A quick checklist of practical things you need to do when starting a business.
The thought of having to navigate all the paperwork when you start a business can be a little overwhelming. Where to start? There are some basic compliance, legal and practical tasks that most business need from the get-go, so we’ve put together a checklist of the most common ones to make it easier for you.
Licences, permits and registrations
In Australia there are a wide range of measures in place to ensure that businesses abide by the law and operate safely. What is required for your business varies by state, local laws and industry.
A licence usually signals a person is competent in the task or service; a permit usually gives permission for a business operate in some way. Registrations involve lodging your business details with particular authorities to ensure you operate lawfully. For example, you need to register your business with the Australia Tax Office by getting an Australian Business Number (ABN).
A good place to find out which you’ll need is ABLIS, the Australian Business Licence and Information Service.
Choose a business structure
Businesses have different structures according to their size, what they do and how they are run. The structure you choose will impact things like your legal obligations and liabilities, your tax payments, and how much control you have over the business.
Businesses are either sole traders, partnerships, companies or trusts. You can read more about each and work out which might be your business structure here. It’s a good idea to also seek professional advice from a business adviser, accountant or lawyer on this.
Choose your banking set-up
For tax purposes, you need to set up separate banking for your business if it is a partnership, company or trust. If you are a sole trader, you aren’t required to but it is a good idea – it’ll make it a lot easier at tax time to separate your personal and business transactions, plus it will help you keep track of your business cash flow.
Most banks offer business accounts that have features that help to run a business, such as statements that show GST and income tax clearly. You can find this information on their websites or by going in to a branch. A financial advisor or tax professional can also advise you on what banking features you might want for your business.
The ATO has a good section on the kinds of banking records you will need to keep.
Set up record-keeping
From the get-go you’ll need to keep good records for your business.
There are record-keeping obligations you need to meet legally, which the ATO details here, around tax and superannuation records.
For their purposes, records must be kept for five years, be legible, in English and must not be changed or damaged. Plus, for your own sake there’s nothing more painful than finding at tax time that your expenses and earnings are in five different folders or that your ABN is somewhere on a post-it note in the kitchen bin.
Bookkeeping describes the record-keeping work that business need to do daily to keep track of everything from income, expenses and payroll to cash ledgers. Business Victoria offers some good basics in bookkeeping, including some tools and templates you can use.
We hope this helps you get off the starting block with some of those important early tasks.