Starting a new business? It is easier than you think

Living the independent dream, it sounds unreachable. Over my two plus decades working with small to medium sized businesses I’ve come to understand that the entrepreneurial spirit is alive and well, however people often and mismakenly believe that are too many barriers to entry when they want to start their own business.

The fact is, that in Australia starting your own business is relatively simply to do, and with the help of experienced tax and business accountancy professionals you can be up running quickly.

If you have an idea, Australia is a great place to get that idea to market. The system is set up to enable anybody with the will to make a start. There are limited regulatory hurdles but what you do need above all else is an ABN (Australian Business Number), considering you’re an Australian citizen or your visa’s are in order if you are not, then getting an ABN is a simple and inexpensive task. You can apply directly for an ABN via the Australian Business Registration Website – There you will find straightforward information you will need such as your tax file number and the service is free. We can also lodge this application on your behalf if required.

Once you’ve locked in your ABN if you plan to trade under a name other than your personal name, you’ll need to register a business name with ASIC (Australian Securities & Investments Commission). This is straightforward and costs around $44 for one year or $102 for three years.

It is also advisable to register a com.au domain name once you have your ABN. This is optional (you don’t need a website to start a business), but it’s highly recommended for building credibility with customers. Importantly, to buy a .com.au domain you must have an ABN or ACN (company number), since .au domains are only available to Australian businesses. The .au in the domain shows customers that you’re an Australian-based business. Securing a domain is quick and typically costs only tens of dollars per year.

So how do you actually go from that lightbulb idea to an operational business? While getting registered in simple there are key steps to turn your idea into a functioning business and I and the team can help you navigate these steps so your foundations are solid.

Business structure. We help you decide whether to operate as a sole trader, a company, a partnership, or a trust. This is one of the first important decisions, as it affects your legal obligations, taxes, and personal liability. Many businesses start as sole traders (one-person business) because it’s simplest and gives you full control, but keep in mind you’ll be personally liable for any business debts. If you are risk-averse or planning to scale up, you might consider registering a company for limited liability protection. You can change structures later, but it’s best to make an informed choice early.

Open a business bank account. It’s recommended to open a separate bank account just for your business. If you’ve set up a company or trust, a separate business bank account is actually required, since those entities’ finances must be kept distinct. Even as a sole trader, keeping your business income and expenses in a dedicated account is simply good practice. It makes bookkeeping and tax reporting much easier and helps you clearly see how the business is doing financially. Setting up a business account is usually as simple as visiting your bank (or applying online) with your personal ID and ABN details.

Understand your tax obligations GST. Australia has a Goods and Services Tax (GST) of 10% on most sales. If you expect your business will earn over $75,000 per year in revenue, you are required to register for GST and charge this tax to your customers. If you’re under that threshold, GST registration is optional. Many small businesses under $75k choose not to register to keep things simple, no quarterly GST paperwork. This threshold means you can start a small side-business without immediate GST compliance burden, until you grow. However, if you do register for GST voluntarily or due to crossing the $75k mark, you’ll need to lodge Business Activity Statements (BAS) either quarterly or monthly to report and pay the GST collected.

Aside from GST, if you hire employees you’ll need to register for PAYG withholding to remit their income tax and pay superannuation, but if you’re starting solo, those may not apply yet. Make sure you know the basics of these tax obligations, we can help you register for all applicable taxes when you set up your ABN. The key point is, you can operate a business without being GST-registered if small, but once you grow or if you start hitting that threshold, you must comply with GST rules

Set up bookkeeping and record-keeping – From day one, keep good records of your income and expenses. This will save you countless headaches later. Consider using accounting software like Xero, to track everything digitally. This tool links with your bank account and make reconciling your transactions easier. Good bookkeeping is not just about being organised, it ensures you claim all your deductible expenses at tax time and stay on top of cash flow. Poor record-keeping is a common downfall for new businesses, so establishing a simple system early will pay off. Even a basic spreadsheet is better than nothing, but dedicated software can automate a lot of the work and generate invoices, financial reports, etc., which gives you insight into your business’s performance.

Attend to licenses, and insurance. Ensure you consider any industry-specific regulations that might apply to your business. Australia generally makes it easy to start trading, but certain businesses like selling food, childcare services, trades like electrical work, etc. require specific licenses or registrations. Use the government’s ABLIS search tool to check what licenses or permits might be needed for your type of business and location. Complying with these upfront will save you from fines or shutdowns later. Along with legal licenses, think about insurance. At minimum, many small businesses take out Public Liability Insurance to cover accidents or injuries to clients/public, and if you’re providing professional advice or services, Professional Indemnity Insurance is important. If you hire staff, Workers’ Compensation insurance is mandatory.

The dream of owning and running your own business is possible. In fact Australia has one of the highest percentages of small business owners anywhere in the world. For decades small to medium sized businesses have been the backbone of the Austalian economy. While getting registered is relatively uncomplicated there are inherent risks that you need to be aware of and get professional advice on.

Early this year I posted two articles directly related to small and medium business. Firstly understanding the right structure for your business. Either a sole trader, partnership, company or trust. It is worth reading this article, to gain an overview of the varying options. Secondly I wrote an article about purchasing a small business – due diligence and assessing the business true value. If you’re considering buying a small business this is a must read.

While the barriers to entry are low, before you invest your money, time and resources into a business there are pitfalls to be aware of:

• Failure rates: Not every new business thrives. In fact, statistics show that around 20% of businesses fail in their first year, and about 60% will fail within the first three years. Those odds improve with good management, but they underscore why preparation is crucial. The most common causes of small business failure include poor management and leadership, inadequate market research, and weak financial management or record-keeping.
• Financial risks and liabilities: If you operate as a sole trader or partnership, you are personally on the hook for business obligations. That means if the business can’t pay its bills, your personal assets could be at risk. This isn’t a reason to avoid starting, but it is a reason to be prudent. If your business has significant risk e.g. potential for lawsuits or large debts, strongly consider structures like a Pty Ltd company to limit liability. Our team are well placed to advise you on the most appropriate structure fo your risk tolerance.
• Tax compliance and cash flow: New business owners sometimes get a nasty shock at their first tax time or BAS time. For example, if you weren’t charging GST but suddenly smash through the $75k threshold, you might find yourself owing a big chunk in GST that you didn’t budget for. Likewise, many businesses that are collecting GST or withholding PAYG tax from employees fail to set that money aside, and then struggle when the BAS is due. This can spiral quickly into tax debt. Again, having a professional business accountant helping you is essential to avoid these traps.
• Thinking it will be easy: While I’m emphasising that starting a business is relatively easy, it’s also worth dispelling the myth that running a business is an easy way to riches or a relaxed lifestyle. Many new owners are surprised by how much work is involved. It’s common for small business owners to work far longer hours than they did as employees, at least in the early years. There can be high stress, especially when cash flow is tight or sales are slow. This isn’t meant to scare you off, but to encourage realistic expectations.

Australia makes it easy to start a business. The barriers to entry are low and almost anyone with an idea can take a shot. By taking advantage of careful planning and professional advice, you greatly improve your odds of not only starting but succeeding. North Advisory can be your best ally, handling the complex stuff like taxes and complianc) so you can focus on growing your business. With the right foundation in place, you’ll find that turning your idea into a thriving business is absolutely within reach.