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Starting A Business

Establishing a business can be confusing to anyone doing it for the first time. There are new terms to understand and processes you need to complete for reasons you are not sure about.

This article will help you understand the process and to complete your business registration online.

This article is intended for businesses and not for Not-For-Profits Organisations, Incorporations, Trusts or Partnerships. (See notes below on Trusts and Partnerships)

DECIDE ON A BUSINESS NAME & TYPE

For many first time business owners, the business name is the catalyst of starting a new business. However, disappointment can quickly follow when they discover, the name is already taken by someone else. So for this first step, you may need to stay flexible on your business name.

What is a Business Name


A business name is the name under which your business will trade. The name people will remember your goods or services by.

Business names are registered with Australian Securities & Investments Commission (ASIC). Once a business name is registered, your business can operate in any state or territory. If you're trading under your own name as a Sole Trader or the Company name there's no requirement to register a separate business name.

Types of Businesses

The type of business you select is an important decision. As most startups are Sole Traders or Corporate entities (Company Eg. Pty Ltd) we will focus on these main business types. Partnerships and Trusts business types are outlined near the end of this article.

Sole Traders and Companies are the only two legal business types in Australia that can be registered with the Australian Tax Office and tax payers.

The following table will assist you in which business type to consider.

Business Type
Outline
Estimated Cost


Sole Trader


A business linked to you as a person, so you are in effect 100% responsible for the business debits and any legal claims.

Suitable for people with few personal or joint assets, business remains small and providing basic services or goods with a low level of risk. Eg. party plan products, retail clothing etc.

  • Low cost to establish due to few legal and tax formalities.
  • Easy start up and to close down.
  • Personally liable while the business is trading and after closure.
  • Basic recording keeping required.
  • Taxed at personal income rates.Unless you intend to trade under your own name, you will need to register a Business Name.



Business Name Registration
$34 for one year
$78 for three years


Corporate 
Entity


Most small Companies are Proprietary Limited's ('Pty Ltd') having at least one shareholder. Shareholders limit their risk based on the shareholding value. E.g 5 shares at $1 each, total of personal risk is $5.

Ideal for people with personal or joint assets that they want to protect and / or the company provides advice or trades in high risk products or services. Eg. Engineering Services, Food Production etc.
  • Higher startup cost.
  • More difficult to wind up (Deregister) if assets remain and during a legal dispute.
  • Liability only exist while the Company is registered.
  • Basic record keeping.
  • Annual ASIC return and payment.
  • Hold Annual General Meeting each year.
  • Directors statements of solvency.
  • Taxed at 30 cent in the dollar on Profit.
  • Can issue pre taxed dividends (Franked)Many companies have the same trading name as the business but without the Pty Ltd so the company will need to register and maintain a Business Name. 


Shelf Company Registration
Approx. $800 - $1500
Once Only

Business Name Registration
$34 for one year
$78 for three years

ASIC Fee
$236 per year

The Adelaide Hills Business Centre can assist you to select the right structure to get started.  Click here for details.

Business Name Search 

When deciding on a Business Name, there are three main areas to consider. 
  1. ASIC national Business Name register - Click here to complete a search
  2. Trade Mark - Click here to access IP Australia and complete an ATMOSS search. 
  3. Domain Name - Click here complete a domain search.
Trade Marks - By simply having a registered Business Name or Company Name does not provided you with exclusive right to use the name. Only a Trade Mark offers this level of protection in a particular Class of goods or services. Click here for further details. Eg. You have a Business Name registered and you are trading and becoming know in your market. Than suddenly you receive a "Cease & Desist" notice as you are using another parties "Intellectual Property", a Trade Mark.

A Trade Mark can be Text, Image etc. Click here for further details. Avoid common words used in your associated industry when applying for a "Text" Trade Mark. Eg. "A1 Home Builders" won't qualify in the Class 37 (Building construction; repair; installation services) because other builders have a right to use common words like "Home" and "Builders". However "Apple", the computer Company can have a common word Trade Mark as it's not associated with food / drink related Classes 29-33 etc.  

Need help? The Adelaide Hills Business Centre can complete a search and register your trademarks.  Click here for details.

domains.adelaidehillsbc.com.au
Domains -
Like a Trade Mark, a domain name can add value to your business brand and in today's world of the internet marketing and shopping, you should consider securing domain names that represent your trading, product and service names. For example, the trading name for "Biscuits To Crumbs" could have one or more of the following domain names registered:
  • biscuitstocrumbs.com.au
  • biscuits2crumbs.com.au
  • btc.com.au
  • b2c.com.au
If most of your business will be within Australia, ensure you secure the Top Level Domain ".au". This helps with displaying your business listing in search engines like Google to local buyers.

If you are looking at internationals sales, also secure the Top Level Domains like ".com" without the ".au".

To search and register a domain, Click here.

REGISTERING 

OK, you have done your research, picked a Business Name and Domain Name and decided on a Business Type.
The next step is to get your personal details and credit card ready.

You will need:-
  • Full name, address, tax file number and date of birth for each person involved in the business. 
  • Corporations, identify who will perform the role of Directors, SecretaryPublic Officer
  • Corporations, list of Members a.k.a. Shareholders (Name, Address, Date of birth, Tax File Number), number of shares, issue price of shares, type of shares. 
  • Intended business location if known. 
  • Registered address for any documents that will be served. Some business owners use their accountant's or lawyer's address however it can be your address. Ensure you obtain permission. 
  • Further details may be required if you are not an Australian Citizen. 
  • Email and Phone numbers to be used as contact. 
  • Your Credit Card to process payments.

Company Registration 

If you intend to Register a Company (Pty Ltd) you are best to purchase what is referred to as a Shelf Company. Years ago, it took a number of months to incorporate a Company. To avoid this delay and high cost, Shelf Companies would pre-incorporate companies and leave them sitting "on the shelf" ready for business owners to buy. Now you can register a company in minutes.

The Adelaide Hills Business Centre can help you register your company and minimise risk. Click here for further details.

You may need to do some research or contact us to understand some of the terms involved. A sole business owner can hold all roles in the Company; Director, Secretary, Public Officer and Member/Shareholder. Please note that a Sole Company Director should have an up to date will. See note below for further details.

At the end of the process you will receive a number of documents including an Australian Company Number. (ACN) This is not an Australian Business Number (ABN) which is the next registration step. In addition, you should receive a "Bank Pack" to open up a business bank account. 

Business Number Registration (ABN) 

More recently the registration of an ABN includes the application of a Business Name,Tax File number for companies and an AUSkey. The registered ABN will link your Business Name and to you as the Sole Trader or the Company ACN / Name. 

You will need to show your ABN on all financial transaction including sales dockets, Tax Invoices, Orders, Payslips etc.

AUSkey is a single key to access Government online services. It is intended to avoid different Usernames and passwords when accessing government web sites. The AUSkey also includes a small piece of software that you saved to your computer or a USB stick. An email will be sent to you with details on how to activate.

To get started, Click here to register for an ABN. Check the options for a Corporation Tax File Number and to apply for a Business Name.

When your application is processed, you will receive an email containing your ABN.

There is no fee to register for an ABN however there is a fee to register a Business Name. $34 for one year and $78 for three years registration. You will receive an email containing an invoice soon after registering. If you don't receive the invoice within 24 hours, check your email spam folder.

Domain Name Registration 

To register a Domain Name, click here to perform a search and then setup an account and register. Your domains are Intellectual Property you don't want too lose so protect your username and password.

Create an account and please keep your Username and Password secure. Your secured domains are Intellectual Property you don't want too lose. You should also set your domain to auto renewal with a credit card. This avoids the domain been snapped up by others if you don't renew in time. Also Lock the domain. This means that your domain can not be transferred without unlocking the domain first.

You will need your ABN or ACN to register a .au top level domains.

TRADE MARK APPLICATION

How much do you value your Business Name and Business logo?

If it has value, protect it with a Trade Mark or two. If your business name, product or service has an unique name (not a common word) then consider a "Word" trademark in addition to any image Trade Mark. If your logo is coloured it may pay to have a mono colour logo (Black & White) to cover all colour options otherwise the Trade Mark will be restricted to the registered colours. However if the colour arrangement is important, than use the coloured image when registering. It's a bit like Cadburys Purple. The colour is it's Trade Mark.

If you are a Sole Trader, you need to register the Trade Mark in your name and not the Business Name. Company should apply in the Company Name (with Pty Ltd).

Your application will not be registered until:
  • It has been examined. 
  • Any problems identified during examination are resolved. 
  • It has been accepted. 
  • It has passed through the opposition period. 
  • Registration fees have been paid. 
We suggest that you use the TM Headstart (pre-application service) that helps you to assess the potential registrability of your Trade Mark before you decide to fully file your application.

The application fee using the TM Headstart program is $120 per Product or Service Class. Not refundable if your Trade Mark application is rejected, unresolved or you decide not to file your application.

The Trade Mark application process will generally take three to four months to examine.

The filing fee is $300 per Class once your Trade Mark Application has been accepted.


This may seem like a lot of money to start with but considering a Trade Mark remains enforceable for 10 years under IP laws, it's a little over $40 per years and is good insurance. 

Click here to start your Trade Mark application or contact the Adelaide Hills Business Centre to complete your Trade Mark application.

GETTING HELP 

As we stated at the start of this article, if you are new to the world of business, it is confusing and even the best of business owners can have a limited level of knowledge. An Accountant, Lawyer or your local business centre should be able to provide assistance. The Adelaide Hills Business Centre has an extensive knowledge and can help you at all levels. Click here to get help.

SOLE COMPANY DIRECTORS NEED A WILL 

Difficulties can arise when an Company Owner / Director dies without leaving a will. Their estate cannot be quickly wrapped up and dependants (widows, children, etc) can be left waiting lengthy periods before the Public Trustee steps in to manage the estate, or appoint someone else to administer it via the court system. If the business is active it may mean the business can not continue to operate without a person properly authorised to immediately manage the company.

Companies with more one director enable the other directors to continue managing the company.

Where the sole Director is also the sole Shareholder, the risk of uncertainty is much greater.

PARTNERSHIPS AND TRUSTS

Partnerships and Trusts are in effect not business structures as neither directly pay tax. These structure in the main are used to distribute profits between partners or beneficiaries

Partnerships are an association of people (Sole Traders) or Companies running a business together, but not as a Company. In a partnership, profits are allocated back to Sole Traders and/ or Companies. The greatest disadvantage with a partnership is that any decision by a partner is "Jointly and Severally" bound to all of the other partners. Meaning, one partners issues either in business or life could have an impact on you and the other partners.

Trusts are entities that hold property or income for the benefit of others. Taxes are paid by the Beneficiaries receiving the funds. A Self Managed Super Fund (SMSF) have some additional legal and taxation considerations.

YOUR EXPERIENCES 

If you have started a business recently and like to share your experience, please feel free to level your comments below for other to read.

All the best in your new venture.

Business Structures