You have done your market research. You have validated your business idea. And you’re bursting with enthusiasm until the scary, uncomfortable moment comes when you need to take care of the legal business registration. Don’t worry, we are taking you through it.
Legally registering a business is maybe the scariest, most embarrassing and most exhausting part of a startup for many entrepreneurs. You might be an expert in your field, but you are most likely not a legal expert. And if it’s your first time registering a business, you might feel overwhelmed and even terrified by all the paperwork and irreversible mistakes that can happen along the way.
That’s why when I talk to aspiring entrepreneurs I always suggest hiring a trusted lawyer or taking a basic business law workshop to reduce the anxiety.
The most important thing to remember is that it’s not your fault that you don’t know all the legal terms and requirements for starting a business. It’s okay to ask for help and educate yourself. Anyhow, being an entrepreneur is a constant learning curve, you better start sooner than later.
How about we start now with the
Step-By-Step Guide To Starting a Business in Australia
(plus a few tips on registering a foreign company in Australia)?
Step #1 Register an ABN (Australian Business Number)
Notice that every business structure needs to register an ABN which is different than ACN (Australian Company Number) and is required only by businesses that have a company structure. It’s free to apply for an Australian business number (ABN) with the Australian Business Register (ABR). You can apply online or lodge a form by mail. First of all, you will need to register an ABN as a sole trader or a partnership. Once you complete Step #2, you will need to transfer this ABN to your business name. If you want to register a company, go directly to Step #3.
Step #2 Register your business name
Registering a business name is necessary if you don’t operate under your own personal name. You need to do a little research and make sure your business name and the respective website domain are available at the website of the Australian Securities and Investments Commission (ASIC) and follow these steps to register it.
Tip: Do some trademark research before you register a business name. Just because a business name is not taken, it doesn’t mean it’s not trademarked. Your business name shouldn’t be infringing anyone’s trademark or you might get into serious legal trouble.
After you have registered your business name (which usually takes about 5 business days) you will receive a confirmation letter and are ready to start printing your business cards.
However, if you have decided that for some reason your desired business structure is a company, you will need to take a few more steps.
Step #3 Registering a company
Company registation is governed by ASIC, you can see an overview of the whole process here. You will need to apply for an ACN instead (issued as soon as your company registration is complete). You need to follow the same process in Step #2 if your company won’t operate under your name and surname. You can complete the Application for registration as an Australian company (Form 201) but we strongly advise you to seek legal help when registering a company.. The guide at the back of the application is there to help you if you need more information about what you may need to provide.
Step #4 A few more registrations
If you are any kind of company or a partnership/sole trader with annual turnover more than $75,000 you need to register for a Goods and Services Tax (GST). If you are planning to employ people, we also recommend you to register for the Pay As You Go (PAYG) program. You can do both at ASIC here. Visit the ATO website for more information on PAYG withholding.
Step #5 Registering a foreign company
If you already own a business that has been established abroad and want to operate in Australia, you will need to register with the ASIC. You will need to appoint a representative, business address and have an ABN/ACN depending on your business structure. You will also receive a ARBN that you need to use correctly and carefully but don’t worry about it because the whole process is pretty smooth and all the required documentation is described here.
Legally registering a business is like the ER of startups – you need to be brave and super savvy to go there. In fact, this is an urban myth. Registering a business in Australia is pretty straightforward once you understand business structures and abbreviations. However, if you want to make sure that you have paid attention to every detail, especially if you are registering a company, I would recommend seeing a lawyer before proceeding with registration.
Don’t wait for the perfect moment to register your business – it will never come. If you have the idea, demand and resources, just go for it, practice makes perfect.
If you want to take your knowledge of business law one step further to really understand the why behind regulations and be able to leverage law for the advantage of your business, follow Aquarius Education on Facebook, Twitter and LinkedIn so you can be the first to hear about our upcoming Essentials Of Business Law workshops.
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See you there!
DISCLAIMER: The guide is for information purposes in Australian business law only. This is not legal advice, but a guide that does not claim to cover all possible scenarios. It is not an exhaustive list and is proposed as a guide only. Aquarius Education recommends that you obtain legal advice before taking any action.