How to start a business: a checklist
Starting a business is an exciting adventure. It can also be stressful, challenging and even overwhelming. There’s so much to consider, and remembering everything you need to do may be difficult.
Don’t worry — we’ve got you covered. In this article, we’ll provide a checklist for starting a business in Australia. You can use this list to help you remember everything as you move from an idea to a startup.
17 easy steps to starting a business in Australia
If you’re setting up a business in Australia, you probably have a lot of questions.
1. Create a business plan
The first step in setting up a business in Australia is to put together your business plan. This document provides a high-level overview of what the business is, how it’ll operate, what the market opportunity is, who the key people are, what its financial projections are, and other important fundamentals.
Your business plan also comes in handy later, when you seek financing. Investors like to see that you’ve done your homework, and a thorough business plan helps demonstrate this. A well-written business plan is especially valuable if it's your first business venture and you don’t have a proven track record.
2. Choose a business structure
Next, you’ll need to decide on the structure of your business and choose the right one for your needs. There are a few options for Australian businesses:
Sole trader: A sole trader business structure is easy to set up and operate. Sole traders can still hire employees, but the owner alone is legally responsible for the business, including any debts or losses.
Company: With this structure, a company is a separate legal entity and can itself incur debt, sue and be sued. A company structure is more complex than a sole trader and has various tax and legal obligations to comply with.
Partnership: In a partnership, two or more people run the business together, but not in the form of a company. They distribute the business’ income and losses amongst themselves.
Trust: With a trust structure, the trustee — who can be a person or a company — carries out the business for the trust members or beneficiaries. The trustee is responsible for the trust’s income and losses.
Each structure has differing tax and legal obligations, so it’s advisable to consult a business advisor, lawyer or accountant for guidance on the structure that’s right for your goals.
3. Select a business model
Once you’ve decided how you’ll structure your business, it’s time to choose a business model. Sometimes your business model may change over time as market demands and consumer behaviours change. For example, retailers may include ecommerce in their business model, as well as traditional brick-and-mortar stores.
4. Secure a funding source
After deciding on your business model, your next step is to seek and secure funding for the business. This is a crucial step that should start with considering how much funding you need and what your ideal sources will be. This can be a long process, so it’s best to get started early.
5. Decide on a business name
Unless you or your business partner are trading under your first and last name, you need to register your business name in Australia. This can be a fun process or a stressful one, depending on your perspective.
Make sure you choose a name that fits well with your brand and differentiates you from your competitors. Then you’ll need to make sure it’s available and register it so you have exclusive use of it in Australia.
6. Choose a business address
You need to have a valid address for your business when you register it. This should be your principal place of business, so a PO box address isn't suitable. This address is where the Australian Securities and Investments Commission (ASIC) will send your documents.
7. Choose company officeholders
To register a company in Australia, at least one director needs to be an ordinary resident of the country. They also need to provide written consent to register the business and list their name.
8. Register your company with ASIC
If you decide to structure your business as a company, your next step is to register it with ASIC. You can do this online. You’ll receive an Australian Company Number (ACN), as well as a certificate of registration.
9. Apply for an ABN
An Australian Business Number (ABN) is an 11-digit number unique to your business that serves as an identifier. This is needed to track business-related activity in Australia. It differs from an ACN, which are only required by businesses registered as companies.
10. Get a Tax File Number (TFN) for business
If you operate a partnership, company or trust, you’ll need a TFN for your business. Sole traders can use their personal TFN when they file their tax returns. You can typically apply for your business TFN at the same time as your ABN, which simplifies the process.
11. Register for GST (Goods and Services Tax)
Once your business reaches the GST threshold (currently a turnover of $75,000), you’ll need to register for GST. The Australian government gives businesses 21 days to do this. Most businesses will be able to register for GST as soon as they have an ABN and should do so if they expect their turnover to reach the GST threshold in the first year of operation.
12. Register your business name with ASIC
This is different to registering your company with ASIC. To register your business name, once you have your ABN, you can register the business name you chose with ASIC. To do this, you’ll need your ABN, name and contact details, the name and contact details of the principal place of business, your name choice/s, payment details and more.
13. Register your website domain name
Your next step after registering your business name is to choose and purchase your business’ domain name.
This is the address for your website, and as such is important. If you want a “.com.au” domain, you’ll need to provide your ABN or ACN, so you’ll need to do this step after getting that. A plain “.au” address doesn’t require this check and you can register for this at any point.
14. Open a local bank account
At this point, it’s probably a good idea to go ahead and open your business’s local bank account. If you’re operating as a sole trader, you don’t have to open a dedicated business account — you can use your own. However, mixing business and personal accounts makes many things more complicated than they need to be. All other business structures are required to have separate bank accounts in Australia.
15. Apply for required licences or permits
In Australia, many businesses will need certain licences, permits and other documentation to legally operate. The specific documents needed vary by industry, so your best bet is to check out the official government website for the Australian Business Licence and Information Service to find out which ones you need.
16. Obtain business insurance
Many businesses are going to need insurance of some kind. Examples can include workers’ compensation insurance, public liability insurance, professional indemnity insurance, insurance for expensive business assets, stock and products.
If you’re in any doubt about what insurance you need, consult an insurer, licenced insurance broker or a business advisor to make sure you’re sufficiently protected.
17. Set up an accounting system
Finally, you probably want accounting software in place for tracking and managing your business’ finances. As your business grows, tracking revenue, expenses, payroll, and other financial data can become increasingly complicated.
There are a lot of solutions on the market to help with this, but modern, cloud-based software is the preferred option for many businesses, giving you access to your data from any device at any time and enabling you to get real-time insights into the state of your finances.
Best practices for starting a business in Australia
It’s not easy starting a business - there are many hurdles that you’ll inevitably have to overcome. Here are some best practices to keep you on track.
Manage your cashflow
It’s an unfortunate fact that a large number of businesses fail within just a few years. Usually this comes down to cashflow problems. This is a scary reality, but it can also be empowering — you already know the main reason businesses fail, so you can work to avoid it.
Plan where your money will come from and where it'll go — and if possible, build up cashflow reserves for those times you need more cash on hand to run your business.
Understand the law
As a business owner, you need to understand which laws apply to your business. Beyond registrations and tax obligations, you’ll need to be across employment laws, privacy laws, contracts, marketing compliance, terms and conditions and more.
To that end, it may be worthwhile consulting with a legal professional or business advisor to make sure you have everything in place from the outset to set you up for success.
Businesses have tax and employee reporting obligations with the ATO. This includes Single Touch Payroll reporting, Business Activity Statements and end of financial year reporting. Penalties for non-compliance apply, so it’s smart to utilise any tool that can make the reporting process easier.
Accounting software like MYOB can help you maintain compliance in a click.
Market your business
Marketing is an incredibly important part of operating a successful business. You need to get your product or service in front of the right people at the right time to convince them to buy.
Digital marketing is extremely important for any new business as customers typically find and engage with brands online. Therefore, invest in your website’s design, content and your social media presence to shore up your search engine rankings and make yourself discoverable to new customers.
Your technology choices play a large role in the daily operations of your business. If you select poor software, it can seriously impact the efficiency, and ultimately the profitability, of your company. By choosing SaaS applications, you may be able to reduce your hardware costs and IT overheads while accessing modern, user-friendly software.
Hire the right people
Lastly, make sure you take the time to hire honest, hardworking people that'll help make your business profitable. At the end of the day, your employees are your brand and they're likely to be the ones that make or break your business.
Keep your business running smoothly with MYOB
Starting a business is hard work. It requires plenty of time, dedication and perseverance to succeed.
Now that you know how to open a business in Australia, your next step is to grow it. MYOB can help. Our online accounting software offers powerful solutions for your finances, invoicing, payroll and much more. Whatever your business goals, MYOB has you covered.
Business models: Definitions, types and key components
How to choose the right business structure
How to get a business loan