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.
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.
Table of Content
- Facts and Figures of Australia That Will Interest You as an Investor/Entrepreneur
- Possible Threats and Challenges You Will Face When Starting a Business in Australia
- List of Legal Documents You Need to Run a Business in Australia
- Top 5 Cities to Do Business in Australia
- Business Licenses and Permits You Needed to Start a Business in Australia
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.
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
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
So, to make starting a business in Australia much easier and affordable, we’ve put together the key steps you need to take when starting a business.
Starting a Profitable Business in Australia as a Foreigner – A Complete Guide
- Decide and select a business structure.
When starting a business in Australia, you have to consider this option extensively as it has a direct effect on the level of control you have in your business, the amount of tax you need to pay, regulatory obligations, health and safety requirements in the workplace and the level of personal liability you will incur. Have it in mind that there are four structures which you can build your business in Australia:
- Sole trader: This is when you register someone (usually, yourself) as the sole owner of the business. It simply means that you’re responsible for all legal aspects of running the business, but you’re entitled to hire people to work for you.
- Company: This is a commercial business or entity that has a separate legal existence to its shareholders.
- Partnership: A Partnership is when more than one person and/or entities run a business together, but not in the form of a company.
- Trust: A Trust is an entity that is in possession of property, income, or any other assets for the benefit of a third party.
Note that in Australia, you’re mandated to decide on the structure of your business before you register it, as each structure entails different steps to do so. Along with this, also remember that you might change the structure of your business as it grows and evolves over time.
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
- Choose a business type
After you must have selected a suitable business structure, you can better understand the type of business you’re likely to need. Note that there are a myriad of business types to choose from, and some of the main types include:
- An Online business
- A franchise
- Independent contractor
In Australia, every industry abides by different sets of legal obligations and regulatory requirements, so it’s very important you pick the business type that best suits your industry.
Top 5 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;
- Apply for an Australian Business Number (ABN) and register your Business Name
It’s very crucial to state 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. Immediately you’ve got an ABN, you’ll 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 credits for things like energy grants
It’s very much advisable you take your time to decide on your business name before you go about creating assets like your website URL, logo or any other designs. Otherwise, you’ll need to change everything in the event that your business name changes.
Also when creating a business logo, it’s worth considering if you need to patent it to protect yourself from copyright infringement. 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.
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.
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.
- Register your domain name
Have it in mind that you can only complete this step after you must have secured your business name and ABN as it’s only possible to get a .com.au address if you’re a registered Australian business.
Also note that the domain name you pick should be related to your business in some way and make it a lot easier for prospective customers to find you. Although you might have the perfect domain to go with a killer business name, but you’ll still need to check that someone else hasn’t taken it already.
In Australia, there are many sites that can help you with that. Immediately you’ve found a domain name that isn’t taken, you can go to the .au Domain Administration Ltd (.auDA) website to find links to domain registrars and resellers.
- Organise and know your funding source
The primary concern of most startup businesses in Australia is adequate funding. You can have the best business plan in the world, but it won’t be any way near achievable if you don’t have the money to keep the lights on while you’re getting your feet on the ground.
That is why it’s important to know what resources are available to make the initial growth period a lot easier. Although there aren’t plenty government grants to help you start your business, there are plenty of options that are specific to each state. For example, if you’re starting a business in Adelaide, you can apply for a cool $20,000 Small Business Development Fund. There are other grants based on:
- Taking your idea to market
- Marketing and sales
- Buying equipment
- Importing and exporting
- Employing people
Banks and other lenders offer a range of business loans including overdrafts, lines of credit and fully drawn advances. Private investors – business angels and venture capitalists are also a growing source of start-up capital for small Australian businesses.
- Register for the correct taxes
When you start a business in Australia, you absolutely must register for the correct taxes to avoid any potential legal implications. Have it at the back of your mind that the taxes you must register for are dependent on the type of business you choose to start, with some applicable to every type and others only mandatory for certain types. Some examples include:
- Goods and Services Tax (GST): Note that this is compulsory if your business has a turnover of $75,000 AUD or higher
- Pay as You Go (PAYG) withholding tax: This is required if you need to withhold an amount for tax purposes, such as paying wages or salaries
- Fringe Benefits Tax (FBT): If you’re lucky enough to be able to provide perks like a company car to your employees, then you’ll need to register for this
But right before you start dealing with all the legal and state technicalities, prospective entrepreneurs must plan for their own success by establishing solid business, marketing and exiting plans. Also by mapping out sales projections, operating costs and development strategies, entrepreneurs are able to attract investors, which is the next phase of starting a business.
- Economic Analysis
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.
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.
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.
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.
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