Starting a new business venture is a very exciting time.
You’ve come up with a great idea that is going to make a difference to the lives of your customers. You’ve worked hard on your business plan to get it just right, and now you just want to start trading.
The problem is you can’t. Not until you have completed your legal requirements at least.
In this article, we will focus on the laws of Australia as an example. Within Australia, there are a strict set of rules you need to follow before you can start trading legally. These rules are designed to ensure your business operates in the correct way.
If you are not sure what they are, in this guide we will outline all the relevant laws and regulations to be aware of when starting a business.
Covering everything from company structure, and financial requirements, to employment law, and tax obligations, we’ll tell you all you need to know to get your business operational, as quickly as possible.
What you need to do
Outlined below are all the legal essentials for business you need to meet before you can launch your new venture.
Choose a Business Structure
In order for you to operate a business in Australia it will need to have a specified company structure.
There are three main types you can choose from.
A sole trader – This type of structure is most suitable for those who run the business themselves and thus are responsible for making all the decisions. While there can be a few risks involved with being a sole trader, it can have several benefits as well.
A partnership – For those thinking of going into business with someone else, or a number of others, then a partnership is a very good choice. Should you decide on this, it is important to note that you would share your business profits based on what was acceded in the partnership agreement – which should be agreed before you start trading.
A company – While this type of business structure requires following a lot more regulatory requirements, in comparison to sole traders or partnerships, it does have one major benefit over them. Being a separate legal entity, you would not be held personally responsible for any liabilities or debts racked up.
Whichever business structure you choose to adopt, it is worth seeking guidance from a specialist lawyer before making the decision.
Registering Your Business Name
Once you have decided on the right business structure for you, the next step is to register your business name with ASIC.
Ideally you should choose a name that indicates what your business does. You will also need to make sure it is a unique name that has not been taken by any other company in Australia.
Once you have settled upon your name, you can register it at the ASIC website.
While registering the business name, you can choose how long you want the name to be registered for. Which may be one year, three years or longer.
Be mindful there are costs associated in doing this. So, try to ensure all your details have been inputted properly prior to hitting the send button.
Apply for an Australian Business Number
All businesses who want to trade in Australia, need to be registered for an Australian Business Number (ABN) before they can do so.
An ABN is a unique 11-digit number that identifies your business. This includes your name, location and what type of business activities you perform.
The process is free to do and can be completed pretty quickly. It is a very important step because you won’t be able to issue invoices to customers or create accounts with suppliers without one.
Get the Right Business Permits and Licences
All businesses in Australia will need to get the right business permits and licences. This will depend on what state you will be operating in, and what your business does,
In order for you to receive the latest information, it is worth checking out the Australian Business Licence and Information Service website.
Here, they will provide a complete breakdown of all the licences and permits you might be obligated to hold. Again, your lawyer can assist you with this as well.
Look Into Business Insurance
All businesses will need insurance. Again, this will depend on what type of business you operate and where you are located.
Be sure to explore options that will cover you for basic eventualities like theft, fire and natural disasters.
Try to source a policy that also provides extensive cover with regards to legal liability. Especially if you are involved in a partnership or are a sole trader.
Although it might be something you are happy to risk not needing, it is the sensible and smart thing to do to get business insurance.
Not only can it protect you from being sued, or any other legal action, but it can also literally be the difference between your business surviving a crisis or not.
Open a Bank Account for Your Business
All businesses involve money transactions. So, it is necessary to have a business bank account.
While it is not compulsory for a sole trader to have a separate bank account from their personal one it is advisable to do that.
Doing so will make it easier to manage your business income and expenses, which in turn makes it less of a challenge to separate company and personal finances come tax time.
If you are involved in a partnership or have a company structure, you are legally obliged to have a business bank account for taxation purposes.
Whilst setting up a separate business account with your bank, there are several types of business loans you can ask them for too, should you require one.
Get your Professional Team Together
If this is the first business you will be starting in Australia, it is advisable to get yourself a team of highly experienced and knowledgeable professionals to assist you with the above.
This can include a legal team, as well as an accountant, bank manager or other business professional.
A good network of professionals like this will be able to seamlessly guide you through the legal processes involved in launching a new business – a law firm like LY Lawyers will ensure that you avoid accidental cartel conduct, and assist you with the correct documentation.
Not only is this also an excellent way of ensuring you are covered from both a legal and financial perspective. It also provides you with a good pool of knowledge, to assist you to tackle any issues that might arise for your business.
Can I start my business without registering?
While you can technically start a business in Australia without registering it, you can’t earn any income from it, or even start trading, without registering your ABN first.
If you are caught trading without an ABN, you risk large fines and other sanctions.
Therefore, it is highly recommended you register your business in the correct way. Not least, because once you have done this, it leaves you free to focus all your energy on growing your business into profitability.
When starting a new business there is a lot for you to consider.
While it is only natural you will want to focus on the product, brand and service you will be offering, it is important you don’t forget the legal and financial rules and regulations as well.
The due process of choosing a company structure, registering your business name and obtaining your ABN, might not be the most exciting of prospects. But it is only once you have done this that you can start legally trading.
If you think of the process in terms of being able to walk before you can run, then you should soon understand the value of doing so.
After all the quicker you complete these obligations, the quicker you can start making money and/or a difference.
And isn’t that what you are launching your new business for?