To start and run a business in any country, you are expected to comply with certain business laws and regulations put in place to protect both the businesses and the people associated with them. Have in mind that complying with these laws will guarantee that your new business will run smoothly and efficiently without any interference from the law.
Truth be told, starting and running a successful business is a very daunting task as you will be expected to take care of various things. In a country like Australia, these requirements and regulations can be quite complex and frustrating. However, you still have to comply with them to successfully start your business in the country.
Since your business will require money-changing hands, you must have a bank account that’s separate from your personal one. While this isn’t mandatory for a sole trader, note that it makes it easier to keep track of everything and also pay your tax in due time.
If you’re just starting a business or considering starting one, here are all the legal requirements to know about in Australia.
What are the Legal Requirements for Starting a Business in Australia?
Selecting the most ideal business structure is one of the primary decisions you have to make when starting a business. In Australia, most businesses will fall into one of three common business structures;
- A sole trader: It means that you run and manage the business yourself and you are the one that makes all the decisions.
- A partnership: If you intend to venture into business with another person or multiple people, then a partnership might be the right option for you. You share business profits based on what’s noted in the partnership agreement
- A company: Note that this business structure tends to come with numerous regulatory requirements when compared to a sole trader or a partnership. Nonetheless, it is a separate legal entity and it entails that you aren’t personally responsible for debts or liabilities.
Don’t forget that each structure is different and you have to extensively consider the benefits, risks, liabilities, and financial obligations that come with each.
Registering Your Business Name
Once you have chosen or settled on a business structure, you will also have to register the name of your business. It’s necessary to choose a name that aligns with the products or services your business intends to offer, and also make sure the name isn’t already taken by another business in Australia.
You will also be expected to register the name with the Australian Securities and Investments Commission. To legally register your business name in Australia, just visit the Australia Securities and Investment Commission’s (ASIC) website and complete the registration process.
During the registration, you will be asked to choose how long you want the name to be registered, such as for one year or three years. You also have to pay a fee to register your business name, so verify that all your details are properly inputted before submitting.
Business Permits and Licenses
In Australia, the exact business permits or licenses your business needs will vary depending on the state or territory where you’re situated. Aside from that, they will also vary based on the business activities you intend to carry out and the industry you operate. You are advised to visit the Australian Business License and Information Service website to obtain the most up-to-date information.
Register for An Australian Business Number (ABN)
Note that you can technically start a business without registering it in Australia, but it becomes a different ball game once you start earning an income because you will then have to register for an ABN. An ABN is a unique 11-digit number used to identify your business primarily for tax purposes. If you decide to start earning income without an ABN, you can face large fines and other penalties.
If you intend to incorporate your business as a company, you will have to first register a CAN with the Australian Securities and Investments Commission (ASIC). This is a unique 9-digit number used to identify the company and for monitoring purposes by ASIC. Once your company is set up and ready to start doing business, you can then use your CAN to register for an ABN.
Irrespective of how you choose to set up your business, have it in mind you will need a contract at some point. For instance, if you are trading goods online, you will need a contract that notes very vital aspects of your business such as refunds and returns. This is often referred to as your terms and conditions.
If you plan to supply products or are a reseller, you will want to ensure that a contract explicitly notes the terms of your supply or reselling arrangement. This is to ensure that each party is clear about its obligations. A well-drafted contract will also assist you to handle disputes if they arise.
Same as with permits and licenses, have it in mind that the exact type of business insurance you will be expected to obtain will vary based on your location or the type of business you operate.
You must carry out extensive research or speak with experts to understand the right insurance for your business. Ensure to consider coverage options for basic things like fire, natural disasters, and theft. Also, look into policies that include legal liability if you’re a sole trader or a partnership.
Starting a business is a challenging task but working out your tax can be even more challenging. However, depending on the exact business structure you have chosen, you must understand the different taxation requirements of each.
If you intend to operate as a sole trader, then you are allowed to use your tax file number (TFN) and will lodge a tax return each year. Howbeit, partnerships, and companies are expected to apply for their own separate TFN and file their own tax returns.
If you intend to run your business under one of these business structures, you must apply for a TFN when applying for an ABN. In addition, if your business generates more than $75,000, you will also need to be registered for GST. It is recommended you consult a trusted accountant to assist you with your tax obligations.
Fair Trading Laws
In Australia, you are also expected to comply with government regulations such as fair trading laws. Note that these laws were established to guarantee that businesses in the country can trade fairly, maintain competitiveness and keep their customers informed.
As a part of the fair trading practice, you have to understand the Australian consumer law in context to your business and comply with the competition and consumer act, Australian standards, and codes of practice. You will also have to understand the Australian trade measurement laws, pricing regulations, laws related to displaying prices, product labeling, rules concerning warranties and refunds, and selling goods and services.
Note that this law regulates how the personal information of customers should be handled. A good number of modern businesses collect and store their customer’s personal information. However, note that there are strict guidelines to follow to ensure that this information does not fall into the wrong hands. You will be expected to adhere to this law and also take all necessary precautions to safeguard your customer’s personal data.