The Land Down Under provides a fantastic location to start a business. There is ample opportunity for anyone with a good idea for a product or service, and many world-class cities throughout the country that could be your home base. Once you’ve made the necessary preparations, (market research, business plan, investment and financial considerations), you’re ready to start your business. Here’s how.
Step 1 - Decide on a Business Structure
The way you set up your business will determine how you pay taxes, your asset protection, and how you can raise funds. Like virtually every other place in the world, you have several options available to you. As a rule of thumb, things become more complex and costly as you move down the list.
- Sole Trader - the easiest and cheapest way to set up for your new business. Debts, losses, and all liabilities are your sole responsibility. You do not file or pay any taxes separate from your own income tax return (everything is filed together).
- Partnership - a division of labour and risk. You and your partner(s) take on responsibility for a percent of the business. There is still no separate tax (each partner takes on the income and loss for however much of the company they are responsible for).
- Company - An incorporated company is a separate entity in the eyes of the government. It is much more complicated and costly to establish, but it does operate unto itself in terms of taxes (it must file an annual tax return at the corporate rate, currently 30% of assessable income) and liabilities. A company requires its own tax-file number and Australian Business Number, and is regulated by the Australian Securities and Investment Commission (ASIC).
- Trust - Costly and complicated, a trust operates when an individual, the trustee, holds property or assets (including business assets) for the benefit of others (usually because they are too young to do so for themselves).
Step 2 - Registration and Taxes
Though not compulsory, the Australian Business Number (ABN) does simplify a lot of business dealings, so it’s worth getting one. The free registration is available online. A Tax-File Number (TFN) is required if your business is either a partnership, company, or trust, and as the name implies, it is used primarily with tax services and collection by the Australian Taxation Office. You actually apply for your TFN at the same time and on the same form as your ABN. If you decide to structure your business as a formal company, you’ll need to register with the Australian Securities and Investment Commission.
As your business grows, you’ll need to register for the Goods & Services Tax if your annual GST turnover exceeds $75,000, and Pay As You Go (PAYG) withholding once you hire additional staff and become an employer. There is also a Payroll Tax and Fringe Benefits Tax that you may be responsible for under certain circumstances.
As is the case in both the US and Canada, the particular state or territory in Australia that you choose to set up in will determine what other registration and permits you require. The Australian Business Licence and Information Service provides specific details depending on your location and industry.
Step 3: Insurance Considerations
Depending on the location and industry, there is mandatory insurance coverage that you’ll need to have. If you have employees, you need to get workers compensation insurance. You may also need public liability insurance as well. Make sure you have the coverage that you need.
Other Useful Links
Starting and Running Your Small Business
Australia is a top tier destination for everything from tourism to business. Setting up a business there is straightforward and easy, with the Australian government doing everything they can to support and encourage small business growth and entrepreneurship.
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