Are you interested in starting a business in Australia? If YES, here is a complete guide plus legal requirement for starting a business in Australia as a foreigner.
Okay, having provided an in-depth analysis of the top 50 best small business ideas in Australia and a series of industry-specific sample business plan templates; we will now analyze in detail the legal requirements, market feasibility and every other thing it takes to start a business in Australia. So put on your entrepreneurial hat and let’s proceed.
Why Start a Business in Australia?
In case you are looking to start a business in any part of the world at all, then you may want to look at Australia. If not for anything, then you should be satisfied with Australia because of the plethora of opportunities that are available therein, and the fact that it’s a country that boasts of a large population which includes citizens and non-citizens of the country.
The country otherwise known as officially known as the Commonwealth of Australia comprises the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands.
Australia is a developed country and one of the wealthiest in the world; it prides itself as the world’s 12th-largest economy. In 2014 it had the world’s fifth-highest per capita income. While its military expenditure is the world’s 13th-largest. It also has the second-highest human development index globally.
Australia ranks highly in many international comparisons of national performance, such as quality of life, health, education, economic freedom, and the protection of civil liberties and political rights. The country is a member of the United Nations, G20, Commonwealth of Nations, ANZUS, Organisation for Economic Co-operation and Development (OECD), World Trade Organization, Asia-Pacific Economic Cooperation, and the Pacific Islands Forum.
Another reason that must be considered before doing business in the Australia is the fact that there is the existence of a mixed economy, it has also maintained a stable overall GDP growth rate, a moderate unemployment rate, and high levels of research and capital investment.
There are also a lot of opportunities in which a person can be involved in, so as to make money from the country
Starting a Business in Australia as a Foreigner – A Complete Guide
- General Overview
A truly unique country, Australia is the world’s sixth largest country and its smallest, flattest continent. It’s about the same size as the 48 mainland states of the USA and 50 per cent larger than Europe, surprisingly, despite its wide land mass it has the lowest population density in the world just only two people per square kilometre.
Australia is a popular travel destination due to its many tourist attractions, remarkable wildlife and beautiful beaches. Australia has the third highest standard of living in the world and four of the world’s top 10 most liveable cities in 2010 were in Australia, according to The Economist Intelligence Unit.
Although it is a small country by population, it provides a fertile ground for new ideas; from the iconic moments in film to the unique architecture of the Sydney Opera House. Australian influence stretches from the stage and architecture to designs and inventions such as blast resistant glass and electronic pacemakers which places the country at the forefront of technological research.
Economically it has been ranked as most resilient in the world five times since 2002 and ranked inside the top 10 of the world’s most resilient economies since 2008 by the World Competitive Yearbook of the International Institute for Management Development. It is also one of the most politically and economically stable nations in the world.
Its major cities function as regional headquarters for more than 850 multinational corporations.
The economy of Australia is one of the largest mixed market economies in the world, with a GDP of AUD$1.62 trillion as of 2015. Australia’s total wealth is AUD$6.4 trillion. In 2012, it was the 12th largest national economy by nominal GDP and the 17th-largest measured by PPP – adjusted GDP, about 1.7% of the world economy. Australia is the 19th-largest importer and 19th-largest exporter.
Facts and Figures of Australia That Will Interest You as an Investor/Entrepreneur
There are loads of facts and figures that make Australia exciting. Since it’s a tourist centre, it is not surprising that people throng the states to do one form of business or the other there. This is because of the human and capital resources that the country possesses. Here are some good facts that you might find handy;
- The Australian economy is dominated by its service sector. It comprises 68% of GDP.
- The mining sector represents 7% of GDP
- The Economic growth is largely dependent on the mining sector and agricultural sector (12% of GDP) with the products to be exported mainly to the East Asian market.
- Despite the recent decline of the mining boom in the country, the Australian economy has remained resilient and stable
- The country also boasts of over 260 languages spoken like English, Arabic, Italian, Mandarin, Greek etc.
- The Biggest Island in the world is also located in the country.
- Since 2002, the country has continued witnessing a booming economic growth
- It has Over 120 sport organisations
- It also has Over 500 national parks, and over 2,700 conservation areas
- There are 17 classified UNESCO world heritage sites.
- These facts and many more, are enough to wow any investor to consider the Australia.
Factors or Incentives Encouraging Investors to Venture into Business in Australia
The wish of every investor is to venture into business in places where their investment will be useful and productive at the end of the day. Hence, there are several incentives that attract investors in Australia. Here are some of the benefits of investing in Australia;
- Strong economy
- Solid infrastructure
- Mixed/Large market
- Strength of the country’s currency
- Diverse ethnic groups and persons
- Government support to economic development through infrastructure development, facilitation, amongst others
- The accessibility of infrastructure and utilities such as good roads, power, communication facilities, and lack of corruption and bureaucratic delays in obtaining such utilities encourage entrepreneurship.
- Economic freedom in the form of promising legislation and few hurdles to start and operate businesses encourage entrepreneurship.
- Sound laws that are investors’ friendly.
Starting a Business in Australia – Market Feasibility Research
A large number of investors from different countries have migrated to Australia to do business. Those who have found themselves there, have stayed there to say the least, this is to enable them to continue doing what they know how to do best. It is therefore not out of place to postulate that Australia is one of the best countries to do business in.
This is one of the reasons why small brands have continued to soar higher to become a formidable force to reckon with. It has a total area 0f 7,692,024Km2 and about 2,969,907 sqm. As at 2016, it has a population of about 24,080,100, making it the 51st most populated country in the world.
Australia has a mixed economy system, and a large importer/exporter of goods. It has a highly educated work force that produces a gross domestic product of approximately $1.223 trillion based on the 2015 data. The country boasts of a lot of international agencies, multinational companies and so on.
List of 10 Well Known Foreign Brands Doing Business in Australia
Over the years, several brands have gone from being small to becoming household names. One of the good things about these brands is that they are foreign. Here is a list of 10 well known foreign brands in Australia;
- British Airways
- DHL express
List of 10 Well Known Indigenous Businesses in Australia
Just as there are foreign entrepreneurs doing business and excelling in Australia, so are there indigenous counterparts. These indigenous moguls have grown from small to solid and have become a force to reckon with. Here is a list of indigenous brands doing business in Australia;
- Red Balloon
- The Messenger group
- Boost juice
- Big commerce
- VGI partners
- Vocus communications
- Comm vault
- Shoes of prey
List of 10 Most Popular Indigenous Entrepreneurs/Business Owners
Owning a business in the Australia isn’t rocket science. A lot of folks over the centuries have built strong businesses. Whilst some have not made it past the first few years of operation, yet others have stood the test of time and have continued to wax stronger and stronger as the years go by. As a matter of fact, some of these businesses are not just known in the Australia only, but has transcended its shores.
- David Rohrsheim – General manager of Australia and New Zealand at Uber
- Karen Stocks – managing director at Twitter Australia
- Naomi Simson – founder and CEO of Red Balloon
- Lisa Messenger – founder and CEO of The Messenger Group
- Nicole McInnes – director of marketing ANZ for Pandora Radio.
- Fred Schebesta – founder of Finder.com.au
- Janine Allis – founder of Boost Juice.
- Daniel Flynn – co-founder and managing director of Thankyou
- Mitch Harper – co-founder of Bigcommerce
- David Jones – executive chairman of VGI Partners
Top 5 Best Cities to Do Business in Australia
Though it is okay to do business generally in Australia, there are however some cities and states that have an edge over others because of the very favourable conditions they offer. Different businesses have gone ahead to be borne here and they have birthed other businesses as well. Here is a list of top 5 best cities to do business in Australia;
When looking to start a business in the Australia, a whole lot has to be looked at from the economic point of view. Some of the factors in consideration include the following; Human Capacity Building and Job creation, Social policies and corporate social responsibility initiatives, Infrastructure improvements, Technology and knowledge transfer.
An essential feature of the U.S. economy is the economic freedom given to the private sector and the fact that its economy is a diverse and mixed one. This is enhanced by relatively low levels of regulation and government participation, as well as a court system that normally protects property rights and imposes contracts.
Australia is a wealthy country, and one of the best places to live in the world. It is a great tourist country with a plethora of things that makes it unique, such as having the big banana etc. Australian per capita GDP growth is higher than that of New Zealand, US, Canada and The Netherlands.
The past performance of the Australian economy has been heavily influenced by US, Japanese and Chinese economic growth. China which is the largest purchaser of Australian debt has a substantial export to it of iron ore, wool, and other raw materials and over 120,000 Chinese students study in Australian schools and universities. It has entered into trade agreements with New Zealand, Singapore, United States, Thailand etc.
Possible Threats and Challenges You Will Face When Starting a Business in Australia
There isn’t a country in the world today that is free from business challenges- no matter how little. Australia is no exception. Here are some challenges to face when you do business there;
- Low context culture
- Complex Tax system
- Legal complexities of international business
- Cultural Barriers
- Difference in Marketing Styles
Starting a Business in Australia as a Foreigner – Legal Aspect
- Business Licenses and Permits You Needed to Start a Business in Australia
In order to be able to start a business in Australia, .you will need local, state and federal business licenses and permits. However, there are basic and most common licenses and permits that all businesses need. Without these licenses you risk being clamped down on by the authorities involved in the execution of business laws in Australia. They include the following;
- Fire department permit – In case your business uses any flammable materials or if your premises will be open to the public air and water control permit-Check with the state environmental protection agency regarding federal or state regulations that may apply to your business. You should get a permit from your fire department.
- Sign/Advertisement permit – If your business is such that, you need to make use of signs or advertise your business, there is need to make use of this permit.
- County permit – County governments frequently need the same types of permits and licenses as cities. As such, you have to ensure that you get this permit, so that you will have the access to the jurisprudence within your county.
- Sales tax license – Sales taxes differ by state and are compulsory at the retail level. It’s vital to know the rules in the states and localities where you operate your business because if you’re a retailer, you must collect state sales tax on each sale you make.
- Health department permit – The health department will want to inspect your facilities before issuing the permit. And this permit is necessary so as to ensure that all hazards that could be accrued from your company are well taken care of.
The Best Legal Entity to Use in Australia
Choosing a business entity as you start out in trade is your responsibility. On the other hand, the type of business which you plan to operate may also suggest the type of entity to use. It all depends on the type of business you want to run. Here is a list of entities to guide you;
- Sole Proprietorship
Adopting a sole proprietorship type of entity means that you may be looking to start on a small scale from the outset. The less complex structure is the sole proprietorship, as it usually involves just one individual who owns and operates the enterprise.
If you intend to work alone, this may be the way to go. The tax aspects of a sole proprietorship are particularly attractive because income and expenses from the business are included on your personal income tax return
This is particularly necessary when you don’t intend to be the only one that would be involved in ownership, then you can consider adopting the partnership style of entity. If your business will be possessed and run by several individuals, you may want to take a look at organizing your business as a partnership.
Partnerships come in two variations: general partnerships and limited partnerships. In a general partnership, the partners accomplish the company and shoulder the responsibility for the partnership’s debts and other responsibilities.
On the other hand, a limited partnership has both general and limited partners. The general partners possess and activate the business and assume liability for the partnership, while the limited partners function as investors only. This means that they take no control over the company and are not saddled with the same liabilities as the general partners.
This type of entity is adopted on a very large scale and adopting the corporate structure is more complex and costly than most other business structures. A corporation is an independent legal entity, separate from its owners, and as such, it needs fulfilling more regulations and tax requirements.
List of Legal Documents You Need to Run a Business in Australia
There are several documents that must be in place to run a business in Australia. The inability to have all or more of these documents in place means that you just might be found wanting along the line. As such, here are some of the documents that you will be needing;
- Certificate of Incorporation
- Business Plan
- Non-Disclosure Agreement (NDA)
- Insurance Policy
- Contract documents
- Patent or Copyright registration
- Operating Agreement
- Business License
List of Government Agencies and Parastatals that are In-charge of Registering businesses and Issuing Licenses and Permits in Australia
In different countries of the world, there are various licensing bodies. Australia has its own bodies that are saddled with the affairs of business permits and licensing. They see to it that before a business fully commences trade, they have to be well licensed.
Here is a brief list;
- Australian Securities & Investments Commission (ASIC)
ASIC is an independent Commonwealth government body that regulates companies, financial markets and financial service providers to ensure that their activities are carried out honestly and transparently.
ASIC is responsible for administering legislation such as the Corporations Act (Cth) and the Financial Services Reform Act 2001 (Cth) and ensuring that companies, financial service providers and their employees comply with the requirements under those Acts.
- Australian Competition and Consumer Commission (ACCC)
The ACCC is responsible for enhancing the welfare of Australia through the promotion of competition and fair trading in the Australian marketplace and for the protection of consumers. It regulates companies and individuals to ensure compliance with the CCA.
It can also regulate foreign companies conducting business or engaging in activities in Australia. The ACCC has significant powers to make decisions or take legal action in respect of consumer protection matters and matters involving anti-competitive behaviour.
- Australian Transaction Reports and Analysis Centre (AUSTRAC)
AUSTRAC is Australia’s anti-money laundering and counter-terrorism financing regulator. Incoming and outgoing monetary transactions may be subject to reporting requirements to AUSTRAC.
Specific requirements exist for a wide range of financial services providers, the gambling industry and others. The regulations are contained in the Financial Transactions Reports Act 1988 (Cth) and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
- Foreign Investment Review Board (FIRB)
FIRB provides foreign investment policy advice to the Australian federal government. FIRB examines the proposals of foreign investors investing in Australia and advises the government whether the proposals comply with foreign investment policies and the Foreign Acquisitions and Takeovers Act 1975 (Cth).
FIRB issues policy documents which outline the kinds of investments for which a foreign investor will need approval. Additionally, there are some limits on the amount and types of investment a foreign investor can make, for example, purchasing shares in an Australian company or land.
- Australian Communications and Media Authority (ACMA)
ACMA is the government body responsible for the regulation of broadcasting, the Internet, radio communications and telecommunications. ACMA’s responsibilities include promoting self-regulation and competition in the communications industry, while protecting consumers and other users. ACMA is also responsible for enforcing Australia’s anti-spam law, the Spam Act 2003 (Cth).
- IP Australia
IP Australia is the regulatory body in respect of intellectual property in Australia. Its main purpose is to administer and keep records of registered patents, designs, trademarks and plant breeder’s rights. Members of the public are able to search the records of IP Australia for information relating to intellectual property rights, including registers of trade-marks, designs and patents.
- .au Domain Administration
auDA is a not-for-profit organisation which was formed in 1999 as the industry self-regulating body for the .au domain name. It has been formally recognised by the Federal Government and has the power to develop and implement domain name policy.
It is responsible for granting licences for second level domain registry operators (e.g. obtaining a .com.au, .net.au or .org.au webpage), as well as ensuring consumer protection by implementing safeguards and dealing with complaints.