First and foremost, if you want to start a business in Australia as a foreigner, you must secure the required business visa that will give you the legal status to start and run a business in Australia. There are specific visa options for non-citizens who want to run a business in Australia and they include; Business Innovation and Investment (Provisional) visas and Business Talent visas.
The Department of Home Affairs is responsible for Australian business visas and before you can apply for these visas, you must be nominated by a state or territory government. You will need to follow these steps:
- Submit an expression of interest through the Department of Home Affairs SkillSelect- an external site online service.
- See if a state or territory government or the CEO of Austrade- an external site decides to invite you to apply for a visa. You can wait for a state or territory government to contact you, or you can contact them directly.
- If you receive an invitation, you can then apply for a visa. You’ll need to meet certain requirements and provide documents to support your application.
Having said that, if you are looking to start a business in Australia as a foreigner, here are simple steps you can follow to achieve your dream.
How to Start a Business in Australia as a Foreigner
STEP 1: Research to Make Sure Your Business Name is Available
You must make sure that the name you want to use is not already taken. You can check if the name is unique by searching the name on your State website. Also, make sure your business can use its name as a web domain. Even though creating a business website is not on your plan, it is best you purchase the URL to stop others from using it.
After you have registered a domain name, consider creating a professional email account. A professional email that makes use of your domain name is vital to establishing trust between your business and its customers. In this modern era where scam is on a high, companies need to make use of a professional email address to provide a sense of professionalism and credibility.
When you choose your name, you must reserve the name. To check the availability of a name, you can contact your state’s secretary of state office (some states offer an online searchable database). Another option is to have an online legal filing service do the search for you – and many sites will offer this basic search for free.
STEP 2: Register Your Business
The next step to take is to register your partnership. In Australia, you can register your business through the Business Registration Service. This service allows you to apply for an Australian company number (ACN), company name, Australian business number (ABN), business name, and other key business registrations at the same time.
Note that you can’t legally start a business in Australia if you don’t own an ABN. This is an 11-digit number that is unique only to your business and acts as a government identifier for the business. When you get an ABN, you will be able to:
- Register your business name
- Identify your business to other entities for things like ordering goods and services or sending invoices
- Claim taxes such as Goods and Services Tax (GST)
- Avail of credits for things like energy grants
Note that you can register your ABN and business name separately if you wish, but it’s easier to apply for both at the same time.
STEP 3: Create Your Partnership Operating Agreement
An Operating Agreement lists the rights and obligations of the members of the company. These include rules on how the company should be run, how taxes are to be paid, and how profits/losses are to be shared among the members.
The Operating Agreement also contains the list of members of your company and how much their stake is in the business. Even if you have a Single – Member company (you are the only owner), it’s still best practice to have an Operating Agreement.
Please note that it is not mandatory to send the Operating Agreement to your State Department of Assessments and Taxation, or to any other state agency. Just give a copy to any necessary members and keep a copy in your company’s business records.
If your company is sued, having an Operating Agreement shows that your company is operating properly. This helps maintain your personal liability protection.
STEP 4: Open a Cooperate Bank Account
It is international best practice to have a business checking account for your new business in order to maintain your personal liability protection. Using a personal bank account for your company is called the “commingling of assets” and this can lead to personal liability issues if you end up in court.
Please note that having a separate business bank account for your company also makes record-keeping easier for accounting and tax purposes. Since banks in Australia have their own rules and regulations, it is recommended to call a few places to determine the following:
- minimum initial deposit
- minimum balance requirements
- monthly maintenance fees (if any)
N.B: Call the bank ahead of time and double-check what documents are required.
Please note that if you had a business bank account for your sole trader business, you will need to close that account and open a new one in the company’s name.
STEP 5: Securing Business Licenses and/or Permits
The next step you are expected to take is to secure your business license and permits. The type of business licenses and/or permits your partnership business will need to legally operate in Australia will depend on its location and the industry it is involved in.
Fees for business licenses and permits will vary based on the sort of license you are seeking to obtain. Contact your local agencies in the city, town, or county where your business is located to find out more.
STEP 6: Sort Out Taxes
In Australia, sole traders and limited partnerships (companies) have similar tax and reporting obligations, but you should be aware of the key differences.
The tax-free threshold for individuals is $18,200 in the 2019–20 financial year. A sole trader business structure is taxed as part of your own personal income but there is no tax-free threshold for companies – you pay tax on every dollar the company earns.
Sole traders pay tax at the individual income rate whereas the full company tax rate is 30 percent. Different company tax rates apply to companies that are base rate entities. You can keep up to date with any changes to company tax rates on the Australian Taxation Office website.
An individual tax return needs to be lodged each year if you operate as a sole trader business. As a separate legal entity, the company must lodge its own tax return and pay tax on income. If you are a director or employee of your company, you still need to lodge your own individual tax return.
STEP 7: Obtain Your Business Phone Number
Instead of using your home telephone number or your cell phone, you can purchase an affordable “virtual business number” specifically for your business. You can set this virtual business phone up to forward to your cell phone, go through voice prompts, or configure it any way you’d like.
You can check out different telecommunication companies to find out the ones that have the cheapest plans and the ones that have the best customer service.
STEP 8: Hiring of Employees
Registering a business means that you will need employees, and in order to get it right with regard to hiring employees, here are some steps you should follow:
- Verify that the new employees are able to work in Australia
- Report employees as “new hires” to the state
- Provide workers’ compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your workspace
Please note that in Australia, there are several options (Sole trader, Partnership, Company, or Trust) when it comes to business structure, and the one that is most suitable for a foreigner is a Partnership.
Partnership business obligations include; record keeping, lodgement of financial records, business registrations, fee payments, and notification of changes to company details, including updating ABN details on the Australian Business Register (ABR).