Starting your own business can be exciting. But before you set up shop and start trading, you’ll need to first register your business and ensure that you are in compliance with government regulations. However, registering a company is not as complicated as it may sound and it’s something you can do from the comfort of your own home or office.
Here are the steps you should follow when registering your business.
1. Choose your business structure
When deciding on your business structure, you should opt for the one that best suits your business needs, keeping in mind that each has different implications and liabilities. The four main business structures commonly used by small businesses in Australia are;
- Sole trader: This is the most common form of business organization. It’s easy to run and offers complete managerial control to the owner. However, the owner is also legally responsible for all aspects of the business and is personally liable for all financial obligations.
- Partnership: This is an association involving two or more people or entities running a business together and sharing in the profits or losses of the business. Each partner is personally liable for the financial obligations of the business.
- Company: An entity, separate from shareholders, that handles the responsibilities of a business.
- Trust: An entity that holds property or income for the benefit of others.
Your business structure will influence everything from the day-to-day operations to tax liabilities as well as the level of risk on your personal assets. You should choose a business structure that gives you the right balance of legal protections and benefits. However, the business structure can be changed a later point. As your business grows and expands, you may decide to take a different path necessitating a change in your business structure or a reconstruction.
2. Apply for an Australian Business Number (ABN)
An Australian Business Number (ABN) is a unique 11-digit number that identifies your business. An ABN doesn’t replace your tax file number, but it is used for various tax and business purposes. Although it’s not mandatory for solo business owners to have an ABN, you need one to be registered for GST.
The ABN registration helps identify your business in public records and facilitates interactions with banks and relevant government departments including ATO. Once your ABN details are added to the Australian Business Register (ABR), they are made accessible to the public. However, you can also apply for non-public information ABN, which is only available to you, as the ABN holder, your registered tax agent and eligible government agencies.
3. Register a business name
Unless you plan on trading under your own name, you’ll need to decide on a business name. Check the National Names Index to see if the business name you want is available. To register the name, you must have an Australian Business Number (ABN) or have applied for an ABN. If applicable, you should also register a domain name, which alongside your business name is connected to your Australian Business Number (ABN).
To protect your business name from being used by someone else, you should register it as a trade mark. A registered trade mark under the Trade Marks Act 1995 gives you the exclusive legal right to use, license and sell and protects your brand. Having a registered trade mark can be your most valuable marketing tool and can help build the value of your business.
Keep in mind that a business name registration or domain name only does not in itself give you any exclusive ownership or proprietary rights to use the business name. That onus goes to the trade mark.
4. Getting a Tax File Number (TFN)
Ensuring you’re registered for the correct taxes is an essential. You must have a TFN regardless of the type of business you’re starting. If you plan on running your business as a sole trader, you can use your individual TFN but if you’re operating as a partnership, company or trust, you’ll need to register a separate TFN for the business. Although taxation applies to all businesses, the exact liabilities will depend on the type of business you’re starting.
Registering your business and having the appropriate licenses and permits is fundamental when setting up a business. Even if your business is a small self-operated entity, failing to comply with the federal and state regulations can attract some hefty penalties. Should you encounter any challenges, you can always consult professionals who can then help you understand your legal requirements such licenses, contracts and leases.
