a type of structure where the business has no separate legal existence from its owner. As a sole trader, you’ll be responsible for the liabilities of your business. You need to report your business income on your personal income tax return, along with any other income.
A partnership is a type of structure where two or more people start a business and can legally share profits, risks and losses according to terms set out in a partnership agreement. You must lodge a separate partnership income tax return.
A trust is a relationship where a business is transferred to a third party who has legal control and has a duty to run that business to benefit someone else. You must lodge a separate trust income tax return.
A company is a legal entity separate from its members (shareholders). A director of a company has additional legal and reporting obligations. You must lodge a separate company income tax return.
You should seek professional advice on the best structure for your business. An accountant or business advisor will be able to assist you & even set up your business structure for you.
Good financial management is critical to the ongoing success of your business.
When starting out, you’ll need to know how much funding you need, where you can get it and how to manage your financial arrangements.
Having a Business Plan is an important part of seeking business funding.
Financing a Business Venture can come from several avenues:
- Loans from a bank or other financial institution
- Dipping into personal Savings
- Borrowing money from friends and relatives
- Re-mortgaging your House
- Venture Capital
- Seeking an Investor
- Government Funding or Grants
Before making the decision to borrow funds, you should seek advice from your accountant, solicitor, business advisor or bank manager.
REGISTRATIONS & LICENCES
When you’re ready to start your business, you need to complete a number of registrations.
These registrations will depend on your chosen business structure.
Have you considered if you need to register a business name or company?
A business name and a company are two different structures.
A business name is not an entity in its own right; the holder of the business name (which can be an individual, a partnership, a company, an incorporated association or a trust) is legally responsible for the business.
In contrast, a company is a legal entity in its own right and has some specific responsibilities and obligations.
Be sure you research the advantages and disadvantages of each before making a decision.
Have you considered if you need to apply for an Australian Business Number (ABN)?
Before you can apply for a business name, you are required to have an ABN or an ABN application number.
Have you considered registering for a Tax File Number (TFN)?
Sole traders can use their existing personal TFN when in business, but partnerships, trusts and companies will need their own TFN.
Have you considered registering for Goods & Services Tax (GST)?
If you have or expect a turn-over of $75,000 or more per financial year, you must register for GST.
REGISTERING A BUSINESS NAME
Once you have chosen a Business Name, you must register your business name with ASIC.
You do not need to register a business name if the entity is
- Your individual Name, for example Jane Smith & you are operating your business under your own name.
- A registered company & the business name is the company’s name.
- A Partnership & the business name consists of all the partners names.
Before registering a Business Name, you must make sure that it is not already taken by someone else.
If your proposed name already exists or is similar to a currently registered name, your application may be rejected. The same rules apply if your proposed name exists as a company name.
Have you checked if your proposed business name could conflict with someone else’s registered trade mark?
You should check whether anyone else is using a trade mark, brand or logo that is identical or similar to your proposed business name. There can be issues if the goods or services are similar to those for which you intend to use the business name.
Click the link below for more information on how to register for appropriate Business Registrations.
YOUR TAXATION OBLIGATIONS
Understanding taxes and meeting your taxation obligations can save you time and money.
By paying the right amount of tax, you can also avoid penalties.
The ATO offers a series of free webinars on a variety of taxation topics.
To access these webinars simply register online.
Your accountant or business advisor will be able to assist you with understanding your obligations regarding Tax.
YOUR LEGAL REQUIREMENTS
As a business owner, you must educate yourself on the number of legal requirements your businesses must comply with, which include Australian, state, territory and local government laws, licences, registrations and leases.
Do you understand the Competition & Consumer Act 2010 (CCA) & the Australian Consumer Law (ACL)?
The objective of the Competition and Consumer Act 2010 (formerly known as the Trade Practices Act 1974) is to enhance the welfare of Australians through the promotion of competition and fair trading, and provision for consumer protection.
You can download a copy of the Act here
The Australian Consumer Law (ACL), which is contained in a schedule to the CCA, prohibits business conduct that is misleading or deceptive, provides product safety standards, makes manufacturers and importers liable for defective goods and prohibits unconscionable conduct by businesses in their dealings with consumers.
The ACL applies nationally to businesses in all states and territories.
Understanding privacy laws?
If your business is covered by the Privacy Act 1988 (Cth) (the Privacy Act) you must ensure you comply with the 13 Australian Privacy Principles (APPs) when you collect, use, secure and disclose personal information.
Generally, small businesses with an annual turnover of $3 million or less are not covered by the Privacy Act, however you may decide to opt in with the benefits of opting-in being increased consumer confidence and trust in your operations.
You can download a copy of the Privacy Act 1988 here
STANDARDS & CODES OF PRACTICE
Best practice is one way you can help your new business to stand out from the crowd.
In some instances, your business may be required to operate to Australian Standards.
Different standards apply to different industry sectors.
Your business may be required to follow mandatory product safety laws, including construction, performance, testing, labelling and information requirements.
These standards can be found in the Competition and Consumer Act 2010 (formerly known as the Trade Practices Act 1974), which is enforced by the Australian Competition and Consumer Commission (ACCC).
Be careful as some products are banned from being sold in Australia.
If any of your products are subject to a ban, you must not sell them.
Contact your state or territory Consumer Affairs Office for more information on mandatory Australian standards.
Good record keeping helps to protect your business & maximise performance and profits.
It is essential for anyone in business because it makes it easier to manage your cash flow, meet your tax obligations and understand how your business is doing.
Your business records are a source of documents both physical & electronic that specify transaction dates & amounts, legal agreements & private customer & business details.
Under tax law you must keep records of income tax, Goods and Services Tax (GST), payments to employees and other business payments for five years.
There are also record keeping requirements for many other measures including workers compensation.
Under the Fair Work Act 2009, you need to keep employee information such as time and wages records for seven years.
You can keep invoicing, payment and other business transaction records electronically or on paper.
The principles are the same for each, but keeping electronic records will make some tasks easier.
You can download a copy of the Fair Work Act 2009 here
If you intend to use a bookkeeper or accountant, get their advice about the best system for you – choose a system you can understand and operate easily.
Insurance is an essential part of running any business.
If you’re operating a business, there are many different insurance policies you must consider.
Taking out the right insurance will help protect your business, minimise its exposure to risk and ensure you’re able to compensate others if you’re at fault.
Types of business insurance; Business insurance policies can be changed and customised to suit your business needs. You can choose from a wide range of insurance cover specifically tailored for your business.
Compulsory Business Insurance
Two forms of insurance are compulsory for most Australian businesses.
Workers’ compensation—Every state and territory operates its own Workers’ Compensation scheme, which protects employees in the event of an accident or sickness. Each jurisdiction has different requirements.
Compulsory Third Party—If you operate a vehicle, Compulsory Third Party car insurance covers you for claims made against you for personal injuries arising from the use of your car. This type of insurance is a requirement of registering and operating a vehicle.
You should consider other forms of motor vehicle insurance to cover other risks and liabilities, such as damage to property or your own or another person’s vehicle.
Each state and territory CTP scheme is different.
Common types of Business Insurance
- Professional Indemnity / Liability Insurance
- Property Insurance
- Public Liability Insurance
- Property Insurance
- Product Liability Insurance
- Theft & Burglary Insurance
- Money Insurance
- Business Interruption Insurance
- Deterioration of Stock Insurance
- Workers Compensation Insurance
As an employer, you have certain obligations to your employees.
The national workplace relations system, established by the Fair Work Act 2009, includes all private sector employment.
When employing, you’ll need to consider the type of employee and skills you need, which will affect employment conditions, level of pay and other costs.
Contractors vs Employee’s
Did you know, you may need to treat contractors differently to your employees for tax and superannuation purposes. However, some contractors may be treated like employees under the law.
Apprentices & Trainee’s
Australian Apprenticeships encompass all apprenticeships and traineeships. They combine training and paid employment and can be full-time, part-time or school based. Apprentices and trainees are employees, and employers must withhold the correct amount of Pay As You Go (PAYG) withholding and make superannuation contributions for them.
No matter what industry you’re in, investing in training through an Australian Apprenticeship can benefit your business and contribute to your bottom line.
If unable to secure skills and resources within Australia, you may consider employing workers from overseas.
Your obligations as an employer require you to create a workplace free from discrimination and harassment.
If your business has employees or contractors then you’ll need to know how to meet certain tax obligations.
YOUR OBLIGATIONS AS AN EMPLOYER
As an employer, you have certain obligations to your employees.
This includes providing minimum standards of pay, conditions and entitlements.
Private sector employers (whether incorporated or not) and their employees in all states and territories other than Western Australia, are now covered by the national workplace relations system established by the Fair Work Act 2009.
In Western Australia, the Fair Work Act applies to employers such as constitutional corporations (trading, financial and foreign corporations) but not to unincorporated businesses, which are covered by the Western Australian workplace relations system.
The national workplace relations system includes minimum National Employment Standards (NES), modern awards, minimum wage orders and unfair dismissal protections.
Information about pay and conditions under the national workplace relations system is available from the Fair Work Ombudsman website.
When it comes to being successful in business, it starts with laying down the correct foundation and following proven steps.
If you don’t have the correct foundations & don’t follow the correct steps, not matter how hard you work, you will fail.
A business that isn’t growing is dying.
Follow these simple steps & you’re on your way to business success.