The costs of starting a business in Australia depend on the structure and what kind of business is intended. We did a quick walkthrough of what actions are required to start a business legally and efficiently.
Types of Business Structures
The business structure directly affects how much expenses there will be to start with.
A company is a commercial business or entity that is separate from its shareholders. It’s mandatory to register a company and obtain an Australian Company Number (ACN). The starting fee is $479, but it can be as much as a couple thousand.
As a sole trader, the person is the only business owner who is responsible for all liabilities. They are still allowed to hire others to work for them.
A partnership is a business run by more than one individual, but not in the form of a company. It is easier and more affordable to start, earn, and exit, but all parties involved are liable for the business.
A trust is a legal entity that owns assets for the benefit of a third party. In the beginning, it is expensive to set up and maintain, but it comes with fewer liabilities and easier capital.
Registering a Business in Australia
Before registering a business, it is recommended to already have an established name, logo, and official website domain name. It will give the owner time and money in case any aspect of their company changes. It is not necessary, but it is easier to register the ABN and the business name at the same time.
Registering a business name is mandatory for sole traders and companies. A business can register a name for one year for $35, or three years for $82.
Australian Business Number (ABN)
Companies and sole traders are required to register for an ABN. It is an 11 digit number that acts as a business identification. Businesses can use their ABN number in transactions, claim taxes, and apply credit for things such as energy grants.
Whether the owner is working alone or is outsourcing work, they must consider the costs of having additional help. Salaries will depend on the position, location and industry.
Another vital expense to be aware of is where the business will operate. Not all companies have or need storefronts. Some businesses can be managed perfectly from the comfort of home, but this isn’t always feasible, if the company is client facing.
Location is only key if, the business needs to be in a specific vicinity, close to other similar businesses, or needing to attract targeted footfall. However, if location isn’t of such huge significance, you could probably avoid setting up offices in Sydney CBD or the like, as these are the most expensive in the country! Instead look for suitable locations outside of the more prestigious areas. Shared space could also be a cost effective solution.
When calculating how much is needed for a startup, these are some of the common factors many tend to leave out:
- Office supplies
- Marketing expenses
- Business insurance fees
- Accountant service fees
To conclude, the amount needed to start a business in Australia can range from $400 to $25,000. With the right mindset, the investment may pay off.