Starting a Business

Starting a Business

So you’re thinking of starting a business? Fantastic!

We have hundreds of resources here on SavvySME to help you on your journey of entrepreneurship. 

It’s one thing having a great business idea and another thing actually turning it into a living and breathing business.

With business structures to choose, tax laws to understand, capital to raise - we totally understand that the onset of starting a new business can feel very overwhelming.

But that feeling of overwhelm is doubled up with excitement - and we want to help you succeed! 

We've put together this step by step guide that covers all of the key steps to start your own business and pave the way for long-term success.

Why do people start their own business?

Here are just some of the reasons why people start their own business:

• Be your own boss
• Turn a passion project into your main income stream
• Set your own schedule
• You’ve noticed a gap in the market
• You have a niche product or service 

How do I start a new business?

Here are the key things on the checklist for starting a business in Australia:

1. Choose your business structure
2. Choose a business type
3. Register your business
4. Register for the right taxes
5. Set up a business bank account
6. Write a business plan
7. Assess your finances and funding option
8. Get business insurance
9. Set up your operations 

Don’t worry, we’ve broken down each step below.

What are the business structures in Australia?

Choosing the right business structure is the first key step. It’s important to know the differences between each type, as it can have a direct impact on things such as:

• Your tax obligations and exposure
• Regulatory requirements
• The level of control you have 
• The level of personal liability you will have
•  Workplace health and safety requirements

There are four business structures in Australia:

1. Sole trader: A sole trader is legally responsible for all facets of their business. It is the simplest and easiest business to set up. You are not a separate entity from your business.
2. Partnership: When two or more individuals co-own a business and share income. A partnership business is not a separate entity from its owners.
3. Company: A company is a separate legal entity and you are not legally liable for the company’s debts and other liabilities.
4. Trust: When an individual (trustee) carries out business on behalf of the trust’s members (beneficiaries). 

The steps to register your business depend on the business structure, so it’s important to get it right. 

It’s possible to change your business structure later down the line (as many businesses do as they grow and expand) but there are legalities and costs involved in doing so. 

What business structure do I need?

Here are some factors to consider to help you choose the right type of business structure:

Image source: AnyBusiness 

How do I pick a business type?

Once you have chosen your business structure, you will have a clearer idea of the type of business you will need. 

Different types of businesses and industries have different regulatory and compliance requirements, so the key is to do your research and seek out professional advice if you’re unsure of anything.

There are loads of business types, but common options for small business startups include:

• Online business: Set up an e-commerce store or set up a website to compliment/promote your bricks and mortar business.
• Independent contractor: Set up as a self-employed contractor to provide your services to clients.
• Franchise: Purchase the rights to operate our business under an existing business name and idea. 

How do I register my business? 

Business registration in Australia involves three things:

1. Applying for an Australian business number (ABN)
2. Registering an Australian company number (ACN) if you have chosen a company business structure 
3. Registering a business name

You can read more about registering your business.

Every business in Australia is legally required to have an Australian business number (ABN). This is a unique 11-digit number issued by the Australian government and is used to identify your business.

It’s important to note that it is illegal to operate without an ABN.

You do not need to register a business name as you can legally trade under your given name, e.g. “John Smith”.

If you do decide to register a business name, it’s best to do so before you create any branding assets such as logos or web design.

It’s much more efficient to register your business number and business name at the same time, but you can also do this separately.

How do I register for tax?

Tax requirements vary for each business structure.

If you operate as a sole trader, you can manage your business taxes with your personal tax file number (TFN). You file your business tax alongside your personal income tax return.

Companies, partnerships and trusts must have a separate TFN and lodge a separate tax return.

Businesses with an annual turnover of $75,000 or more must also register for good and services tax (GST). 

Other tax obligations you may need to register for include:

• Pay as you go (PAYG) withholding: You may be responsible for collecting tax withholding amounts from your employees salary to help them meet end-of-year tax liabilities.
• Fringe benefits tax (FBT): Fringe benefits tax is a tax you pay on certain benefits that you pay your employees, e.g. providing a company car and gym memberships.
• Payroll tax: If the wages you pay exceed the tax-free threshold you need to register for payroll tax (this varies by state).

Learn about the full list of business taxation requirements and eligibility.

How do I set up a business bank account? 

A business bank account helps you keep track of, organise and manage your business finances.

Sole traders do not need a business bank account, but you should definitely consider opening one as it makes things much easier.

Companies, partnerships and trusts are legally required to have a business bank account for tax purposes.

Setting up a business bank account is straightforward and has many benefits including:

• Greater control of your business finances
• Separate your personal and business income for better financial management
• Track inventory, sales and cash flow for simpler financial reporting and tax assessments 
• Monitor profitability 

The next step is writing a business plan. 

Why is a business plan important?

As a startup, having a robust business plan that defines your objectives and outlines how you will achieve them is crucial - especially for getting startup finance.

Mapping out the direction of your business and devising relevant strategies will give you a sense of control and help you manage the ups and down of starting a business with more confidence. 

How do I write a business plan?

Writing a business plan is no small feat, so consider getting advice and assistance from a business consultant or your accountant.

A typical business plan format typically covers the following elements:

• Executive summary
• Business description
• Market analysis 
• Business description
• Description of product or service offering
• Marketing and sales strategy 
• Funding requirements 
• Financial forecasts 

What funding options do I have when starting a business?

Getting the capital is often the biggest concern (and roadblock) when it comes to starting a business.

Having a lump sum of cash to turn your business idea into reality is a but distant dream for many entrepreneurs, but fortunately you have a number of funding options to help you including:

• Government grants: There are federal and state grants available for new businesses that meet the criteria
• Business finance loans: Get a loan from a bank or non-traditional lender
• Investor funding and capital: Explore the funding options offered by investors that are eager to back profitable startups and businesses

How much does it cost to start a business?

It’s very difficult to give example figures of startup costs as every business is unique and has different requirements.

However, here are some of the expenses involved with starting a business to help you factor into your budgeting process:

• Consulting fees
• Business registration 
• Insurance 
• Legal fees 
• Premises costs and utility connections
• Web design and development 
• Advertising
• Marketing
• Staffing and employment
• Stock and inventory 
• Equipment 

You can use this startup costing template provided by the Australian government to estimate your expenses.

Do I need business insurance?

Taking out the relevant business insurance helps you minimise your risk exposure and potential expenses in the result of an incident or claim.

The type of business insurance you need depends on various factors such as:

• Your industry
• The nature of your business activities
• The equipment and machinery you use
• The number of employees you have
• The type of services you provide to clients 

How do I set up business operations? 

Business operations is an umbrella term for essentially everything that will allow your business to run. This includes (but is not limited to):

• Financial operations
• Software and technology 
• Hiring employees
• Operations management 
• Sales and marketing
• Customer/client management 
• Managing stock and supplies

How do I find clients and customers?

Once you’re up and running, the first priority is getting customers on your doorstep or website. 

Many entrepreneurs get started by building an online presence (whether your primary business operations are online or offline) because that’s usually the first place people go at the start of the customer journey.

If you're comfortable investing some capital into your business, it's a good idea to get a web designer and developer to build you a great website. You can direct people to your site using online advertising, SEO, sales and marketing techniques, and traditional advertising. 

If you haven't already, conducting market research is the best way to find out which customer acquisition strategies will be most effective for your business.

Here at SavvySME, we have a vast range of resources to help you get your new business up and running.

From investor funding and product development to devising your business structure and compliance, we have all resources and experts you can reach out to on all things business

If you’re feeling overwhelmed by it all (as many people rightfully do) a great first step is reaching out to a business consultant.

Find out more about the services offered by business consultants and how they can help you pick up the initial momentum to start your business

Business.gov resources:

• Business planning and structures 
• Setting up a business bank account
• Business insurance