A Complete Guide to Starting a Business in Australia

Australia's diverse economy and strong financial sector make it an attractive spot for business investment and expansion. Its stable economy and expected growth in average disposable incomes also draw many foreign entrepreneurs and companies to this side of the world.

While family-operated ventures own nearly 70% of all businesses in the country and employ more than half of its population, Australia welcomes foreign investment, as it helps provide local jobs and fuel modernization. Around 40% of Australia's total exports come from businesses with foreign investment.

Why Set Up a Business in Australia?

Let's take a closer look at the benefits of expanding your business in Australia:

A thriving economy with streamlined regulations

Through its robust industries led by minerals and fuels, agribusiness, education, tourism, and funds management, Australia currently contributes to 1.6% of the global economy. Australia also has high standards and clear procedures for corporate transparency and governance safeguards, which protect investors against fraud and corruption. Intellectual property protection covers trademarks, copyrights, patents, designs, and plant breeders' rights.

Open-minded market with strong regional ties

With the new normal pushing as many as 30% of consumers in Australia to try new brands, foreign businesses—especially those with a sustainability and health focus—are at a great advantage of introducing their products and services to the local market.

Besides being near bustling Asian economies such as Singapore, Malaysia, Indonesia, and Thailand, Australia also shares special trade relations with them and the rest of the region, including New Zealand, Japan, South Korea, and China.

Challenges

Amid Australia's conducive business environment, there are a few challenges in starting a business in the country. They include:

High costs and long permit approvals

Business visits, staff deployment, and moving goods can be expensive for the U.S., Canada, Europe, or U.K.-based business owners. Meanwhile, any shop or office construction or expansion will have to undergo as many as 11 different procedures that may take around three months. Additionally, paperwork for power and water supply may run for about two months.

Tough competition

It's critical to study the industry you'll be going into and your target market to determine the established players in the field.

Variable weather

Australia's regions have unique climates and may face extended periods of wildfires, drought, and flooding.

Steps for Establishing a Business

Visa Process

eVisitor (subclass 600) and Business Visitor (subclass 600) Visas are enough when traveling to Australia to attend a trade fair or negotiate and sign business agreements. However, non-citizens or foreigners who aren't permanent residents need a work visa to sell or deliver products and services to consumers.

The Department of Home Affairs (DHA) gives the following steps to securing such a visa:

- Go to the DHA's SkillSelect website to create and submit an expression of interest (EOI).

- Submit your EOI letter to a state or territory government or the Australian Trade and Investment Commission to request a nomination or invitation to apply for a visa. You should determine which state or territory you'll request your nomination for this step. Afterward, contact the appropriate office to know their requirements and process.

- Once you receive an invitation, you can apply for a visa.

Visa Options

There are several types of visas that non-citizens can apply for. The processing time ranges from 30 to 36 months. The DHA recommends getting advice from a registered migration agent to help you determine the type of visa you need. Here are your options:

- Business innovation and investment (provisional) visa (subclass 188)

All provisional visas under subclass 188 are valid for up to five years except the Premium Investor stream visa, valid for only four years and three months. Some of the other requirements include:

You should be aged 54 and younger. The state or territorial government may only consider accepting those aged 55 and above if the business is deemed exceptional economic benefit.
You should get a score of at least 65 in the points test, which gives points based on your business qualification, experience, turnover, innovation, special endorsement, and English language ability.

You should meet health and character requirements.

- Business innovation stream

You and/or your partner should have total net business and personal assets of at least A$1.25 million. You can extend your stay in the country for two more years by applying for the Business Innovation Extension stream.

- Investor stream

(at least A$2.5 million to live for at least two years in the state or territory where you made an investment application)

- Significant investor stream

(at least A$5 million; extendable by up to four years under the Significant Investor Extension stream)

- Premium investor stream

(at least A$15 million with charitable contributions)

- Entrepreneur stream

(should have a funding agreement with a third party)

- Business innovation and investment (permanent) visa (subclass 888)

You can apply for permanent status if you're able to sustain your investment level since being granted your provisional business visa and comply with residence requirements.

- Business owner visa (subclass 890)

There's no age limit for this visa, and those who successfully secure it can travel to and from Australia for five years.

The Aussie government grants this permanent visa to those who have held the following provisional visas: business owner (160), senior executive (161), investor (162), or state/territory sponsored visas (163, 164, and 165).

The business owner visa requires you to have met assets and employment requirements. Moreover, applicants should have stayed in Australia for at least a year (doesn't need to be continuous) within the past two years before applying for this visa type.

- Business talent visa (subclass 132)

Another permanent visa, the business talent visa, falls under two streams:

1. Significant business history stream

Australia grants this visa to business individuals with a net value of at least A$1.5 million and a yearly business turnover of at least A$3 million.

2. Venture capital entrepreneur stream

This visa goes to business individuals who have received venture capital funding of at least A$1 million from an Australian Investment Council member.

Choosing the Right Business Structure

Before getting a business visa, it's best to decide on the proper legal structure for your business. Consider your organization's size, goals, company culture, and Australian laws when selecting a business structure. Your choice will affect the type of tax to be paid, licenses to obtain, as well as personal liabilities. You can eventually change your structure as your business grows.

When setting up a business in Australia, you can pick from these four main structures:

Sole proprietorship

When you're a sole trader, you're the boss. You have complete control of your assets and business decisions. But you'll also be responsible for debts, losses, and lawsuits. You're personally liable to pay the tax on all your income. When making tax payments, you can use your individual tax file number (TFN).

As long as you'll only use your name (not a business name) when dealing with your customers, you don't need to register with the Australian Securities and Investments Commission (ASIC).

You may start as self-employed and later hire staff. However, sole traders still have to fulfill Australian workers' insurance and superannuation requirements.

Partnership

Partners share management, control, income, and losses of a business. Partnerships need separate TFNs and should file a partnership tax return with the Australian Taxation Office annually. They must apply for an Australian business number for their business dealings. They also have to pay goods and services tax (GST) if their annual turnover is A$75,000 and above.

Company

Companies have to register with ASIC, becoming a separate legal entity from the original business owner. They have at least one shareholder who owns the business, and one director, who manages it. Australia's Corporations Act lists legal obligations that company officers should fulfill. That law says that at least one director should be an Australian resident.

Companies must pay the company tax rate and submit annual company tax returns. They also need to keep tax (at least five years) and financial (at least seven years) records.

They have worker insurance and super obligations like sole proprietors. And just like partnerships, companies who reach turnovers worth A$75,000 and higher also need to pay GST.

Trust

In this business structure, a trustee—either an individual or a company—manages various property types such as real estate, stocks, and other personal assets on behalf of beneficiaries. The trustee is also responsible for distributing business income and profits to beneficiaries, who then individually file taxes.

The Australian government's Business Registration – Help Me Decide webpage can help you determine the right structure for your business.

Furthermore, you can run your business in the form of an e-commerce store, a franchise, or a contract-based business.

Business Number Application and Business Name Registration

The Business Registration Service (BRS) has a dedicated "Select your registrations" page where you can apply for an Australian Business Number (ABN) and register your business name at the same time.

All business types need a unique 11-digit ABN for tax purposes. You'll also need to acquire your website's unique .com.au domain name.

Another way to register your business name is through ASIC Connect. Registering your name won't automatically give you exclusive ownership of it. To prevent other people from registering using your business name or something related to it, you must register it as a trademark with IP Australia.

To verify whether your preferred name hasn't been used or trademarked yet, you can use the Business Name Check tool of the BRS or ASIC Connect's Check Name Availability page.

Securing Your Company's Certificate of Registration

If you're going to operate a company, it's necessary to register it with ASIC. You can do this by placing a check mark on the box before "Australian Company and Company Name" on the Select Your Registrations webpage of the BRS.

You'll need to submit several documents to complete your registration:

Filled-out Form 402, which is the Application for Registration as a Foreign Company
Certified copy of the entity's certificate of incorporation
Certified copy of the entity's constitution
Filled-out Form 418 or the memorandum of appointment of local agent
Memorandum of the powers designated to particular directors

Once the agency finishes processing your application, you'll get an Australian Company Number, which you can present when applying for an ABN.

Registering a Business Website

To set up a business website with an Australia-based extension (.au), you need to register your domain name with a registrar or reseller accredited by the .au Domain Administration Ltd. (auDA), the administrator of Australia's .au top-level domain.

About registering your .au domain name:

Choose a unique name that represents your brand or business. Short names that are easy to spell will help the public recall your brand more easily.
Check if your preferred domain name is available or already used by another business. The com.au domain is dedicated to commercial businesses. The new .au domain will be launched soon.
You'll need an ABN if you want to register a com.au or net.au website address.
Find domain providers. The auDA website offers a list of accredited registrars and resellers.
Note the expiration date of your domain name, and renew before that date to protect it against cybercriminals. You can further protect your domain name from people who may want to use it to name their own business by applying and registering an Australian trademark for it.

Determining Your Business Location

Unless you're a sole trader, you must have a primary business address. Consider the following when selecting your location:

Affordability (whether you'll lease or acquire property)
Availability of infrastructure and utilities that your business needs
The proximity of your suppliers and distributors (which can lessen freight costs and delivery times)
Research-backed support for the product or service you provide
Accessibility to customers and suppliers
Presence of other businesses that complement what you have to offer
Signs of growth potential in various entrepreneurial ventures
Low crime rate

It's advisable to seek professional legal advice about the future premises of your business. You can determine necessary approvals and proper assessment of its prior use and possible contamination through expert advice.

Tax Reporting and Payments

Regardless of the type of business, you're starting; you need to have a TFN, as every kind of business has certain taxes to pay. The business structure section mentions that this includes income tax and GST.

If you hired staff and contractors for your business, you also need to register for and pay the following with the Australian Taxation Office:

Withholding tax from their pay helps your staff meet their year-end tax obligations.
Payroll tax – which depends on the rate set by the state or territorial government and the monthly salary you pay your employee.
Fringe benefits tax – which can include using a work vehicle or health insurance.

If you register your business as a company, you'll have to pay company tax, which depends on the type of industry you belong to.

You or your tax agent can report employee-related tax payments through ATO's Single Touch Payroll system. Online channels are also available for submitting your business activity statements.

Meanwhile, you have various payment options, including via credit and debit card or bank transfer.

By Rick Crandon