How to start your own business in Australia

Steps to start a business

Before you race ahead, you need to get set up! Here are the essential steps for starting a small business.

Establish your business’s legal footing

1. Choose the right business structure

• A sole trader is a one-owner business. The owner has full control and a straightforward time paying taxes. The downside is that this person is solely responsible for any business debt or legal trouble (and would be wise to get insurance: see below).
• A partnership is owned by two or more people. Again, tax is quite straightforward, but you’ll shoulder the business’s full liability – which means you’re responsible for your partners’ behaviour, too.
• A company is owned by one or more people. The owners are legally separate from the business and are therefore protected if things go wrong. But it’s more expensive to run your business as a company and you’ll do more admin.
• A trust is a more complex business structure that can be handy for estate and tax planning. Talk to an accountant to figure out if it’s best for you.

2. Register your business name with the ASIC

Visit the Australian Securities and Investments Commission (ASIC) to check whether your preferred business name is available and to register it.

You’ll need an Australian Business Number (ABN) to do this. You can apply for one on the government's site.

Here’s advice on registering and trademarking a business name, and on applying for an ABN.

3. Research the permits and licences you need

In some industries you need permission to do business – such as the building permits for construction firms or licences for plumbers.

You might also need a location-specific licence or permit – to work in a national park or run a food truck, for instance. Check your local government’s website.

4. Get insured

To run your business legally, you may need several types of insurance.

Public liability insurance

This protects you from claims if your business is responsible for injuring someone or damaging property. Requirements to have this insurance vary between states, territories, and occupations. Public-facing businesses, such as the trades, either must have public liability insurance or are strongly encouraged to have it.

Workers’ compensation insurance

If you’re an employer in Australia you’ll probably need this insurance, which covers your employees if they’re sick or injured because of work.

Third-party personal injury insurance

If you use motor vehicles for your business, you need third-party cover. The good news is that it’s often part of your vehicle registration fee.

Professional indemnity insurance

The protects business owners who could face legal action against their professional work or advice. It’s mandatory in some industries and sectors, so ask your professional association.

Know your tax obligations

GST

Depending on your turnover and type of business, you may need to pay goods and services tax (GST). Register for GST on the ATO website.

Income tax

The income tax you pay depends on your taxable income and deductions. Learn more about business income and tax deductions from the ATO.

Pay-as-you-go withholding tax

Plan to hire staff? You’ll need to register for pay as you go (PAYG) withholding to collect income tax from your employees’ wages. Register for PAYG withholding on the ATO website.

You’ll need complete confidence in your numbers for your financial year-end. If you’re not sure, ask your tax advisor to check you’re paying the right taxes and getting the tax deductions you’re entitled to.

Research the major industries in Australia

When starting a small business, research the industries that pull in the most revenue. Which ones currently dominate? Which are likely to grow in future? Here are some jumping-off points.

Healthcare and social assistance

This, Australia’s largest and fastest-growing industry, covers all kinds of businesses, including specialist medical services and carers. Here's a government release on investment in healthcare.

Technology

The International Data Corporation predicts that global investment in digital technologies will reach almost US$4 trillion by 2027. This staggering amount will surely boost areas like artificial intelligence, robotics, and data analytics in Australia. Businesses need experts in these fields and people who can explain them to the rest of us – here’s a government report on digital businesses.

Finance

These days, heavyweight financial institutions are competing with fleet-footed fintech companies and online banks (‘neobanks’). To keep their customers, they’re upping their skills in digital tech and cybersecurity. Expect ongoing shifts across finance as banks and companies fight to meet consumer demand. Here’s a market research report from IBISWorld.

Get clued up on regional differences

Starting a business is all about maximising your chances of success, so think about your location in terms of:

• Startup costs, like your rent or mortgage – for example, your Gold Coast rent would likely be a fraction of that in Sydney
• How much tax you pay – Victoria tends to have the highest taxes in Australia, for instance
• The available talent pool – Sydney has a large talent pool for banking and wealth management, for instance, while Melbourne has a younger working population skilled in tech
• Whether there’s support for innovation – Adelaide is a great place for entrepreneurs to open a business, partly because the state government helps startups

Research consumer behaviour

A strong business model shows you understand the behaviour of your target market – how your consumers respond to changing prices, quality, choices, shopping experiences, and so on. Do they want high quality, even at high prices? Or are they more interested in low prices and free delivery?

Don’t neglect this area of your business strategy. It’s only through market research – talking to people, in particular – that you learn how to beat your competitors.

Case studies: what business ownership is really like

Let’s look at some real business owners and how they succeeded.

Brothers Stef and Anton Schafroth took over the family business of making traditional Bavarian cuckoo clocks. After growing up hearing the chimes, they’ve continued making the carved wooden heirlooms using a mix of old and new technologies. The brothers keep the business running smoothly and avoid overlap between them by having well-defined roles. Read more about their business insights.

Kate Reid created Lune Croissanterie in pursuit of the perfect croissant. On returning from Paris, she couldn’t find pastries up to her high standards in Melbourne and decided to fill that gastronomical hole in the market. Much hard work and experimentation later, she’s built a business of over 60 staff. Here's more about Kate’s approach to business.

Tristan Minter always knew he wanted his own business. When his friend saw a Batman Begins billboard on the side of a local milk bar – and saw room for improvement – they came up with a niche form of street advertising. Apparition Media was born, though not without much research, hard work, and determination. Read more business insights from Tristan.