It may seem like a crazy time to start a business, but maybe you’ve had a brilliant idea during isolation boredom or redundancy has caused you to rethink working for someone else.
You want to make sure you start your new business off on the right foot and this means addressing quite a few things.
As you’re setting up your business, you’ll need to make sure the name you’re thinking of isn’t already taken, that your website complies with Australian laws, and you have your legal ducks in a row ready to start working with your first client.
So, before you jump in and offer your services, product, or expertise to your new clients, you’ll want to make sure you have thought about these 5 things:
1 Business & Domain Name
✔ Business name is available- You may have come up with the perfect name for your new business, but you’ll first need to check it isn’t already taken. You can do this by searching for the name on ASIC Connect.
✔ Domain is available - If your business name is available in Australia, you then want to confirm the domain name (your website address) is also available. There might not be a business name in Australia, but Bob in England may have already snagged www.bobthebuilder.com . You can still see if www.bobthebuilder.com.au is available and consider whether you may not mind the occasional mix-up.
✔ Register both! - You can easily register a business name online by creating an ASIC Connect account and following their step-by-step questionnaire. (before you can register your business name, you’ll need an ABN mentioned in step 4)
You can register a business name for 1 or 3 years, costing around $37 or $87.
You can register a domain name with one of these providers or check with your website building platform (e.g. Wix, Squarespace, Kajabi etc.) as they may have free domain registration included in a premium subscription.
Registering a business name and domain doesn’t guarantee that no one else can use that name, the only way to ensure that is to register the business name as a trade mark. You can search for trade marks already registered here, and then consider registering your business name and/or other business intellectual property here.
2 Check licensing and insurance requirements
Whether you’re planning to run your business from home or be out and about between job sites, you’ll likely need to meet licencing requirements and obtain insurance. What insurances and licences you’ll need depends on your product or service. You can find the license(s) required by your local council through the Australian Business Licence and Information Service and it’s best to speak to speak with an insurance broker to ensure you’re properly covered by insurance.
3 Choose a business structure
There are three main business structures to choose from, each providing pros and cons depending on how you plan to run your new business.
Sole trader: This is the simplest and most affordable structure to establish, however the business does not operate as a separate entity. Essentially, you are the business and the business is you! Tax returns are lodged under your personal TFN and all income is yours, though if you would like you can obtain an ABN and set up a separate business bank account.
Propriety Limited Company: This is slightly more complicated and costly to set up, but it means the business runs as a separate entity and if things go wrong only business assets are at risk, not your personal assets. However, you’ll need to comply with additional legal requirements in running the company and company tax returns will need to be lodged.
Read our article on "Should I start as a company, or sole trader" for more details.
Partnership: This is usually used to establish a business where two or more persons are working jointly. The partnership itself is also not its own entity, so if things go wrong you may be personally liable, though both profit and loss are shared jointly between the business partners. The partnership requires its own ABN and you will need to lodge partnership tax returns in addition to your own.
You can read more on business structures on the Business QLD website here.
4 Register your business
Now that you’ve decided on your structure, you need to register your business with ASIC. Depending on which structure you’ve chosen, you may need an ABN, ACN, or TFN. If you intend to trade as a name other than the name on your ABN/ACN/TFN, you’ll need to register that as well.
For example, if a sole trader has an ABN under their personal name but wants to conduct landscaping services as ‘Leo’s Landscaping’, the business name will need to be registered and paid for as mentioned in step 1.
Also, if you expect turnover to exceed $75,000 in the first year, you need to register for GST.
5 Get your essential new business legal pack
Finally, it’s vital that the front-end legals of a new business, particularly with individual clients and website visitors are also sorted. This includes:
• Terms and conditions
You’ll need an agreement and/or disclaimer that each client you bring on board signs. Terms and conditions protect both you and the client. For example, you don’t want to spend hours landscaping a gorgeous yard only to have the client return in two weeks wanting their money back because all the plants died when they didn’t water them. Read “How to make sure you get paid – Top Tips from a Lawyer” for more about terms and conditions and how they can help your business.
As you can see, there’s quite a few things to think about when starting a new business. This article is not intended to be definitive legal advice but just a handy checklist of the types of things you need to be thinking about. Just as you are an expert craftsman, we are experts in business law, so we can get you from brilliant idea to legally-sound reality. Book a chat with us here.
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Typical Legal Disclaimer!…
Unfortunately, there is never a ‘one size fits all’ formula to apply. Every situation is unique and it can be tricky to wrap your head around some areas of the law. To ensure you are setting yourself and your business up for success, it is always best to consult a legal professional with expertise in the field.