You've decided that you want to start a business. Excellent! Forming an idea and knowing you're ready to start is half the battle. And yet, the procedures that come afterward can prevent even great ideas from seeing the light of day. What do you need to register your business? How do you do it? Where do you go? In this post, we're breaking down the basics you need to understand before you can get your business up and running.
Getting an ABN
An ABN—Australian Business Number—is a unique number that every business should have. You'll use this number when applying for taxes, listing your business in any public directory, and validating your right to do business.
Whether you're an individual or a group, if you intend to earn money from selling either goods or services, you'll need an ABN. The only exceptions to getting an ABN are if you're doing business in the Christmas or Cocos Islands or if you're joining an existing venture and the other partners already have an ABN.
Think of an ABN like a driver's license for your business. You need one if you want to:
Legally conduct business in the country
Buy .com.au, .net.au, or .org.au domain names for your business website
Getting an ABN is easy. You can register for one online, and it's entirely free. You don't need any documentation, and it takes about 10 minutes from start to finish. If you already know what name you want to run your business under, you can register that as well.
When you register for an ABN, you should know which structure of business you'll follow. There are four standard types:
Sole trader or individual: You run the business by yourself, and you have complete control over all decisions. You also bear all responsibilities and consequences yourself.
Company: Could be a private or a public limited company. The business is considered as a separate entity and the owners/founders will have limited liability for consequences.
Partnership: An agreement between two or more people to run the business together. All partners share profits and losses. The ratio of sharing depends on the type of partnership established.
Trust: A business that's operated by one or multiple people on behalf of the owner. In this case, the trustee will be entirely responsible for the business's everyday functioning. A trustee can also be a company that manages assets for a business.
Here's a more detailed look at Australian business structures and what each one entails.
How to apply for an ABN
There are a couple of simple ways to register for an ABN. You can either apply directly through the Australian Business Register or use the more convenient Australian Government Business Registration Service, which also lets you register your business name (sole traders and partnerships) and a company name (where the business functions as a complete legal entity separate from the owners and operators).
Before you start your application, make sure you have the documents necessary for your application. What you'll need may change based on your chosen business structure, but you'll certainly need:
Your Tax File Number. You'll need your TFN as well as the TFN of any other key stakeholders, such as your business partners or board of directors.
The date when you need your ABN by. This is the date you expect to start trading.
The name of your business. Here's how to choose an effective business name.
Contact details for your business, including a physical address, email address, and phone number.
Locations, in case you plan to run your business in multiple states or localities.
If you're starting a company, you'll need your Australian Company Number (ACN) or Australian Registered Body Number (ARBN). You can apply for that separately on the Australian Securities and Investments Commission (ASIC) website.
In case your ABN application is rejected, you will receive a full refund of the fees you paid.
How to add a business name to your ABN
Once you've got your ABN, it's time for you to register a name for your business. This is the name you're legally entitled to operate under.
Unless you're an individual and you run your business under your own name, you have to come up with a name for your business and register it. For instance, if you're Mark Hannegan, a freelance web developer, you don't have to register that name. But if you're Kenny Anderson who owns a cafe on Lonsdale Street, you need to register.
Before you start your application to register your business name, here are a few things you need to do.
Get your ABN.
Use the Business Register's service to check that the name you've chosen for your business isn't already registered. Your business name has to be unique.
Have a look at IP Australia to make sure that your business name doesn't already have a trademark.
Check the Australian Business Licence and Information Service (ABLIS) to understand what licences you need. This varies based on your business type.
Browse through .auDA to find a suitable domain name for your business website.
Think about how you want to protect your business name, and apply for a trademark on the IP Australia website, if you think this is an appropriate step for your business.
Managing your ABN and business affairs online
Have your myGovID handy and link it to your ABN on RAM (Relationship Authorisation Manager). RAM is an authorisation service that lets you manage your business details on myGov. For more information on how to set up your myGovID, have a look at this webpage from the Business Register.
myGovID is an Australian Government service that lets residents access all government services from one portal. When you link it to RAM, you can also access a host of other business-related services such as self portals for the Australian Tax Office's (ATO) online services, revenue reporting, aged care financial reporting, the Australian Business Register (ABR), and more. Here's a full list of what you can do when you connect your myGovID with RAM.
myGovID and RAM have replaced the previous AUSKey and Manage ABN services. They're both managed by the Australian Tax Office.
There are 3 ways to register your business name:
1. Use the Australian Government's Business Registration Service.
2. Register using your ASIC Connect account. If you've already registered your company, then you most likely have an account on ASIC. You can also sign up for one by following these directions.
3. Register with a Private Service Provider (PSP). Although, PSPs will charge you an extra consultation fee aside from your application fee.
When applying to register your business online:
Have your ABN, business addresses, and required documents handy. The application takes about 20 minutes. You can register for either one year ($37) or three years ($87), and you must pay the fees within 10 days. You can start operating only after your business name appears on the Australian Business Register website.
Can you use the same ABN for multiple business names?
You can have as many business names as you wish and map them to your ABN. When you have multiple business names, though, there will be more administrative work to deal with.
If you are registering a new name altogether, you can also cancel the previous one for free, and keep the same ABN.
Can you use the same ABN for multiple businesses?
If you're a sole trader, you can use your ABN to run multiple businesses. For example, Peter Bell can sell masks and also provide marketing services under the same ABN.
If you're a company, you can run multiple businesses as part of a parent company and its ABN. For instance, Zylker Corp can sell fresh produce from their farms to local sellers and also develop business software under the same ABN. Though legally possible, you might face administrative risks further down the road. Consider running each business as a separate company instead.
If you're running two businesses with different structures, you'll have to register for a separate ABN for each. For instance, if the owner of your local supermarket wants to start a training institute for wrestling, they should use separate ABNs.
Protecting your business name
Registering your business name doesn't guarantee that someone else won't use it. To make sure your business name belongs only to you, consider getting a trademark on your name. Not everyone needs to trademark their name, however. It's a decision for you to make based on your industry, business type, and customer potential. If you do decide to apply for one, you can do so on the IP Australia website.
How to apply for a Tax File Number (TFN)
TFN for individuals
Anyone who earns income in Australia needs to have a Tax File Number. This is issued by the Australian Tax Office and is used to track tax payments. Your TFN is an 11-digit number that's unique to you, and you shouldn't disclose it to unauthorised entities.
The ATO categorises TFN applications for individuals based on who you are and where you live. You can apply on the ATO website. Some of the categories include:
Overseas passport holders, Australian Permanent Residents, and temporary visitors
Australian residents, including citizens
Australians living overseas, including citizens, who have income from Australian sources such as rent
If you're a freelancing individual or a sole trader, your personal TFN applies to your business activities as well.
TFN for business
In the case of your business, you can either apply for a TFN along with your ABN application, or do so separately on the Business Register webpage.
Getting these basics sorted is a big part of running your own business. The process can be confusing and even overwhelming to go about by yourself. We hope this article gave you an idea of what you need to set up before you start trading and how to go about it.