What else can be more exciting than opening your own business? However, in order to make it successful, strategic planning, along with hard work, is essential. Thus, before you dive in, it is crucial that you know what will come your way.
From legal responsibilities to managing the whole business, everything will have to be managed by you. It can be intimidating, especially if you are unprepared. So, the following steps will teach you how to start a small business in Australia.
Choose a business structure
The initial step of setting up a small business in Australia is choosing the appropriate business structure. Depending upon the business structure you choose, it will determine how other things will work, such as:
- How much tax you will pay
- Type of responsibilities you will have as a business owner
- Your asset protection
- Requirements and costs of ongoing reporting
- The level of control
- Your potential personal liabilities
There are four business structures in Australia that you can build your business on.
1. Sole trader
It is the most popular and simplest business structure. The sole person who operates the business takes all the expenses and revenue generated. Under this structure, no legal separation between the business and the owner is present. As a result, the personal assets are not protected, and the owner gets the responsibility for all the liabilities.
2. Partnerships
This business structure lets two or more people operate a business in a partnership. Partners share the profit and loss in the exact proportions set in the agreement. There is no separation of the legal entities among the partners. Moreover, one partner can be liable for debts incurred by the other partner on behalf of the partnership.
3. Trusts
A trustee runs the business on behalf of beneficiaries or, in simpler words, partners. The net income is distributed among them as per the rules in the trust deed. The key benefit of this structure is the distribution of profits to beneficiaries who were not involved in the business running on lower tax rates.
4. Company
This structure is owned by shareholders and is operated by directors, who are usually the shareholders as well. It is different from other structures as the personal assets are well protected.
Registrations
Here are the registrations required for setting up a new business.
- Apply for Australian Business Number (ABN)
- Get your Tax File Number (TFN)
- Register for GST
- Register your company and business name with the Australian Investments & Securities Commission or the ASIC
- Register the business website’s domain name
- Apply for any permits or licences required
Legal Requirements
You must fulfil a few legal requirements to start a business in Australia. A partnership agreement, a trust deed or a constitution, minutes, consents and formal notices are the documents required for a partnership, trust or company, respectively. Depending upon the business structure, you would need appropriate documents.
Get fundings
Identifying the source of funding is also crucial. You can look for government grants, if there are any, to help you. There are some options also available as per states. Consult a professional to find these out.
Seek financial advice
If this sounds too overwhelming to you, you can always seek financial advice. At Clear Tax Accountant Melbourne, we can provide you with the right advice for your business. So if you wish to have the best accounting services in Melbourne, contact us today.
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