What are the legal requirements for starting a business in Australia?

Author: Ian Aldridge, Progressive Legal

Starting a business in Australia is an exciting and thrilling adventure. Imagine being your own boss, setting your own schedule, and pursuing your passions every day. The possibilities are endless, and the rewards can be great. But starting a business in Australia requires more than just an idea and enthusiasm. It requires careful planning, research, and execution and you need to be aware of the legal requirements for starting a business in Australia.

You need to decide on a business structure, register your business name, obtain necessary licenses and permits, and comply with all relevant laws, including employment and taxation laws. If you speak to most business owners, they will tell you it’s the hardest job they’ve ever done. 

Are there any age requirements for starting a business in Australia?

In Australia, there are no specific age requirements for starting a business. If an individual can enter into a legal contract, they can legally establish and operate a business. However, individuals under the age of 18 are considered minors and may require parental or guardian consent to enter into contracts, lease agreements, or obtain licenses and permits. 

Moreover, starting a business in Australia also requires compliance with other legal requirements, such as registering a business name, obtaining necessary licenses and permits, registering for taxes, complying with employment laws, and protecting intellectual property. 

It is important to seek professional advice and guidance to ensure that all legal requirements are met when starting a business in Australia, regardless of age or other personal factors. 

Steps for starting a business in Australia

The steps for starting a business in Australia include choosing an appropriate business structure, registering your business name, obtaining necessary licenses and permits, complying with employment laws, registering for taxes, protecting intellectual property, and ensuring data protection.  

Seeking professional advice and guidance can help ensure that all legal requirements are met and your business is established and operated correctly. By following the legally right way to start a business in Australia, entrepreneurs can avoid legal issues and establish a successful and compliant business. 

Business Structure

When starting a business in Australia, one of the critical decisions you need to make is choosing the right business structure. The most common business structures in Australia include sole trader, partnership, company, and trust.  

Each structure has its unique features, advantages, and legal obligations, and it’s essential to select the one that best aligns with your goals and circumstances. Once you have chosen a structure, you need to register your business name, obtain any necessary licenses and permits, and comply with employment laws, taxation requirements, and data protection laws.  

Seeking professional legal advice from experienced business solicitors can help ensure compliance with all legal requirements and regulations, and help you establish a solid legal foundation for your business. By choosing the right structure and meeting all legal requirements, you can set your business up for success and mitigate potential legal issues in the future. 

Understanding the Different Business Structures in Australia 

1. Sole trader: A sole trader is an individual who operates their own business. It is the simplest business structure, and the owner has full control of the business and its profits. 
2. Partnership: A partnership is a business structure where two or more people share ownership and responsibility for the business. Each partner contributes to the business and shares in the profits and losses. 
3. Company: A company is a separate legal entity from its owners, and it can be owned by individuals, other companies, or a combination of both. A company can issue shares, raise capital, and limit the liability of its owners. 
4. Trust: A trust is a legal arrangement where a trustee manages assets or property for the benefit of the trust’s beneficiaries. It can be used for various purposes, such as asset protection, tax minimisation, and estate planning. 

Registering your business name 

Registering your business name is a crucial step when starting a business in Australia. It gives your business a legal identity and distinguishes it from other businesses. Here are some of the key reasons why registering your business name is important: 

1. Legitimacy: Registering your business name makes your business look more professional and legitimate. It gives customers and suppliers confidence that they are dealing with a real business. 
2. Branding: Your business name is a critical part of your branding strategy. It’s the name that your customers will know you by, and it’s essential to choose a name that’s unique, memorable, and easy to pronounce. 
3. Legal Protection: Registering your business name gives you legal protection and exclusive rights to use that name in your industry. It prevents other businesses from using a similar name and helps you avoid legal disputes. 
4. Compliance: It is a legal requirement to register your business name if you are trading under a name that is not your own. Failure to register can result in legal action, fines, and even the forced closure of your business. 

Licenses and Permits 

Licenses and permits are an essential aspect of starting a business in Australia. Depending on your industry and business activities, you may need to obtain various licenses and permits from local, state, and federal authorities. Here are some of the key licenses and permits you may need: 

1. Business License: Most businesses in Australia require a license to operate. The type of license you need will depend on your business activities and industry. 
2. Trade or Occupational License: Some businesses require a specific trade or occupational license, such as builders, electricians, and plumbers. 
3. Environmental Permits: If your business involves activities that may impact the environment, such as waste disposal or air emissions, you may need to obtain environmental permits. 
4. Food and Safety Permits: If your business involves handling food, you may need to obtain food and safety permits to ensure compliance with health and safety standards. 
5. Liquor License: If your business involves selling alcohol, you will need to obtain a liquor license from the relevant state authority. 

Obtaining the necessary licenses and permits can be a time-consuming and complex process. It is important to research the requirements for your industry and seek professional advice to ensure compliance. Failure to obtain the necessary licenses and permits can result in legal action, fines, and even the forced closure of your business. 

Tax Obligations 

Tax obligations are an important consideration when starting a business in Australia. Here are some of the key tax obligations you need to be aware of: 

1. Australian Business Number (ABN): You need to apply for an ABN if you are starting a business in Australia. An ABN is a unique 11-digit number that identifies your business to the government and other businesses. You can use your ABN to register for goods and services tax (GST), claim tax credits, and more. 
2. Goods and Services Tax (GST): If your business has a turnover of $75,000 or more, you need to register for GST. GST is a tax of 10% on most goods and services sold in Australia. You will need to charge GST on your sales and remit the tax to the Australian Taxation Office (ATO). 
3. Income Tax: You need to lodge an income tax return with the ATO every year. The amount of tax you pay will depend on your business structure and profits. It is important to keep accurate records of all your income and expenses to ensure you pay the correct amount of tax. 
4. Payroll Tax: If your business pays wages above a certain threshold, you may need to pay payroll tax. The threshold varies between states and territories, so it is important to check the requirements in your location. 
5. Fringe Benefits Tax (FBT): If your business provides non-cash benefits to employees, such as company cars or private health insurance, you may need to pay FBT. FBT is a tax of 47% on the value of the benefits provided. 

Legal Obligations 

Starting a business in Australia comes with certain legal obligations that must be fulfilled. Here are some of the key legal obligations you need to be aware of: 

1. Business Structure: Choosing the right business structure is important as it impacts your legal and financial responsibilities. Common business structures in Australia include sole trader, partnership, company, and trust. 
2. Business Name Registration: You must register your business name with the Australian Securities and Investments Commission (ASIC) unless you operate under your own name. 
3. Licenses and Permits: Depending on your business activities and industry, you may need to obtain various licenses and permits from local, state, and federal authorities. 
4. Tax Obligations: You must register for an Australian Business Number (ABN) and comply with tax requirements, such as Goods and Services Tax (GST), income tax, payroll tax, and fringe benefits tax (FBT). 
5. Workplace Health and Safety: As an employer, you have a duty of care to ensure the health and safety of your employees. You must comply with workplace health and safety regulations and provide a safe working environment. 
6. Consumer Law: If you sell goods or services to consumers, you must comply with the Australian Consumer Law. This includes providing accurate information about your products or services, complying with consumer guarantees, and avoiding misleading or deceptive conduct. 

Now when it comes to the sale of a business or the purchase of a business, there are other legal considerations to take into account as well.

Are you starting a business in Australia? Contact our experienced commercial lawyers to make sure you’re on the right path! Call us on 1800 820 083 or fill out the contact form on this page and a member of our team will be in touch.

Legal Requirements for Starting a Business in Australia FAQs