Setting up a business is an exciting milestone, but it can also be daunting one if you don’t know where to start. Here are 3 useful tips before starting your business in Australia.
In Australia, there are 4 main business types.
Each business structure has it’s pro’s and con’s. Tax, cost and ease of setup are usually a big deciding factor.
It’s beneficial to choose the best structure that will take into account your growth plans now.
Yes, you can change your structure at a later stage but there can be substantial administrative work involved, so it’s a good idea to pick the most suitable structure from the outset.
Here’s a simple overview:
Sole trader - easy and cheap to set up, you are taxed at individual tax rates. However you are personally liable for the business. For example, if there is
Partnership - a group of up to 20 people that work together with a common view to make a profit. Each state in Australia
Company - a separate legal entity that enter into contracts, can sue and be sued, taxed at the company tax rate of xx If you are setting up a company, at least one director will need to be an Australian resident.
Trust - a trustee holds business assets for the benefit of others known as beneficiaries. You will need a trust deed to set out how the trust will function.
Can’t decide ? A lawyer or accountant can give you advice about the best possible structure for your circumstances.
When choosing your business name, it’s important that you choose a name that’s available and not placing you at risk of breaching intellectual property laws.
You will need to register your business name with the Australian Securities and Investment
ASIC has some rules about the business name that you pick, it cannot:
be already registered
identical or nearly identical to a name already registered to another entity; and
include words or phrases that are restricted, offensive, could imply a connection to a government or similar organisation.
a. Time frames
You can have a company set up in minutes.
However, setting up an ABN can take longer, up to 28 days.
For example, if you have non-resident directors involved in your business that need to provide proof of identity documents this can cause the ABN setup process to take longer.
If you are setting up a partnership or trust - you should also factor the time it will take for a lawyer to draft your agreement or deed.
b. Proof of identity
If you are a non-resident applying for an ABN, you will need to provide 2 proof of identity documents, one from the primary documents list and the other from the secondary documents list.
Primary documents include foreign birth certificate, foreign passport, Australian birth certificate and Australian passport.
Secondary documents include national photo identification card, foreign government identification, marriage certificate (if provided to verify your change of name it will not be classified as a second document) and driver licence (the address on the licence must match the home address provided).
Choose a structure that work’s for you in the long term. Get advice from the outset if you need it.
There are 4 main structures in Australia - sole trader, partnership, company and trust.