Starting a business in Australia is easier than most people think but only if you do the steps in the right order. This guide walks you through the full setup process, including ABN, business name, GST, payroll, and compliance so you can launch confidently and avoid ATO or ASIC problems later.
Your Startup Checklist
- Choose the right structure first: Deciding between a sole trader vs a company has major tax and liability implications.
- Register an ABN: Apply for your Australian Business Number through the Australian Business Register (ABR) – it’s free.
- Register a business name: If you’re not trading under your own legal name or exact company name, you must register a business name with ASIC.
- Register for GST: It’s mandatory if your annual turnover will be $75,000 or more, but you can register earlier if it’s beneficial.
- Set up bookkeeping and payroll: Get your accounting software and payroll systems correct before you send your first invoice or hire your first employee.
- Get licences and insurance: Check your state and industry requirements to ensure you are legally allowed to operate.
How to open a business in Australia
To open a business in Australia step by step, you typically choose a business structure, register for an ABN, register a business name (if needed), set up tax registrations like GST and PAYG withholding, open a business bank account, and set up bookkeeping and payroll. Requirements vary by industry and state, check current ABR, ATO and ASIC guidance.
Knowing how to start a business in Australia is about following the correct order of operations. Getting the compliance steps right from the start saves you from expensive fixes and administrative headaches later. You can do many registrations yourself (like an ABN), but getting professional advice on your business structure is the single most valuable investment you can make at this stage.
Before you register, choose your business structure
Before you apply for a single registration, you must decide on your business structure. This choice is critical as it directly impacts your tax obligations, personal liability, ability to get loans, and administrative workload. Getting advice early can save you thousands in tax and restructuring costs down the line.
Sole trader
This is the cheapest and fastest way to start. As a sole trader, you and the business are a single legal entity. This means you have full control, but also unlimited personal liability, your personal assets are at risk if the business incurs debt. Tax is simple: you report business income on your personal tax return and pay tax at your marginal rate.
Partnership
A partnership involves two or more people or entities running a business together. It’s relatively easy to set up, but a formal partnership agreement is essential to define roles, profit splits, and exit strategies. Like sole traders, partners typically have unlimited liability for business debts.
Company (Pty Ltd)
Registering a proprietary limited (Pty Ltd) company with ASIC creates a separate legal entity. This structure offers better asset separation, as the company is responsible for its own debts. However, it comes with higher setup costs and ongoing compliance obligations, including director duties. A company pays tax at the corporate tax rate, which can be advantageous.
Trust
A trust is a more complex structure where a trustee manages assets or income for the benefit of others (beneficiaries). It’s primarily used for asset protection and flexible tax distributions. Trusts have significant compliance requirements and should only be set up with professional guidance.
| Structure | Setup cost | Tax | Liability | Best for |
|---|---|---|---|---|
| Sole Trader | Low (Free ABN) | Personal income tax rates | Unlimited personal liability | Freelancers, contractors, and solo operators just starting. |
| Partnership | Low-Medium | Partners pay tax on their share of profit | Unlimited personal liability for partners | Businesses with multiple owners who have a strong partnership agreement. |
| Company | Medium (ASIC fee) | Fixed corporate tax rate | Limited liability (protects personal assets) | Businesses planning to grow, seek investment, or requiring asset protection. |
| Trust | High | Flexible income distribution to beneficiaries | Limited liability for trustee (if a company) | Asset protection, family businesses, and complex investment holdings. |
How to open a business in Australia
This is the core business registration Australia step by step process. Following these steps in order ensures you build a compliant and scalable foundation.
- Confirm your business structure and ownership details.
- Choose a business name and check its availability on ASIC and as a domain name.
- Apply for your ABN (and a TFN for a company/trust) through the ABR.
- Register your business name with ASIC if you’re not trading under your legal name.
- Apply for a Director ID via ABRS if you are setting up a company.
- Register for GST and other taxes like PAYG withholding with the ATO.
- Open a separate business bank account.
- Set up your accounting software (e.g., Xero or QuickBooks).
- Establish invoicing, quoting, and record-keeping systems.
- Set up payroll, superannuation, and Fair Work compliance if you plan on hiring staff.
- Obtain necessary business licences, permits, and insurance.
- Prepare your BAS and tax lodgement systems and schedule.
Register your ABN and TFN
The Australian Business Number (ABN) is your unique 11-digit identifier for all business dealings. An ABN is required if you are ‘carrying on an enterprise’ in Australia. The ABN registration step by step process is done through the Australian Business Register (ABR), and it is free to apply.
If you are setting up a company or a trust, you will also apply for a unique Tax File Number (TFN) for the business entity as part of this process. Check current ABR guidance before applying.
Register a business name (ASIC) and secure your domain (auDA)
If you trade under a name that isn’t your own legal name (for a sole trader) or the exact legal name of your company, you must register a business name with the Australian Securities and Investments Commission (ASIC). This is not the same as a trademark, which protects your brand.
Simultaneously, you should secure your online presence by registering a .com.au domain name. Be aware that .au domain registrations have eligibility rules managed by auDA. For brand protection, also consider registering a trademark with IP Australia.
| Registration | Regulator | Purpose |
|---|---|---|
| ABN | ABR / ABRS | Unique business identifier for tax and other purposes. |
| Business Name | ASIC | Your public trading name. |
| Domain Name | auDA | Your online website address. |
| Trademark | IP Australia | Legal protection for your brand (name, logo). |
Register for GST, PAYG withholding and other ATO obligations
You must register for Goods and Services Tax (GST) if your current or projected annual turnover is $75,000 or more. You can also register voluntarily if your turnover is below this threshold, which allows you to claim GST credits on business purchases.
If you plan to hire employees, you must also complete your PAYG withholding registration. This system requires you to withhold tax from employee wages and remit it to the Australian Taxation Office (ATO). Later, you may also need to pay Pay As You Go (PAYG) instalments towards your own income tax. Check current ATO guidance for thresholds and obligations.
Set up business banking, invoicing and bookkeeping
Keeping your business and personal finances separate is non-negotiable. Open a dedicated business bank account as soon as your ABN is active. This is crucial for clean record-keeping and meeting ATO requirements.
Set up an accounting system like Xero or QuickBooks from day one. Connect your bank feeds to automatically import transactions, and use receipt capture apps to digitise paperwork. Ensure your tax invoices meet ATO requirements and that you are coding transactions correctly for your Business Activity Statement (BAS). The ATO requires you to keep business records for a minimum of five years.
Hiring staff: Fair Work, super and payroll compliance
Hiring your first employee introduces significant compliance responsibilities. You must adhere to the modern awards and minimum pay rates set by the Fair Work Ombudsman.
You are also required to pay the Superannuation Guarantee (the minimum percentage of an employee’s earnings) into their nominated super fund. All payroll must be reported to the ATO via Single Touch Payroll (STP) with each pay run. Finally, you must take out workers’ compensation insurance, which is managed by state-based regulators. Check current Fair Work guidance on pay rates and entitlements before hiring.
Licences, permits, and insurance
Your industry and location determine the specific business licence requirements Australia has for you. Some businesses, like food service, construction trades, or professional services (e.g., financial advice), require specific licences, permits, or registrations to operate legally. Local councils often have their own rules. The business.gov.au licence and permit tool is an excellent starting point.
Insurance is also critical. Key policies to consider include:
- Public Liability Insurance: Protects against third-party injury or property damage.
- Professional Indemnity Insurance: Covers claims of negligence or bad advice.
- Workers’ Compensation Insurance: Mandatory if you have employees.
- Business Interruption Insurance: Covers loss of income after a disaster.
Your first 90 days – BAS, tax and compliance checklist
Your first three months set the tone for your business’s financial health. Focus on establishing strong compliance habits.
- BAS Due Dates: Diarise your BAS lodgement and payment dates.
- Record-Keeping: Regularly update your bookkeeping and reconcile your bank accounts.
- Tax Planning: Set aside funds for upcoming GST, PAYG, and income tax liabilities.
- Cash Flow Management: Monitor your income and expenses closely to ensure you remain solvent.
- Payroll Lodgements: Ensure your STP reporting is completed with every pay run.
- Super Payments: Pay employee superannuation contributions on time (at least quarterly) to avoid penalties.
Worked example (AU scenario)
Let’s imagine you’re starting a new cleaning business, “Sparkle Clean Services.”
- Structure: You choose to be a sole trader for simplicity and low cost.
- Registration: You register for an ABN and also register the business name “Sparkle Clean Services” with ASIC.
- GST: You project your first-year turnover will be $85,000, which is over the $75,000 threshold, so you must register for GST from the start.
- Hiring: You hire a casual employee. This requires you to register for PAYG withholding, set up STP reporting, and start paying the super guarantee. You also take out workers’ compensation insurance.
| Timeline | Action |
|---|---|
| Week 1 | Decide on sole trader structure. Register for ABN and business name. |
| Week 2 | Open business bank account. Set up Xero. Register for GST. |
| Week 4 | Hire a casual employee. Register for PAYG Withholding and set up payroll. |
| Quarter 1 | Lodge first BAS. Pay employee super contribution. |
Common mistakes & quick fixes
- Mistake: Registering a business name before choosing a structure.
- Quick Fix: Decide on your structure first. Your structure dictates which registrations you need and how you should hold the business name.
- Mistake: Using a personal bank account for business transactions.
- Quick Fix: Open a separate business bank account immediately after getting your ABN. Keep finances strictly separate.
- Mistake: Missing the GST registration threshold.
- Quick Fix: Use your accounting software to set up turnover tracking and alerts so you can register as soon as you approach the $75,000 threshold.
- Mistake: Not registering for PAYG withholding before hiring an employee.
- Quick Fix: Register for PAYG withholding with the ATO before your first pay run. You cannot legally pay an employee without it.
- Mistake: Not checking for required licences and permits.
- Quick Fix: Use the business.gov.au licence finder tool before you start trading to ensure you are operating legally.
- Mistake: Having no bookkeeping system from day one.
- Quick Fix: Set up Xero or QuickBooks from the beginning. It makes BAS, tax time, and financial management infinitely easier.
Startup checklist
- Choose business structure (Sole Trader, Company, etc.)
- Apply for ABN (and TFN for company/trust)
- Register business name with ASIC (if needed)
- Apply for Director ID (if registering a company)
- Register for GST (if turnover is $75k+ or desired)
- Register for PAYG Withholding (if hiring staff)
- Open a dedicated business bank account
- Set up accounting software (Xero, QuickBooks)
- Set up payroll and superannuation clearing house
- Obtain required industry licences and permits
- Arrange necessary business insurance
- Set up a system for BAS and tax lodgements
FAQs
How much does it cost to start a business in Australia?
Costs vary. ABN registration is free for a sole trader, while registering a company with ASIC costs approximately $576 (check current fees). You must also budget for business name registration (from $39/year), insurance, software, and professional advice.
Do I need an ABN to start a business?
Yes. If you are ‘carrying on an enterprise’ in Australia, you need an Australian Business Number (ABN). It’s essential for invoicing, claiming tax credits, and interacting with other businesses and government agencies.
What is the difference between ABN and ASIC registration?
An ABN is a unique identifier for tax and business purposes issued by the ABR. ASIC registration relates to your legal entity, such as registering a company (Pty Ltd) or a business name you trade under.
Do I need to register for GST under $75,000?
No, it’s not mandatory. GST registration is only compulsory once your annual business turnover is $75,000 or more. However, you can register voluntarily to claim GST credits on your purchases.
Can I run a business from home in Australia?
Yes, many businesses operate from home. However, you should check with your local council for any restrictions, especially if you have customers visiting, are producing goods, or want to put up signage.
Do I need a business bank account?
For companies, it is mandatory. For sole traders, it is not legally required but highly recommended to keep your finances organised, simplify tax time, and maintain a professional image.
How do I register a company in Australia?
Company registration is done through ASIC. It involves choosing a name, appointing directors (who must have a Director ID), and lodging an application. Most people use an agent like an accountant to ensure it’s done correctly.
What is a director ID and who needs one?
A director ID is a unique lifetime identifier for any person who is a director of a company. You must apply for your director ID with the Australian Business Registry Services (ABRS) before being appointed.
What licences do I need to start a business?
This depends entirely on your industry and location. Trades, food services, childcare, and financial services are examples of industries with specific licensing requirements. Use the business.gov.au tool to check your obligations.
When do I need to start lodging BAS?
Once you are registered for GST, you will need to lodge a Business Activity Statement (BAS), usually quarterly. The ATO will notify you of your reporting cycle and due dates upon registration.
Starting a business correctly is about following the right steps in the right order. Your business structure affects everything, and a compliance-first approach at setup will save you from expensive fixes and stressful audits in the future.
For expert guidance tailored to your new venture, book a consult with Nanak Accountants & Associates. Call us today on 1300 NANAK TAX (626 258) or visit our website to get in touch.
Disclaimer: This article provides general information only for Australia. It doesn’t consider your objectives, financial situation or needs. Rules, thresholds and fees change, check current ATO/ASIC/ABR/Fair Work/auDA guidance and seek professional advice before acting.
