Starting a business in Australia involves more than registering a name and opening a bank account.
Before launching, it helps to think carefully about how the business will operate, who will own it, the legal structure, the contracts you may need and how important business assets such as your brand will be managed.
This guide explains some of the main legal and practical steps involved in starting an Australian business and where professional advice may be useful.
Table of Contents
- Start With the Business Idea
- Choose a Business Structure
- ABNs, Business Names and Company Registration
- Starting a Business With Someone Else
- Put Key Business Relationships in Writing
- Terms and Conditions
- Trade Marks and Intellectual Property
- Contractors and IP Ownership
- Pre-Launch Legal Checklist
Start With the Business Idea
A good idea is only the starting point.
Before committing significant money, consider:
- who your customers are;
- what problem your business solves;
- what products or services you will offer;
- how customers will buy from you;
- how you will deliver the product or service;
- your expected costs;
- how the business will earn revenue; and
- any licences, permits or industry requirements that may apply.
Testing demand before making major financial commitments can help you assess the commercial viability of the idea.
Business.gov.au provides useful government information about planning and starting a business in Australia.
Choose a Business Structure
One of the early legal decisions is how the business will be structured.
Common Australian business structures include:
- sole trader;
- partnership;
- company; and
- trust arrangements.
These structures can differ considerably in relation to ownership, control, liability, administration and ongoing legal obligations.
Sole Trader
A sole trader operates the business personally.
The individual and the business are not separate legal entities, so the individual is generally personally responsible for the business’s obligations.
Partnership
A partnership generally involves two or more people carrying on a business together.
A written Partnership Agreement can document matters such as ownership, contributions, decision-making, profits, responsibilities and exit arrangements.
Company
A company is a separate legal entity from its shareholders and directors.
It can own property, enter contracts, incur liabilities and conduct business in its own name.
Operating through a company can provide legal separation between the business and its owners, but personal liability can still arise in some circumstances, including through personal guarantees and breaches of directors’ duties.
You can read more about our business structuring services.
Legal Advice vs Tax Advice
The choice of business structure can have legal, tax, accounting and financial consequences.
A commercial lawyer can advise on the legal aspects of ownership, control, liability and governing documents.
Tax and accounting consequences should be discussed separately with an appropriately qualified accountant or tax adviser.
ABNs, Business Names and Company Registration
Different business registrations serve different purposes.
Australian Business Number
An Australian Business Number, or ABN, is a unique number used to identify a business or other enterprise in dealings with government, other businesses and the public.
Not everyone is entitled to an ABN. Eligibility depends on the applicable requirements, although companies registered under the Corporations Act are entitled to an ABN.
Business Name
A business name is the name under which a person or entity carries on business.
If you trade under a name other than your own legal name, business-name registration may be required.
Registering a business name does not create a company and does not give the holder exclusive proprietary rights in the name.
Company Registration
If you decide to operate through a company, the company must be registered with ASIC.
Once registered, the company receives an Australian Company Number, commonly known as an ACN.
An ACN and an ABN are different identifiers.
Starting a Business With Someone Else
If the business will have multiple owners, it is useful to document the relationship early.
Important issues may include:
- who owns what;
- how much each person contributes;
- roles and responsibilities;
- how decisions are made;
- how additional funding is handled;
- how profits are distributed;
- what happens if an owner wants to leave;
- how ownership interests may be transferred;
- what happens if the owners disagree; and
- what happens if an owner dies or becomes incapacitated.
Depending on the structure, this may be documented in a Shareholders Agreement or Partnership Agreement.
See our shareholder and partnership agreement services.
Put Key Business Relationships in Writing
Contracts help document what the parties have agreed and can reduce uncertainty later.
Depending on the business, important contracts may include:
- customer Terms and Conditions;
- service agreements;
- supplier agreements;
- contractor agreements;
- confidentiality agreements;
- Shareholders Agreements;
- Partnership Agreements;
- commercial leases; and
- licensing agreements.
The right documents depend on how the business actually operates.
Generic templates may not address the specific payment arrangements, risks, responsibilities or intellectual property issues involved in your business.
Read more about our business contract services.
Terms and Conditions
Businesses supplying goods or services should consider having appropriate Terms and Conditions in place before trading.
Terms and Conditions can address matters such as:
- the goods or services being supplied;
- quotes and orders;
- payment terms;
- late payment;
- delivery;
- customer obligations;
- changes and cancellations;
- intellectual property;
- confidentiality;
- limitations of liability;
- suspension of services; and
- termination.
The terms should reflect the way the business actually deals with customers.
Australian Consumer Law requirements may also apply, including consumer guarantees and unfair contract terms provisions.
See our Terms and Conditions services.
Trade Marks and Intellectual Property
Choosing a business name and protecting a brand are separate issues.
Registering a business name with ASIC does not itself give proprietary intellectual property rights in the name.
A registered trade mark can provide exclusive rights in Australia in relation to the registered mark and the goods or services covered by the registration.
Before investing significantly in a brand, consider:
- existing business names;
- registered and pending trade marks;
- domain-name availability;
- social-media usernames; and
- who should own the trade mark.
You can read more about our trade mark and intellectual property services.
Contractors and IP Ownership
Businesses commonly engage designers, developers, marketers, photographers, consultants and other contractors when getting established.
Paying a contractor to create material does not necessarily mean the business automatically owns the intellectual property in that material.
A written contractor agreement should deal with issues such as:
- scope of work;
- fees and payment;
- deadlines;
- confidentiality;
- ownership of intellectual property;
- assignment of intellectual property;
- licences to use intellectual property; and
- what happens when the engagement ends.
This can be particularly important where the contractor is creating a logo, website, software, written material or other assets that will become important to the business.
Commercial Leases
A business operating from commercial premises may also need to enter into a lease.
Commercial leases can create significant ongoing obligations, so prospective tenants should understand matters such as:
- rent;
- rent reviews;
- outgoings;
- the lease term;
- options;
- permitted use;
- fit-out obligations;
- make-good obligations;
- personal guarantees; and
- assignment provisions.
The applicable legal framework can also depend on the type of premises and the State or Territory.
Pre-Launch Legal Checklist
Before launching, consider the following:
- Have you chosen an appropriate business structure?
- Do you have the registrations required for your business?
- If there are multiple owners, have ownership and decision-making arrangements been documented?
- Do you have appropriate customer Terms and Conditions?
- Are important supplier and contractor relationships documented?
- Is intellectual property ownership clear?
- Have you considered trade mark protection for important branding?
- Have you checked licences and permits relevant to your industry?
- Have you considered insurance requirements?
- If leasing premises, have you reviewed the lease before signing?
- Have you obtained appropriate accounting and tax advice?
Not every item will apply to every business.
The legal work required should reflect the particular business, industry and commercial arrangements involved.
How Rise Legal Can Help
Rise Legal assists Australian business owners with commercial legal matters involved in starting and operating a business.
Our work can include:
- business structuring;
- Terms and Conditions;
- business contracts;
- Shareholders Agreements;
- Partnership Agreements;
- contractor agreements;
- trade marks;
- commercial leases;
- credit applications and PPSR matters;
- franchising; and
- business sales and purchases.
Rise Legal provides fixed-fee proposals for defined legal work so the scope and legal fee are agreed before work begins.
Rise Legal focuses on commercial and business law and does not undertake disputes or litigation.
Contact Rise Legal about legal support for your new business.
Frequently Asked Questions
How do I start a business in Australia?
Start by considering the business model, customers, products or services and how the business will operate.
You can then choose an appropriate structure, determine which registrations apply, document important relationships and consider contracts, intellectual property and regulatory requirements before launch.
Do I need an ABN to start a business?
Most businesses use an ABN, but entitlement depends on the applicable requirements.
The Australian Business Register provides guidance on ABN eligibility and applications.
Do I need to register a business name?
If you carry on business under a name other than your own legal name, business-name registration may be required.
Business-name registration does not itself give exclusive trade mark rights.
Should I operate as a sole trader or company?
There is no single answer that suits every business.
The structures differ in ownership, legal liability, administration and ongoing obligations.
Legal advice can help with the legal aspects of the structure. Tax and accounting implications should be discussed with an accountant or tax adviser.
Do I need a lawyer to start a business?
Not every startup task requires a lawyer.
Legal advice can be useful for matters such as business structure, co-owner arrangements, contracts, Terms and Conditions, commercial leases and intellectual property.
Does registering a business name protect my brand?
No.
Business-name registration and trade mark registration are different systems.
A registered trade mark can provide proprietary rights in relation to the registered mark and relevant goods or services.
Should I have Terms and Conditions before I start trading?
For many businesses, having appropriately drafted Terms and Conditions in place before supplying goods or services can help document payment arrangements, responsibilities and other important aspects of the customer relationship.
Article by
Helen Kay, Principal Lawyer, Rise Legal
Helen Kay is the Managing Director and Principal Lawyer at Rise Legal, an Australian commercial and business law firm advising business owners, franchisors and franchisees across Australia. Helen practises in commercial law, franchising, business contracts, business sales and purchases, trade marks and related business law matters.
Disclaimer
This article provides general information only and does not constitute legal advice. It does not take into account your specific circumstances. Laws and regulatory requirements may change, so you should obtain legal advice relevant to your situation before acting on the information contained in this article. Liability limited by a scheme approved under professional standards legislation.
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