Setting up a business
Congratulations! You’ve been inspired to set up your own small business and be mistress of your own destiny. It’s an exciting time – and it can be fun, too, if you know what to do, how and when to do it, and what pitfalls to watch out for.
The red tape and the work required to get started can occasionally make your head spin, but be inspired by the success of other businesswomen, many of who are mothers just like you. And like you, they had to start somewhere. In fact, big names such as Sass & Bide, Sambag and Dinosaur Designs are just three of many famous Aussie businesses that began as a humble market stall.
Basic steps to starting a small business in Australia
Today, women run more than one third of the Australia’s small and medium enterprises, and that figure rises to half when home-based businesses are included. We’ve included a list of basic steps to follow so that you can join the statistics too!
- Market research: Conducting market research will allow you to determine if there is a demand for your product. Read our Market Research article for more information on how to do this.
- Business plan: One of the most important steps when starting a business is Writing a Business Plan.
- Accountant: It’s always a good idea to get advice from an accountant before starting a business. Ask other small businesspeople to recommend a good one that specialises in your industry and/or small business.
- Finance: Make sure you have enough money to finance your small business during start-up. If you don’t already have the money to get started you may decide to borrow money from friends, family or a commercial lender, such as your bank. Alternatively, you may find someone who is willing to invest money for a share of eventual profits.
- Paperwork: Submit a Form 201 to the Australian Securities and Investment Commission. This form legally registers your small business as a licensed entity in Australia. There’s a fee of $400.
- Name your business: Put some thought into what your business, products and services should be called. For some great tips, read our article on Naming a Business.
- Register your business name: If you’re not planning to trade under your own or your partner’s name, you must Register a Business Name.
- Open a bank account: Check out who offers the best rates and benefits for checking and savings accounts. It’s best to go to a local branch so you can talk to someone in person and build a working relationship with them.
- Register for GST and get an ABN: Any Aussie business that turns over more than $50,000 during any 12-month period must register for payment of the Good and Services Tax (GST). You can do this through the Australian Business Register, who will then give you an ABN – Australian Business Number. You must register when your income exceeds $50,000, not when your profits reach that amount, otherwise you might have to pay fees and penalties later on.
- Trade and Practices Act: Make sure you’re aware of your obligations under the Trade Practices Act. Go to the Australian Competition & Consumer Commission or call the ACCC helpline on 1300 302 021.
- Protect your idea: Ensure that you’re the legal owner of your idea. Read our article, Protecting your Idea, for more information.
- Marketing and Networking: Once you have the basics sorted you can move on to the more exciting things such as Creating a Website, Blogging and Social Media, Networking and Marketing.
Which business structure is right for you?
When it comes to choosing the right business structure it’s best to talk it over with your accountant before making a decision. The four options are:
- Sole trader: This is the simplest and easiest option. There isn’t much paperwork and if you use your own name you don’t have to register the business name. There are tax advantages, too, which your accountant can explain to you. There are also less stringent reporting obligations compared to other structures. On the down side, you’re personally responsible for all debts, which means your personal property could be vulnerable.
- Partnership: This means there are joint owners of your business. It could be a friend, a family member or anyone else with the same goals as you. You are both responsible for decisions made on behalf of the business. To avoid arguments and other problems, it’s a good idea to have a partnership agreement that covers issues like the amount of money each of you contributes to the business, salaries, roles and responsibilities, and how the profits are divided.
- A Proprietor Ltd Company: This type of company has one, two or multiple shareholders and is more expensive to set up and maintain. The big benefit is that you’re protected from personal liability. You’ll need an accountant and a lawyer, so take their fees into account. A common procedure is to buy a shelf company for around $1,500.
- Trust: Trusts are a useful tool in business and usually cost around $500 to set up. Ask your accountant about the several different types of trusts as well as their pros and cons.
Running your own business is hugely rewarding in many ways; the ability to spend more time with your family, be your own boss and achieve financial independence are just a few of the many things you can look forward to!
For more information related to starting your own business, view our articles on How to Write a Business Plan and Naming a Business.