8 things you need to know before starting a business
Starting your own business can be an exhilarating time. Before you make the big jump, save yourself time and money by being aware of what’s involved in operating a business.
Investing time into proper planning is crucial to turning your dreams into reality. Operating a business is not just about working for yourself or the income potential, it’s also about having the essential skills to grow and succeed.
- Choose your business structure
One of the most important decisions you will make when starting a business is choosing what structure to operate as. Your choice of structure can determine:
- the licenses you require
- how much tax you pay
- whether you’re considered an employee, or the owner of the business
- your potential personal liability
- how much control you have over the business
- ongoing costs and volume of paper work for your business.
Some of the different business structures include sole trader, partnership, company, discretionary trust or unit trust. It’s important to investigate each option carefully, as there are advantages and disadvantages for each structure.
- Register your business name
A business name, also known as a trading name, is simply a name or title under which a person, or other legal entity, trades. You need to register a business name if you operate your business under a name other than your own.
- Register a website domain
Your domain name is your online business address, uniquely identifying your website on the Internet. It’s a valuable part of your business and therefore it’s critical to protect it by registering multiple extensions. You will need to check that your domain name is available before you register it.
- What taxes do I need to register for?
Before commencing your business it is key that you have an understanding on what taxes you are required to be registered for.
The taxes you must register for depend on the type of business you are conducting. Some tax registrations apply to all businesses and others may be required depending on your business’ size and type. Some registrations are entirely optional, but can make life easier if you have them.
Common tax registrations that your business may need include:
- Tax File Number (TFN)
- Australian Business Number (ABN)
- Australian Company Number (ACN)
- Goods and Services Tax (GST)
- Pay as you go (PAYG) withholding
- Payroll Tax
- Fringe Benefits Tax (FBT)
- Registration and licences to start a business
Before starting a business it is essential that you have the correct registrations, licences and permits. They allow you to operate without fear of closure from non-compliance. The Australian Business Licence and Information Service (ABLIS) is an online search tool that helps you find the licences and permits you need to run your business.
A legal professional will be able to help you understand your legal requirements, such as registrations and licences, contracts and leases.
- Arrange insurance for your business
Investment in a business goes beyond money and equipment. When you start a business, you are investing your hopes and dreams, years of hard work and savings, and the livelihoods of yourself and your employees. When something unfortunate happens the consequences can be devastating. If you are operating a business, having insurance can help reduce your risk and allow you to succeed in the future.
Your insurance requirements will depend on the type of business you are operating, your business structure and size, and the industry you are in. You should contact your insurance broker to understand what your requirements are.
- Find out about selling products and services.
When selling products or services, it is essential to know what your legal requirements are, in particular your obligations under fair trading law. It is recommended that you speak to your adviser or Fair Trading.
- Need to employ people?
If you need to employ people to start running your business, make sure you understand the government requirements that may apply to you as an employer. It is highly recommended that you speak to your adviser before hiring staff. The Fair Work Ombudsman website is also another valuable source of information.
Things to be aware of include:
- What kind of employment are you offering?
- Is your worker an employee or a contractor?
- Can your employee legally work in Australia?
- What are your employee’s rights under anti-discrimination laws?
- What are your record keeping requirements?
- Are you paying the correct wages and entitlements?
- What tax do you need to deduct from your employee’s pay?
- What are your superannuation obligations?
- What are your workplace health and safety obligations?
- Do you need workers’ compensation insurance?
- Do you need to register for portable long service leave?
It is important to get all of the above right when starting your business. Don’t be afraid to seek advice from professionals as many of these areas can be complex as well as risky and it is important to be set up correctly from the beginning.