It’s an exciting time what you’re thinking about setting up your own company. You’ve got your business idea, and you’re eager to get started right away.
But there’s a lot to consider before you can establish your company and begin working. And quite a number of steps involved when setting up one up in Australia.
But that doesn’t mean it’s difficult. We created this checklist for first-time business owners, that outlines the key steps involved in setting up your company.
Following these steps means you'll get it right the first time and avoid some of the easy mistakes people can make.
Discuss your business' future and how to set up a company with our expert team at Liston Newton Advisory.
Before you set up
Before setting up your company, there are a few things you need to consider.
Step 1. What type of work will you do?
This depends on what you want to build your business on. Be aware that each industry, like retail and hospitality, has its own set of regulatory requirements and legal obligations.
Step 2. Choose a structure
In some cases, a company structure might not actually be the right choice for your business. Here are the most common business structures available.
- Sole trader: If you’re an individual starting your own business, and don’t foresee it growing beyond your means, a sole trader structure might be appropriate.
- Partnership: If you and a partner are looking to start a business together, and aim to keep it just between yourselves, this structure may work better for your needs.
- Company: This works for commercial businesses. It allows for high growth, scaling, and multiple employees. It also allows for corporate tax breaks and has limited liability.
- Family Trust: This suits business owners who want to protect their family assets and distribute their income to the family in a tax-effective manner.
- Unit Trust: This structure is perfect for multiple business owners who aren’t family members, who want to start a trust together.
It’s essential to set up your business with a structure that’s got your future in mind. And just remember, you can always change your business structure later down the line if your business needs change.
After deciding the groundwork for your company, it’s time to register it as a legal entity.
Step 3. Choose a company name and register with the Australian Securities and Investments Commission (ASIC)
This is where you go to register your company and business name. When choosing a name to register, you need to make sure it’s unique. You can check this on the ASIC database.
You can also choose to register a company through Liston Newton Advisory, and we can deal directly with ASIC on your behalf.
Registration can be tricky, and it's important to do it right. Our team of experts can help you with this step, and make sure you start your company out on the right foot.
Step 4. Receive your Australian Company Number (ACN)
Once you’ve registered your business with ASIC, they’ll provide you with your ACN, which you can use to apply for your Australian Business Number (ABN). This means you’re now registered as a company, and you’ll receive a certificate of registration.
Step 5. Apply for an ABN
Without an ABN you can’t legally start or run a business. Get in touch with Liston Newton Advisory for support in applying for your ABN.
Step 6. Register a domain name
Every business needs a website. You may not need it immediately, but it does help business growth if you get your e-real estate sorted sooner rather than later. You can search for available domain names online, and then use the Australian Domain Registration to purchase your domain.
Once your company is fully registered, you can establish the governance and reporting obligations.
Step 7. Establish a funding source
You may be starting your business to make more money, but in the start-up phase you'll actually be out of pocket. This is why it’s so important to determine a funding source to see you through until you start earning. Usually a business owner will contribute their own money to start the company, or seek investment from others.
For companies, this can also come in the form of government grants. Check your state government's website to see what grants are available for different business types.
Step 8. Establish the rules that will govern your company
To ensure the best running of your new business, you need to establish binding rules of governance. This includes the rules for taking on partners, shareholders, and how to plan for selling or exiting the business.
You can do this by sourcing the replaceable rules from the Corporations Act 2001 (which means you don’t need a constitution), or you can choose to write your own constitution. Be aware, though, that you’ll need to update a constitution as the law changes, which can incur its own fees. When forming a company with the support of Liston Newton Advisory, we'll provide you with a constitution that fits your needs exactly.
Extra tip: Establishing governance rules isn’t necessary if you’re the sole owner.
Step 9. Decide on the company officeholders
You need to decide who will act as your company director. You may also want to designate a secretary and vice director but these roles are usually unnecessary for smaller companies.
As your director will be controlling the company, you need to choose someone who you can trust with that responsibility. And remember:
- At least one of your directors must be an Australian resident.
- Written consent must be obtained from the person who has agreed to be the Director, so you have clear confirmation that they’ve taken on the role.
Step 10. Determine the structure of your shares
You'll need to make these choices:
- How many shares will you issue?
- How many shares will each shareholder own?
- How much will shares cost?
- What class of shares will you offer? The most common type of shares are known as ordinary shares.
The share class determines the type of rights your shareholder will receive with different shares. This can affect the distribution of power among the people who support your business, so you'll need to be strategic about who you offer what kind of share to.
Step 11. Decide on your shareholders
Choose who will be your shareholders. You can add more shareholders at any time, should you need to. Written consent must be obtained from each person who agrees to become a shareholder.
Step 12. Understand your company obligations
Either your director or, if you have one, the company's secretary will need to ensure your business meets the legal obligations specified in your version of the Corporations Act.
This person will need to ensure your business details are current, maintain company records, and pay the necessary fees for the company.
Step 13. Where will your company be registered?
You can register your company in any state or territory in Australia.
Step 14. Nominate a place of business and a registered office
You can register your home as your office but if you plan to rent a different space, you'll need to organise a commercial lease. If you plan to use a friend's place, then you'll need their written consent.
Step 15. Register for the right taxes
It’s crucial to register for the correct taxes in order to avoid any fines or legal ramifications. This can include:
- GST, if your business earns $75,000 or more.
- PAYG withholding tax, for paying salaries or wages of your employees.
- Fringe Benefits Tax, for companies who are able to supply company perks, like a gym membership or company car.
Get the right advice
As you can see, there’s a lot that’s involved when setting up a compcany in Australia. It’s important to make sure you cover all your business and legal requirements.
This checklist is designed to give you a starting point, so you understand what’s involved with setting up a company. To take the next step, get in touch in touch with one of our expert business advisers.