Having the passion, desire, and excitement to start a business in Australia can either go bad or successful depending on how prepared you are. Sometimes, being prepared still isn’t enough. And that is just business; that is just how it is learning the legal requirements in starting a business in Australia is essential.
Even big businesses fail regardless of how proven their business model is and how prepared they are. If people don’t feel that certain element your business has, slowly and surely, all of your efforts will be in vain. Nonetheless, it is still better to be well prepared, knowing the harsh truth of venturing into business.
Below are the things you need to know as a future business owner. Make sure you follow these things below to make sure you eliminate a large chance of failing.
Choose a Business Structure
There are four common business structures that are being used, and they are: Sole Trader, Partnership, Company, and Trust. Choosing a Business Structure is the first legal step in starting a business.
- Sole Trader is when their owner is the sole owner of the business and has full control of the assets and liabilities as well as the business decisions. The owner is liable to pay the taxes using their TFN or Tax File Number, to lodge tax returns. Profits and losses are borne by the owner alone.
- Partnership: Unlike a sole trader structure that only has one proprietor, this structure is made up of 2 or more individuals that share the profit and losses between themselves. Depending on each partner’s agreement, they can equally divide profits and losses, or they can agree to have one partner bear more profits but more liabilities as well.
- Company: This type of structure is a legal entity that is separate from the individuals it comprises. This means it has the same rights as a natural person that can sue, can be sued, and has debts. It also has directors that provide business decisions and require you to comply with the Corporations Act 2001.
- Trust: this type of structure is when the trustees (a person or company) hold the business for the benefit of others or the so-called beneficiaries. These trustees act in the best interest of the beneficiaries in an honest, reasonable, and in a manner of good faith. The trustee is the legal owner of the property.
Register for an Australian Business Number (ABN)
It is mandatory to register for an Australian Business Number or ABN. This 11-digit number is the identification of the business to the Australian Taxation Office (ATO) or other government agencies and other businesses. This is essential to:
- Avoid pay as you go (PAYG) tax on payments received.
- Access government online services.
- Confirm business identity when ordering and invoicing.
- Operate in the GST system.
Register Your Business Name
The business name you plan to have for your business needs to be checked by the Australian Securities and Investments Commission, or ASIC, to see if it is available to register.
Business names are not registered based on what state you are in but rather nationally. Thus, registering your name separately in your state is not needed.
Register for Tax and Other Obligations
The most important legal aspect when it comes to business is keeping records of every financial movement of your company. This will be helpful some time in the future when there are disputes and financial anomalies that are almost impossible to find a solution when there are no financial history to back you up.
Another important reason why keeping track of your finances is easier is to comply with the things below that your business may include:
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- Goods and Services Tax (GST)
- Pay-As-You-Go (PAYG) Withholding
- Income Tax
- Stamp Duty Tax
- Fringe Benefits Tax (FBT)
Make sure to secure a tax file number for your business.
Comply with Employment Laws
If you plan to hire employees, you’ll need to be familiar with Australian employment laws. Pay your employees the correct wages based on the current rates. Keep work health and safety standards up to date. Ensure you are contributing to your employees’ superannuation accounts. And, avoid discrimination based on race, gender, disability, age, or sexual orientation.
Sexual harassment is a rather important factor to consider in setting up a working environment for your business. Everyone, whether men or women, must have an assurance of a workplace free of sexual harassment. Following these key factors is essential to running a business with happy employees to ensure business stability for the future years.
Get Licences and Permits
This gives your business approval to operate and ensures compliance with safety regulations. It also protects your business and employees. For example, if you run a restaurant, having the proper licences and permits ensures your business is safe and meets industry standards.
This will also ensure that customers feel safe and increase the legitimacy of your business in return for the trust of the customers. You can get more information to get licences and permits on the Australian Business and Licence Information Service.
Protect Your Intellectual Property
Intellectual property is the business itself. You would not have a business that suddenly came into existence without a little bit of imagination. Thus, protecting your logo, inventions, products, etc. is the most logical thing to do. Otherwise, a lot of people are going to copy your business and you won’t have any course of action against it. Some of what you ought to do are: Trademark, Patent, Copyright
Create a Strong Legal Foundation
Last but not least, creating a strong legal foundation for your business is very important in the legal requirements of starting a business in Australia. This could dictate the future of your company and the legal boundaries you and other parties are bound to. Setting clear provisions and clauses will definitely be used for your advantage and will even protect you should there be any litigation that may ensue.
- Contracts and Agreements: Whether it’s supplier agreements, client contracts, or employment contracts, having clear legal agreements protects your business and minimises disputes.
- Terms and Conditions: If you operate online, make sure your website has proper terms and conditions as well as privacy policies to comply with Australian privacy laws.
- Insurance: Ensure your business is protected with appropriate insurance policies, such as public liability, professional indemnity, or workers’ compensation insurance.
Starting a business in Australia requires careful attention to legal obligations to ensure compliance and protect your venture. Choosing the right business structure is the first step. Then, register for taxes and protect your intellectual property. Understanding these legal requirements is essential for building a strong and sustainable business.
Before taking the leap, it’s wise to consult with a lawyer or a business advisor. This helps ensure you meet all the legal requirements for starting a business in Australia, specific to your industry.
