How to start a business in Australia
You’ve decided it’s time to go out on a limb, pursue your dreams and become your own boss.
Plenty of Australians are doing it, despite all the COVID-19 lockdown uncertainty over the past couple of years.
In fact, the latest new business registration figures from the Australian Bureau of Statistics show that over 365,000 new businesses were started nationally during the last financial year alone. There’s tonnes to learn when you start a new business, but where should you begin? Don’t worry — this post will walk you through how to start a business step by step. From deciding what to sell through to legally registering it and making your first sale, it’s all here. We’ve also included answers to the FAQs of budding Australian entrepreneurs and business owners.
1. Pick a product or service
It’s easy to get caught up in the hype of starting your own business, but you really should do some research before diving in too deep. If your product/service is already being offered and has fierce competition, you need to know that now. That great business idea you thought up in the shower might or might not be worth pursuing. So start off by doing your homework. Find out everything you can about what you’re hoping to do. Have you found a need that no one else is meeting? Or are you one of countless many to offer this particular product or service? Be open to feedback from those in the know to increase your chances of success. Above all, if your first idea is already being done very well by other businesses, let it go.
Easy businesses to start
Here are a few examples of easy businesses to start:
- Web design If you can help a business to design a website, then you can court potential customers for your web design business from anywhere in the world.
- Virtual assistant With more and more people working remotely both in Australia and all over the globe, there’s an increased demand for virtual assistants to do routine admin work.
- Bookkeeping Every business needs to keep their books, and more and more are choosing to outsource this essential task to specialised bookkeepers.
- Graphic design They say that ‘a picture is worth a thousand words’, which is why the skills of talented graphic designers will always be in demand and highly valued.
- Online store You can sell just about anything online these days — fish shoes, bread pillows — which is why so many people are setting up online stores.
- Digital marketing Digital marketing skills are also in high demand, whether it be social media or search engine (SEO) marketing.
- Copywriting The internet is a hungry beast that’s always demanding fresh content, so if you’re a wordsmith, there are plenty of opportunities.
- Delivery (eg. parcels and groceries) COVID-19 restrictions saw a massive increase in online shopping, and this trend doesn’t look like it will subside, even after the restrictions have eased. That’s good news for courier businesses.
Some of these businesses require special skills, but all except the online store and delivery services can be started with a modest outlay of money.
2. Choose your business structure
Choosing the right business structure is important, as each of the four options below have pros and cons. Which one you choose affects your:
- Ongoing cost and amount of paperwork
- Number of licenses needed
- Personal liability (in case the company is sued or goes bankrupt)
- Level of control
- Tax obligations
Australians have these business structures to choose from:
As a sole trader, you are legally responsible for all business debts or losses, as well as any profits. You must also pay super for all workers (except yourself). Related: What are the tax differences between a sole trader and a company?
A company has higher setup costs and more paperwork. This structure is run by directors (you) and owned by shareholders (those who fund your business). You must pay super guarantee contributions for any eligible workers including yourself.
A partnership is two or more people who run a business together. Each partner shares the business’ income, losses and control. A partnership is inexpensive to set up and run.
This is an entity that holds property or income for the benefit of others. This can be expensive, as it requires a formal deed. There are also yearly administrative tasks for the trustee. Keep in mind that you’re not locked into any one structure; you can change the structure as your business grows. If you’re not sure which one is right for you, talk to a tax, business or legal adviser.
3. Apply for an Australian Business Number
Applying for an Australian Business Number or ABN is the next step to setting up your own business — it’s also free. Your 11-digit ABN is different from your Tax File Number. An ABN makes it easy for the government and other businesses to identify your business. Check the website linked above to find out which (if any) other business or tax registrations you need.
4. Decide on a business name
Before settling on a name for your business, jump on the ASIC Connect website to search the Business Names Register. There’s no point in choosing a name that isn’t available.
5. Register your website domain name
If you’re serious about your small business, you’ll want to build a website. More and more Australians are looking online for everything from the nearest Thai takeout to where to buy gifts. A website is a good way to make sure your business shows up when they search.
True, many site builders offer free domain names — gemmasfoodblog.wordpress.com for example — but if you intend to make your business venture a success, you’re better off with a website domain name of your own (gemmasfoodblog.com or gemmasfood.blog). A couple of golden rules apply when deciding to buy a website domain name. Ideally, it should:
- Describe your business
- Be easy to spell and remember
- Not contain abbreviations, dashes or numbers (unless there’s a number in your company name)
As with business names, you won’t be able to use a domain name that someone else is using. Find more tips on choosing a great website domain name here. Check to see if the name you want is available now!
6. Organise any necessary licences or permits
Certain types of businesses require a licence or permit to operate in Australia. These licences and permits vary based on four main factors:
- The type of business you want to run
- Any relevant local, State or Territory laws for that type of business in the area where it will be located
- Your business structure (e., whether you will have a sole trader, company, partnership or trust structure)
- How your business will operate (for example, your operating hours)
You can find out about any licenses or permits you need to run specific types of businesses in different locations across Australia here. For example, if you want to open a café in Sydney with a partnership business structure, you will need a permit from the relevant local council. This permit will require you to comply with the safety provisions of the Food Standards Code. If your café will be serving any alcohol, you will also need a liquor licence.
7. Arrange start-up funding
It takes money to make money and this is especially true for start-ups. Luckily, you have some options here.
- The Start-up Finance Package which provides loans of up to $100,000 to eligible Indigenous Australians to start their own businesses
- Innovation Booster Grants of up to $20,000 to help Western Australian start-up businesses to commercialise innovative ideas
- Seed-Start Grants of up to $500,000 to help early-stage South Australian start-ups to commercialise innovative products and services
- The First Start Loans program provides low-interest loans of up to $2 million for Queensland primary producers and commercial fishers to start a viable business
- Agristarter Loans of up to $2 million for first-time farmers
Finally, if you have no other finance options (or you need more finance), you can apply for a business loan through a commercial (i.e. non-government) lender.
Improving your odds of success
You will increase your chances of getting any business loan approved if you have:
- A thoroughly researched business plan and proof of concept
- A realistic budget that demonstrates how you will be able to afford your loan repayments
- A good credit score. Lenders will check your credit score as part of assessing your business loan application. You will have a good credit score if you have a history of paying all your debts on time. This includes obvious debts like loans and credit cards, as well as less obvious debts like mobile phone or electricity accounts.
- Assets you can provide as security for the loan. For example, property that you own or partially own
8. Find your first client
Congratulations! Your business is up and running and you’re eager to start earning money. But where do you start?
- Your own network of family and friends is a good place to begin. Let everyone know about your new business, what you do and why you’re better than similar businesses.
- Use LinkedIn’s professional network by creating an engaging profile and connecting with potential clients.
- Claim your Google My Business listing and fill it out completely. This will also put your business on Google maps.
- Set up a Facebook business page to promote your products or services. You can even sell directly from Facebook.
- Join a business network and start making connections.
You can also look for local business directories that will list your business, including your website domain name.
Editor’s note: Bring new business in the door with a website. Build it yourself — truly no tech skills needed! — or let the pros at GoDaddy build one for you.
Consider this your start-up checklist
Really, setting up your own business in Australia is as easy as 1-2-3. Just follow the eight steps outlined in this article and enjoy the rollercoaster ride, with its ups and downs. We’ve even offered a couple of suggestions for easy businesses to start. Whether you work out of your garage or rent a storefront, starting your own business can be a life-fulfilling adventure. Best of luck to you!
John Coomer contributed to this post.
Frequently Asked Questions
How can I start my own business with no money?
The best way to start your own business with no (or very little) money is to keep your day job while you’re getting established.
How can a beginner start a business?
The best advice for a beginner starting a business is to choose a product or service that you’re passionate about. Then do your research on the market and your competition to make sure you will have the skills and capacity to compete successfully. Do this research before you start your business. Ideally, you will want to have a competitive advantage that you can exploit. Finally, before you take the plunge, ask for advice from people who have or are running successful businesses. Make sure you go in with your eyes open.
What are 3 things you need to start a business?
Three things that you need to start a successful business are: 1) A business plan As the old saying goes, people don’t plan to fail, they fail to plan. The failure rate of new businesses is high. Having a well-researched business plan can reduce your risk of failure. 2) A market for your products and services There is no point in trying to sell a product or service that no one wants to buy. If there is an existing market or competitors, why will customers choose your business? If you are developing a new market with a new product or service, enough people need to be willing to pay the right price for what you will offer. 3) The resources to implement your business plan Even if you don’t need financial resources, you need to have the physical resources and skills to successfully implement your business plan.
Do I have to register my new business for GST?
Goods and services tax (GST) registration in Australia is compulsory if your business will have an annual turnover that will exceed $75,000. You only have to register within 21 days of your business turnover exceeding this threshold, so you may not need to register straight away (if at all). If or when your annual turnover exceeds $75,000, you need to charge 10% GST on all of your customer invoices. You will also be able to deduct any GST that your business is charged by other businesses. If your business is registered for GST, you (or your tax agent/accountant) will need to submit either a monthly or quarterly business activity statement (BAS) to the Australian taxation Office (ATO).
What is a business activity statement (BAS)?
A BAS reports all your business tax obligations to the ATO, including:
- Pay as You Go (PAYG) tax for yourself
- PAYG withholding tax for any employees (if you have them)
If you’re registered for GST, the ATO will send you your BAS to fill out prior to your monthly or quarterly lodgement date.
How much tax will I need to pay?
The tax you pay on your business income will depend on your business structure.
- If you have a sole trader or partnership structure, you will pay tax at your marginal rate.
- If you set up a company, you will pay the company tax rate (which is currently 25% for most businesses in Australia). It’s important to understand that while the company tax rate is lower than most marginal tax rates, there are some significant upfront and ongoing legal compliance costs for setting up a company. You should get professional financial advice to determine if a company structure is appropriate for your business.
- If you have a trust structure for your business, then you can distribute your income among trust beneficiaries who have the lowest marginal tax rates to minimise the tax you need to pay on the income.
However, as with setting up a company, setting up a trust structure also has upfront and ongoing legal compliance costs. Once again, you should get professional financial advice about whether it’s an appropriate structure for your business.
When will I pay tax?
This depends on whether your business is registered for GST or not. If your business is registered for GST, it also depends on whether you are doing monthly or quarterly BAS reporting. If you’re doing monthly reporting, you need to pay any BAS tax due by the 21st of each month. If you’re doing quarterly BAS reporting, you need to pay your BAS tax by the following quarterly dates:
- 28 February
- 28 April
- 28 July
- 28 October
UPDATE: This how to start a business post was originally published on 3 December 2019 and updated on 13 January 2021 and again on 15 July 2022.