How much does it cost to start a business in Australia?

Published Friday 15 May 2026

Table of contents

• What is a start-up cost?
• Types of start-up costs
• How much does it cost to register a business in Australia?
• Business insurance costs
• How to calculate start-up costs
• What affects your startup costs
• How to reduce start-up costs
• Tax deductions for start-up costs
• How to work out your break-even point
• Stay on top of business costs with Xero
• FAQs on business start-up costs

Key takeaways

• Start-up costs in Australia can range from a few hundred dollars for a home-based service business to $50,000 or more for a retail operation, depending on your structure, location, and industry.
• Registering a business can cost between $0 and $700+, covering your ABN (free), business name ($45 for one year), and company registration ($576 – $597 through ASIC).
• Many start-up expenses are tax-deductible in Australia, including legal fees, accounting costs, and some capital purchases, so keep records from day one.
• Calculate your total start-up costs by listing one-off expenses plus three to six months of ongoing costs, then add a contingency buffer of 10 – 20% for unexpected expenses.

What is a start-up cost?

A start-up cost is any expense you pay to get a new business off the ground before it starts earning revenue. These costs cover everything from registration fees and equipment to initial stock and marketing.

Knowing your start-up costs helps you figure out how much capital you need and whether your business idea is financially viable. It also shapes your first budget and gives potential lenders or investors a clear picture of your financial plan.

Types of start-up costs

Start-up expenses generally fall into two categories: one-off costs you pay before launch, and ongoing costs you'll keep paying once you're trading. Planning for both gives you a realistic picture of how much money you need.

One-off costs

These are expenses you pay once to set up your business. They typically include:

• Business registration fees: ABN, business name, and company registration through ASIC
• Legal fees: Contracts, terms of service, and compliance advice
• Equipment and machinery: Physical tools, computers, and technology needed to operate
• Branding and website: Logo design, domain name, and website development
• Fit-out or renovation: Shopfront, office, or workspace setup costs
• Initial inventory: First batch of stock if you're selling physical products

Ongoing costs

These are regular expenses that keep your business running day to day. Budget for them on a monthly or annual basis:

• Rent and utilities: Office or retail space, electricity, internet, and phone
• Staff expenses: Wages, superannuation, and employee benefits
• Insurance premiums: Public liability, professional indemnity, and workers' compensation
• Marketing spend: Advertising, social media, and promotional campaigns
• Software subscriptions: Accounting, CRM, and business management tools
• Inventory replenishment: Regular stock top-ups and supply chain costs

Set aside contingency funds of 10 – 20% of your total budget for unexpected expenses like emergency repairs, sudden compliance costs, or interest rate increases. This buffer helps you handle surprises without disrupting your cash flow.

How much does it cost to register a business in Australia?

Registering a business in Australia can cost between $0 and $700+, depending on your business structure. Here's a breakdown of the main registration fees.

• Australian Business Number (ABN): Free to apply through the Australian Taxation Office
• Business name registration: $45 for one year or $104 for three years through ASIC. You can register a business name online.
• Company registration: $576 for online lodgement or $597 for paper lodgement through ASIC
• Domain name: $10 – $20 per year for a .com.au domain
• Trademark: From $250 per class of goods or services through IP Australia. Find out more about how to trademark a name.

If you're operating as a sole trader, you only need an ABN, which is free. A sole trader with a business name different from their own legal name will also need to register that name for $45.

Business insurance costs

Business insurance protects you from financial loss if something goes wrong. The type and cost of cover you need depends on your industry, number of employees, and level of risk.

Common types of business insurance in Australia include:

• Public liability insurance: Covers claims from third parties for injury or property damage. Expect to pay $500 – $1,500+ per year for most small businesses.
• Professional indemnity insurance: Protects you if a client claims your advice or service caused them financial loss. Costs vary by profession, but typically start from $300 – $1,000+ per year.
• Workers' compensation insurance: Compulsory in every Australian state and territory if you employ staff. Premiums are based on your industry, wages, and claims history.

Some industries require specific cover before you can trade. Check your state or territory's requirements early so insurance costs don't catch you off guard. For more detail, explore the different types of business insurance.

How to calculate start-up costs

Calculating your start-up costs gives you a clear financial roadmap before you launch. Follow these four steps to work out your total investment.

1. List your one-off costs. Write down every expense you need to pay before you start trading, including registration fees, equipment, fit-out, and initial stock. Get quotes where you can.
2. Estimate your ongoing costs. Calculate your monthly running costs, including rent, wages, insurance, marketing, and software. Multiply by three to six months to cover the period before revenue picks up.
3. Add a contingency buffer. Set aside 10 – 20% of your total for unexpected expenses. New businesses almost always encounter costs they didn't plan for.
4. Total it up. Add your one-off costs, your ongoing costs buffer, and your contingency together. This is the minimum capital you need to launch with confidence.

The business.gov.au website offers a free startup cost calculator that can help you estimate costs for your specific situation. You can also create a small business budget to map out your spending in more detail.

What affects your startup costs

Your total start-up costs depend on several factors specific to your business. Understanding these helps you budget more accurately and avoid surprises.

Business type

The kind of business you run has the biggest impact on costs. A service-based business like consulting or freelancing can launch for under $2,000, with minimal equipment and no inventory. A retail shop or restaurant, on the other hand, could require $20,000 – $50,000+ for fit-out, stock, and equipment.

Online businesses tend to sit somewhere in between. You'll need a website, payment processing, and possibly stock, but you can often avoid the cost of a physical shopfront. Running a business from home is another way to keep costs low; check out this guide on how to start a business from home.

Location

Where you operate affects rent, wages, and foot traffic. A CBD storefront in Sydney or Melbourne costs significantly more than a regional location. If your business doesn't need a physical presence, working from home or using a co-working space can save thousands each year.

Business structure

Your chosen business structure affects both setup and ongoing costs. A sole trader pays nothing beyond an ABN, while registering a company costs $576 – $597 and comes with additional compliance obligations like annual reviews and ASIC fees.

Equipment and technology

Some businesses need specialised equipment that adds to start-up costs. A tradesperson might need tools worth $5,000 – $10,000, while a graphic designer may only need a laptop and software subscriptions. Choose tools that match your current needs and can scale as you grow.

Marketing and branding

Your marketing budget depends on your target audience and industry. A basic website and social media presence might cost under $1,000, while a professional brand identity with paid advertising could run to $5,000+. For tips on keeping marketing costs manageable, read this guide to digital marketing for small businesses.

How to reduce start-up costs

You don't need a large budget to start a business. There are practical ways to keep your initial spending low without cutting corners on quality.

• Start lean. Only spend on what you absolutely need to begin trading. Delay nice-to-have purchases until you're generating revenue.
• Use scalable software. Choose tools with basic plans that grow with your business. Cloud-based accounting software, for example, lets you start small and add features as you need them.
• Work from home. Avoid office rent by starting from a home office or shared workspace. Many successful businesses begin at the kitchen table.
• Outsource instead of hiring. Use freelancers or contractors for tasks like bookkeeping, design, or marketing until you can afford full-time staff.
• Buy second-hand. Look for pre-owned equipment, furniture, and fitout items. Online marketplaces often have quality business equipment at a fraction of the retail price.
• Explore grants and funding. Australian federal and state governments offer grants, loans, and incentives for new businesses. Check business.gov.au for programs you may be eligible for.

For more ideas on keeping expenses down, explore these business cost-saving ideas.

Tax deductions for start-up costs

Many start-up expenses are tax-deductible in Australia, which can reduce the overall cost of launching your business. Knowing what you can claim helps you plan your spending and keep more money in your pocket.

According to the Australian Taxation Office (ATO), you can generally deduct expenses that are directly related to earning your business income. Common deductible start-up costs include:

• Professional fees: Legal, accounting, and business advisory costs related to setting up your business
• Operating expenses: Rent, utilities, insurance premiums, and software subscriptions
• Marketing costs: Website development, advertising, and promotional materials
• Training expenses: Courses and training directly related to your business operations

Some capital expenses, like equipment and machinery, can't be claimed as an immediate deduction. Instead, you may be able to depreciate them over their effective life. Small businesses with a turnover under $10 million may be eligible for instant asset write-offs on eligible purchases.

Keep detailed records of every business expense from day one. Good record-keeping makes tax time simpler and ensures you don't miss deductions you're entitled to.

How to work out your break-even point

Your break-even point is the amount of revenue your business needs to cover all its costs, with no profit and no loss. Knowing this number helps you set realistic sales targets and understand how long it might take to become profitable.

The basic break-even formula is:

Break-even point = Fixed costs / (Selling price per unit - Variable cost per unit)

Fixed costs are expenses that stay the same regardless of how much you sell, like rent, insurance, and software subscriptions. Variable costs change with your sales volume, like materials, packaging, and shipping.

For example, if your monthly fixed costs are $3,000, you sell a product for $50, and each unit costs $20 to make, your break-even point is 100 units per month ($3,000 / $30). Selling more than 100 units means you're making a profit.

If you're a service-based business, replace "units" with billable hours or projects and adjust the formula accordingly. Understanding your break-even point early on helps you price your products or services correctly and plan your cash flow. For more on managing finances, read about how much business funding you need.

Stay on top of business costs with Xero

Tracking your start-up costs from day one puts you in control of your finances. Xero's cloud accounting software helps you monitor expenses, send invoices, reconcile bank transactions, and keep an eye on cash flow, all in one place.

With features like automated bank feeds, expense tracking, and real-time reporting, you can spend less time on bookkeeping and more time growing your business. Xero also connects with over 1,000 apps, so you can build a toolkit that fits your needs as your business scales.

Ready to get started? Try Xero and get one month free.

FAQs on business start-up costs

Here are answers to common questions about starting a business in Australia and what it costs.

How much does it cost to start a business in Australia?

It depends on your business type and structure. A simple home-based service business can start for under $2,000, while a retail or hospitality business may need $20,000 – $50,000+. Registration alone ranges from $0 (sole trader with an ABN) to around $700 for a registered company with a business name.

Can you start a business with $5,000?

Yes. Many service-based, freelance, and online businesses can launch with $5,000 or less. Focus on essential expenses like registration, a basic website, and the tools you need to deliver your service. Delay non-essential spending until revenue comes in.

Can you start a business with $10,000?

$10,000 gives you more flexibility. You could cover registration, basic equipment, initial marketing, and a few months of operating costs for a small business. Create a detailed budget so every dollar goes where it's needed most.

What are the hidden costs of starting a business?

Hidden costs often include ongoing compliance fees, software subscriptions you didn't anticipate, merchant and payment processing fees, and the cost of your own time during the unpaid setup period. Adding a 10 – 20% contingency buffer to your budget helps cover these surprises.

What types of businesses have the lowest startup costs?

Service-based businesses like consulting, tutoring, cleaning, and freelance writing typically have the lowest start-up costs. They often require little more than an ABN, a laptop, and a phone. Online businesses without physical stock also tend to be affordable to launch.

Can you claim start-up costs on tax in Australia?

Yes. The ATO allows deductions for many start-up expenses, including professional fees, operating costs, and marketing. Some capital items are depreciated over time rather than claimed immediately. Check the ATO website or speak with an accountant for advice specific to your situation.