Embarking on the journey of establishing a new business is enthralling, indeed, and nerve-racking at the same time. Being one’s own boss, however, doesn’t come so easy. You need to go through a lot of administrative procedures, qualify for the requirements, and so on.
Are you planning to locate your business in Australia? Well, batten down your hatches and sit down to research the marketability of your idea and check whether it would be able to gain ground in the competitive markets of the country. Fill yourself with dedication, commitment, and the information about the process of starting a business in Australia. Its strategic location renders access to the largest population center, i.e., Asia. That directly implies the opportunities the country has to offer to small businesses. Furthermore, the Doing Business report 2020 conferred 14th rank to the country in the EODB (Ease of Doing Business) index. A highly skilled workforce, developed infrastructure, stable markets, cultural diversity, etc., make it an almost ideal destination to institute a venture.
You need to face many ups and downs when starting a business. Chances are, you may face confusion as well when going through the red tape. This bitter scenario, however, can be avoided by paying attention to the aspects and process of starting a business in Australia. Read on to know more!
To start with, have you assessed the marketability and viability of your business idea? Great! Now, utilize the research and information collected to prepare a convincing business plan. Thereafter, choose a company name that is original and unique. Make sure you check its availability before finalizing.
The next step that follows is that of selecting a legal structure of a business. In Australia, the common types of business entities that are found are Limited Liability Company, Private Entrepreneurship, Sole Trader, Partnership, Company, or Trust. To open a business in Australia, you must have a registered address in the country. Now comes the time to select officeholders of the company. To base a business in Australia, it must have at least one director who is an Australian resident. Then, get your company registered with the ASIC, send an application for ABN (Australian Business Number) and TFN (Tax File Number), and register your Goods and Service Tax (GST). Now set up a business bank account and apply for applicable permits and licenses. Now, you are ready to prepare your employment contracts and hire your first employee.
In the sections that follow, you shall know the process of starting a business in Australia in detail. Read on!
Process of setting up a business in Australia
How to start a business in Australia?
Starting a business anywhere takes a lot of commitment and effort. It can get overwhelming at a point, but the prospect of building something great propels you. Australia has a high business enabling environment, which implies that you won’t have to endure many hassles when registering your property, business, procuring permits and licenses, etc. Its well-educated workforce, rich and promising market, respect for innovation, and well-regulated financial and corporate market render the country apt for establishing your venture. Now, let’s what it takes to start a business here, all the documents you will need, procedures you will need to follow, and so on.
- Choose a company name: A good business name connects your target audience emotionally to your brand. Unless you are a sole trader, you will need to choose and register your company name. Before finalizing any name, you must check its availability so it does not commit any breach of the existing trademarks in the country. Register your company name with ASIC. or this you will need:
- An email address
- Registered/ principal business place
- Address to receive official documents
- Application reference number or ABN (Australian Business Number)
- Prepare a business plan: A strong business plan entails an executive summary, organizational summary, market analysis, competitor analysis, product/ service demand and supply, business description, etc. It will help you navigate your needs with regards to staffing and funding, get funds or loans, and render you with a roadmap to accomplish your first-year business goals. So, consider preparing a business plan that is concise and clear.
- Select a legal structure: Choosing a suitable business structure is a critical step you must consider when starting up a new venture in Australia. You may select from a sole trader, trust, company, or partnership. You may even change your business structure as it develops further. It is important to choose a business structure carefully since it would impact the taxes you will reimburse, liabilities you will face, and other benefits you will enjoy.
- Get a registered business address: To set up a business in Australia, one must have a place of conducting a business and a registered office. When registering the company with ASIC in the next step, you would be asked for it. All the official communications and mails would be delivered to you at the same address. Your chosen business address must not be a PO box. These days, you may even consider utilizing a virtual office that is available at a much lower price compared to the traditional one.
- Register the company with ASIC: Now head to the portal of the Business Registration Service of Australia to send an application for business registration. While the application is processed, you will be issued an ACN, and ASIC will register your business and allocate you a registration certificate.
- Procure your ABN & TFN: ABN is a number allocated to identify businesses in Australia. It is a unique 11-digit number that is needed to perform various business activities like invoicing, claiming GST credits, paying taxes, etc., foreign residents may also apply for ABN (Australian Business Number). However, they would be asked for a TAX File Number of Identity Proof and your business purpose statement. TFN (Tax File Number) is needed to file a tax return for the company. A separate TFN number is necessary for businesses in Australia, except for sole traders.
- Set up a business bank account: To operate a business in Australia, you will need to set up a local business bank account. In case you operate from outside the country, you will need to come to complete the KYC requirements of the bank.
- Get the licenses and permits: Licenses and permits are a dire necessity when it comes to operating a business in Australia. Know what permits and licenses are applicable for your entity and procure them.
Hiring Employees in Australia
It’s indeed reliving to finally see your business identified officially. Now, you have to prepare the employment contracts before you can hire people to work for your company. The step isn’t possible without having familiarity with the regulations that govern this domain. Experienced consultants at Zimyo will help you know what the entitlements, responsibilities, and duties of employees and employers in Australia are.
- Trial Period/Probation Period: The employment and labor regulation of Australia lay it clear that if an employee has to make a case of unfair dismissal, he/ she must have worked for the company for at least 6 months, while it is 12 months in case it is a small business. An employment contract may include a probationary period to assess the competency of an employee.
Statutory entitlements of the employee for unfair dismissals stand intact if the probation period has been extended beyond the said duration. An employment contract must clearly elaborate on the duration of the trial period and when and how the performance would be evaluated.
- Leave and Holidays: NES entitles full-time employees to receive 4 weeks of paid annual leave from work. The reimbursement for annual leave is estimated in correspondence with the base rate of pay of the employee. Shift workers in certain sectors must be allowed 5 weeks of annual leave, which is paid. In case the employee’s annual leave period includes any federal holiday or other kinds of leave such as personal leave, sick leave, etc., it won’t be counted in the annual leave period.
In order to look after a family member who is very seriously ill, the employee is entitled to two days of compassionate leave per year.
- Maternity Leave: Maternity leave is an entitlement enjoyed by female employees, where they are granted unpaid leave for up to 12 months. Nonetheless, several certified agreements provide a paid maternity leave for 12 months. Except for one week of childbirth, paternity leave and maternity leave cannot overlap, and if leave is taken together by the parents, it cannot exceed the duration of 52 weeks.
- Termination of Services: The grounds for fair dismissal of employees are clarified under the Fair Work Act 2009, which includes serious misconduct, poor performance, incapacity for the assigned role, and redundancy. If the dismissal is related to performance, the notice must be provided to the employee. Obligations of an employer related to the employment termination may also involve enterprise agreements, employment contracts, and awards. Collective dismissals are not applicable and relevant in Australia.
- Pension: Social Security Act 1991 clarifies that pension is reimbursed to Australian residents who have reached the age of receiving it and are seen as not having enough assets or sources of income to support themselves. The age for getting a pension was increased to 65 years and 6 months from July 1, 2017, while it is expected to touch the limit of 67 years by July 1, 2023. Workers do not contribute to an insurance or pension, and the reimbursements are subject to means testing in Australia, unlike in other countries.
- Work Hour Norms: As per NES, the standard workweek in Australia if of 38 hours. It is allowed at the employer’s behest to solicit reasonable extra hours. Evaluation of reasonable hours is done by including several factors like remuneration of the employee, his/ her role, patterns of work in the company, etc. The employees are entitled to extra pay when working on public holidays, weekends, early morning, or late nights.
How easy is it to conduct business in Australia?
Australia secured 14th position in the Ease of Doing Business index among 190 countries and scored 81.2 out of 100, as indicated by the Doing Business report 2020. The EODB rank is granted to countries by comparing them against different indicators by the World Bank. The positions and scores on various sub-indices are then used to gauge the overall EODB position of a country. The higher the rank, the smoother it is to conduct a business in that country. Let’s see where Australia lies in the sub-indices to better understand the business environment of the country. Read on!
- Starting a Business: You can’t definitely make a move to quit your nine-to-five unless you have a solid business idea. However, it also takes the grit to face the red tape for registering your business here and there. The Doing Business intends to measure the time, formalities, and cost one would need to invest when starting a business in a country. Australia came at 7th position among 190 countries and scored 96.6 out of 100, according to the Doing Business report 2020. In 2008, the country reduced the registration fee by half for new businesses, thereby making the process less costly.
- Managing Permits: Permits are a necessity when it comes to operating your business freely and legally. The permits applicable for your business are different from the one that comes under another niche. For instance, if you have got a tourism business, you will need permits that are not the same as a candle-making business would need. The Doing Business measures the efficiency and quality of safety control under a construction permitting system. It also assesses the time, cost, and procedures one has to endure when procuring permits. Australia came at the 11th position in this sub-index among 190 countries and scored 84.7 out of 100. In 2010, the country reduced the time involved in procuring construction permits, thereby streamlining the whole process.
- Getting Electricity: Modern technology requires electricity for operation. So, with a sane mind, you can’t really expect a business to thrive without it. That’s the reason why it is considered a critical Doing Business indicator. The Doing Business measures the time, formalities, and costs involved in getting a connection to the electricity grid. Furthermore, transparency of tariffs and reliability of power supply are other factors that are attended. According to the Doing Business report 2020, Australia came at 62nd position among 190 countries and scored 82.3 out of 100.
- Getting Credit: Credit is more than important for businesses, especially new ones. They seek it to expand their territory, satisfy day-to-day business expenses, recruit more staff and employees, conserve cash for other business operations, and to purchase inventory. How easily a business can procure credit in a country determines to a substantial extent the fate of the venture. The Doing Business 2020 report positions Australia at the 4th position among 190 countries and assigned a score of 95 out of 100. In 2013, the country adopted a new national legal regime that governs the mandatory nature of security interests in personal property and also executed a single collateral registry.
- Managing Payroll: Payroll management involves the management of financial records of employees, such as bonuses, incentives, salaries, net pay, and deductions. Furthermore, one has to abide by income tax laws as well when doing the job. To help you with this hectic task, integrating an efficient payroll management system is a worthwhile decision you can take. Having a robust payroll management system boosts employee morale, lowers tax bills, saves you from penalties, etc. You may choose from different payroll management services offered by experienced consultants like Zimyo.
- Paying Taxes: Getting late in filing and paying taxes is the last blunder you would want to make when operating a business. It triggers penalties, and you may have to pay interest. The Doing Business measures the time, cost, and procedures involved in the process. According to the Doing Business report 2020, Australia came at the 28th position among 190 economies and scored 85.7 out of 100. In 2010, the country abolished the stamp duty which was earlier levied on contracts, thereby making the process of paying taxes easier.
- Enforcing Contracts: Enforcing Contracts is another Doing Business indicator, where the World Bank measures the time, cost, outcome, etc., involved in enforcing contracts. Furthermore, it also assesses the quality and efficiency of applicable regulations and court systems in settling a commercial dispute in court. According to the Doing Business report 2020, Australia came at the 6th position among 190 economies and scored 79 out of 100.
- Resolving Insolvency: To recover from an instance of insolvency, efficient regulations on credit rearrangement are important. The Doing Business report, thus, measures the outcome, cost, recovery rate, and time involved in the process of solving business insolvency. According to the Doing Business report 2020, Australia bagged 20th position among 190 economies and scored 78.9 out of 100. In 2012, the country adopted additional regulations for insolvency practitioners and prioritized unsecured creditors’ claims over shareholder claims.
Australia is a promising destination for businesses, thanks to its rich and stable economy, high-living standards, its strategic location, and vicinity to Asia, qualified workforce. The small businesses that enjoy the most scope in the country are laundromat businesses, airport shuttle services, fiber-optic installation companies, catering businesses, babysitting firms, network security businesses, gaming development firms, and more.
Zimyo is a leading HR and Payroll management services provider in Australia with multiple years of experience. The company helps businesses hire the best talent and takes care of the financial requirements of employees, such as advances or credit for a hassle-free work experience.