The basics of starting a business
Registering a business and getting off the ground is easier than you think
There has been a notable surge in young people venturing into the world of entrepreneurship in recent years. New statistics released by the Commonwealth Bank indicate nearly two thirds of small businesses are started by millennials and gen Z.
The allure of a stable 9-to-5 job is no longer the sole aspiration for many young individuals. Instead, the prospect of creating something meaningful, being their own boss, and having good work-life balance is driving them towards entrepreneurship.
As the traditional career landscape evolves, more people are opting to forge their own paths, trying their hand at turning innovative ideas into successful small businesses.
While starting a business can seem like a daunting venture, the admin process is fairly straightforward.
- Obtain an Australian Business Number (ABN), which is necessary for tax and business dealings.
- Choose a business name and register your business.
- Search your business type and easily find out what licences and permits your business will need.
- Choose a structure that suits your business. It can be a sole trader, partnership, company or trust. Each structure has its advantages.
Business structure basics
If you intend to be the exclusive owner of the business, a sole trader structure is simple to set up and inexpensive to operate. It gives you full control over decision-making and has easier tax reporting than other structures. However, it’s important to note that as a sole trader while you are entitled to keep all the profits you are also personally responsible for the business’s debts. It can also be harder to raise capital to grow the business compared with other structures.
Businesses where the ownership is shared are called partnerships. The responsibility of running the business and liabilities is shared, making it a good option if you are nervous about starting the venture on your own. A partnership agreement outlining terms is advisable as disagreements between partners can impact the business.
A company is a separate legal entity where ownership is determined by shares, offering limited liability to its owners. This structure is good if your business is a high-growth venture that can attract external investment – areas such as technology, innovation, or research and development. Keep in mind they involve a more complex setup and higher costs compared to other structures but the structure does extend a number of other important benefits.
Trusts are one of the more complex structures, but can be advantageous depending on your business goals, circumstances, and the nature of your operations. Trusts offer flexibility in terms of succession or estate planning, aiding in asset protection and reducing tax liability. However, professional advice is crucial due to the complexity, and legal and tax implications should be carefully evaluated with the assistance of professionals.
Learn more about the differences between these structures at business.gov
Start-up costs
These are one-off costs associated with setting up a business, from legal and regulatory requirements to operational necessities. Here are some expenses to consider:
- Registering a business name:
The fees for registering a business name are:
$42 for one year
$98 for three years
- Premises and utilities: costs for renting or leasing office, retail, or production space and utility costs such as electricity, water, and internet.
- Supplies and equipment: consider what machinery, materials, technology infrastructure etc. your business needs for operations.
- Inventory and Supplies: initial investment in stock or raw materials, depending on your business type.
- Insurance: business insurance premiums, including public liability insurance, professional indemnity insurance, and others as needed for your business.
- Compliance and safety: depending on your business you will need to ensure compliance with health and safety regulations as well as invest in safety equipment and measures.
- Professional advice: fees for business consulting and advisory services to ensure your business runs efficiently and meets legal requirements.
It’s a good idea to create a start-up costs sheet to help prioritize expenses based on your business's needs, and plan for ongoing operational costs beyond the startup phase. Keep in mind other miscellaneous costs, unexpected expenses or emergencies may also arise.
More resources
Startup support
There are various initiatives and resources available to support small businesses. These include grants, mentorship programs, and educational resources aimed at equipping young entrepreneurs with the skills and knowledge needed to succeed. Learn more at Support for startups
Home Business
Thinking of running a business out of home? Get information on requirements, where to go for support, and a helpful guide for getting started. View our Home business guide
Business plan tool
Create a tailored plan in 30-60 minutes with Business.gov.au's new business planning tool. Evaluate a new business idea, set goals for the year ahead or keep an existing business on track.