Whether you are looking to establish a new business enterprise in Australia or expand an existing business, there are many things to consider. In addition to thinking about your sources of capital, reaching agreement with suppliers, trading terms with customers, leasing premises, products and marketing, there are also business laws and regulations to understand and comply with. Here are some of the legal essentials required for starting a business in Australia:
Registering Your Business
Every official business must be registered with the Australian government. Registering your business ensures you are taxed at the correct rates, helping you avoid penalties as well as protect your ideas and brands.
Business registration generally covers these components:
- Business name: Business owners planning to use a name other than their own need to register an official business name.
- Australian Business Number (ABN): While an ABN is not mandatory for all businesses, having one will ensure smoother operations and will avoid tax being withheld from payments. You can use an ABN to identify your business to others when ordering and invoicing, claim goods and services tax credits, and more.
- Structures: There are many choices of what structure to adopt, and they all have advantages and disadvantages. If you are structuring your business as a company, you will need to register it as a legal entity. The Australian Securities & Investments Commission (ASIC) will issue an Australian Company Number (ACN) to new companies. Take note that you will need to apply for your ACN before getting an ABN. You may also wish to trade through a trust. These types of decisions depend on many things such as who is involved in the business, your personal financial and asset position etc.
- Tax File Number (TFN): All businesses must have a TFN. As a sole trader, you can use your own TFN. However, partnerships and companies must apply for a separate TFN.
- Goods and Services Tax (GST): Generally, GST tax registration is compulsory for businesses and enterprises that have a GST turnover of $75,000 or more; non-profit organisations with a GST turnover of $150,000 or more; or businesses that wish to claim fuel tax credits or provide fare-charging ride services.
- Pay As You Go (PAYG) Tax: If you pay wages or salaries to employees, contractors, or businesses that don’t provide you with their ABN, you are required to withhold a certain amount from those payments as PAYG tax. Therefore, PAYG tax registration is required for you to withhold that amount.
Other taxes that you may need to consider include payroll tax, fringe benefits tax, wine equalisation tax, fuel tax credits, and luxury car tax. You will also need to look into the required licenses and permits. All these will vary according to the location of your business and the industry.
A contract refers to a commercial agreement made between two parties. When someone agrees to provide goods or services in exchange for money or some other benefit, they’re entering a legally enforceable contract. By understanding the contracts you enter into and the specific laws associated with the agreement, you will be better equipped to negotiate terms and conditions that benefit you. However, it’s still imperative to seek professional legal advice from an experienced business lawyer in Melbourne to vet any contracts beforehand, or draft them for you.
Protecting Your Business
As a business owner, you are responsible for protecting your business, those that work for you, and your customers. First, you have a legal responsibility to manage the health and safety of your staff in the workplace. Understanding the requirements that apply to your business and its location is paramount.
Additionally, the right insurance that suits your business can help protect it, your customers, and your income. This includes worker’s compensation insurance, which is compulsory for companies with employees. The insurance will cover you and your employees against financial hardship due to illnesses or accidents.
To further protect yourself and your employees, adherence to anti-bullying laws and unfair dismissal protocols will help you develop a solid organisational structure and company policies.
Other insurance plans to consider include:
- personal or loss of income insurance
- stock, product, and asset insurance
- accident and liability insurance
- technology and cybercrime insurance
Some of these insurance plans are a legal requirement to ensure proper protection. The other types of insurance mentioned are not compulsory but can prove to be important in minimising potential risk.
Furthermore, protecting your intellectual property (IP) should be another consideration if your ideas fall into the wrong hands. Legal advice and expertise are recommended to help you better understand these laws and what to do about them.
Getting Professional Assistance
At Nevett Ford, we understand the complex nature of setting up a new business. To lighten your load, we have some of the best lawyers in Melbourne to assist you with all the legal essentials required for your business. As experienced business lawyers in Melbourne, we handle the legal matters so that you can initiate your business with ease. Get in touch with us to discuss your concerns and needs and we will let you know how we can best assist you.