Many people have a great concept for a new business but then don’t know what the next step is, don’t know who to ask for advice, and give up before they have even started.
The first step is easy. You need to decide on the business type, whether that is sole trader, partnership (if there is more than one owner of the business), company (being able to sell shares in the company later) or trust (for asset protection). It’s best to obtain some advice from your accountant or financial adviser about which option is best suited to your needs, because this is in no way a “join the dots” exercise.
Decide on a name and see if it is available for use. ASIC’s website will tell you if it has been registered or you can Google the name and see what comes up. If the name is already being used, it may also be trademarked and you do not want to be subject to a cease and desist order.
Once you have decided on the best vehicle for your business you need to apply for an Australian Business Number (ABN – not to be confused with a A.C.N – Australian Company Number). Without an ABN you cannot trade and your customers should withhold 46.5% of any of your invoices and pay this to the ATO. Register the business name with ASIC.
You can apply online for an ABN at abr.gov.au and can apply for the following at the same time:
• AUSKEY – this will make it easier to change or update registrations in future
• Tax file number for the entity if not trading as a sole trader
• GST – the limit is $75,000 (or $150,000 for not-for-profit organisations). Be aware that if you do not register and then reach the limit the ATO may require GST to be back dated and all GST liabilities to be paid for the year, even if GST was not raised on sales
• If you are employing staff you need to register for PAYG withholding
Other requirements to consider:
• Open a business bank account and start to keep it separate from your personal expenses
• licences to trade for your profession
• working from home – do you need permission from your shire?
• any special permits
Your accountant can assist with most of these registrations and applications. Please remember that it’s less expensive to pay someone to do it correctly from the start than to pay someone to undo and fix the errors later.