Business Registration and Licensing Regulations

An ABN is a unique 11 digit number that identifies your business to the government and community. Registering for an ABN through the Australian Government’s Business Registration Service is free. You can use an ABN to;

• identify your business to others when ordering and invoicing.

• avoid pay as you go (PAYG) tax on payments you get.

• claim goods and services tax (GST) credits.

• claim energy grants credits.

• get an Australian domain name.

For more information on ABN, refer to Australian Business Number.

Before you can apply for a business name, you are required to have an ABN or an ABN application number. Business name, also known as a trading name, is simply a name or title under which a person, or other legal entity, trades. Your business name not only identifies you to your customers, but also allows you to differentiate yourself from your competitors and enables your customers to make an emotional connection to your business and brand. For many businesses, the name is often the most valuable asset.

To register a business name;

• Decide on a name that's right for your business.

• See if the business name you want is available through the check name availability search on the ASIC website.

• Register for your business name online.

• There are fees applicable for registering, renewing, and transferring business names.

• You can choose to register a business name for one or three years. 

You can't register a business name that is identical or too similar to a business name registered to another Australian business or company. However, a business name does not give you legal rights to that name. This means that if someone else uses your business name for their business, you don't have any rights to stop them.

For more information on registering a Business name, select how to register a business name.

For more information on the topic of Business name, select what is a business name.

If you already have an ABN, you can apply for tax registration.

Applicable taxes could be;

• Goods And Services Tax - GST.

• Pay As You Go Withholding - PAYG.

• Fringe Benefits Tax - FBT.

• Fuel Tax Credits - FTC.

• other taxes are Luxury car tax (LCT), an Wine equalisation tax (WET).

Not sure what registrations are applicable to you? Refer to help me decide.

When you register a company, you are creating an entity that has its own legal obligations. As an officeholder, you need to be aware of anything that is required of you under the law. Before starting a company, you also need to consider the structure of your company and how it will operate.

For more information on preparing to register a company, refer to the checklist for registering a company.

Follow these steps to register a company.

A company is a separate legal entity. This means it has the same rights as a natural person and can incur debt, sue and be sued.

The company’s owners (called ‘members’ or ‘shareholders’) can limit their personal liability and are generally not liable for company debts (unless they give personal guarantees to borrow money).

Companies are taxed at a different rate. A company pays income tax on its assessable income (profits) at the company tax rate, which is currently 30%.

You must lodge a separate company income tax return.

A company is a complex business structure, with higher set-up and administrative costs.

Companies must be registered with ASIC.

Company officeholders have legal obligations under the Corporations Act.

A director of a company has additional legal and reporting obligations.

Find more information at starting a company.

Cooperatives let you pool your resources with other operators in your industry.

A cooperative belongs to its members, and it operates for their benefit.

The members will share: the investment and operational risks all the benefits any losses.

A cooperative has the legal status of an individual. It may sue—or be sued—in its corporate name. This protects the members from being personally liable for most legal issues. A member will only need to pay for: their shares any charges listed in the rules.

Cooperatives work under the following 7 principles;

1. Anyone can become a member.
2. Each member has 1 vote.
3. They divide profits among their members, based on how active each member is within the cooperative.
4. They are run by and for their members.
5. They give education and training to members, their representatives, managers and employees.
6. They maintain local, state, national and international networks for members.
7. They help to uphold the sustainable development of their communities.

Find more information at cooperatives.

Corporations are a type of company, but much larger.

The corporate structure is applicable when a company is listed on the open market and becomes publicly traded, allowing far greater numbers of shareholders.

The regulation is more stringent. Corporations face more scrutiny to ensure compliance.

Its more likely that a corporation would trade or have a registered presence globally.

The management structure will most likely involve a board of directors.

The Corporate Tax Rate in Australia stands at 30 percent (as at 2020).

It's principal function is to engage in commercial activities in the private sector.

It is controlled by government.

It has an independent legal existence from government.

Governed the same as any company or corporation in Australia.

It has boards that are accountable to shareholders for GBE performance, and shareholders that are accountable to Parliament and the public.

A partnership is a type of structure where two or more people start a business and can legally share profits, risks and losses according to terms set out in a partnership agreement.

You must lodge a separate partnership income tax return, but the partnership doesn't pay tax. Instead, each partner pays tax on their share of net partnership income according to the individual tax rates. PAYG instalments paid by partners are credited against their personal income tax assessments.

In a partnership, control or management of the business is shared.

A partnership is not a separate legal entity so you and your partners are liable for all debts and obligations of the business.

A formal partnership agreement is common, but not essential. But to ensure that all partners have a clear understanding of their rights, responsibilities and obligations, a written partnership agreement is vital.

A partnership is a common and relatively simple, informal and inexpensive way to set up or structure a business. It involves 2 or more co-owners participating together in a business.

A partnership also requires an intention to make and share profits and an understanding that these co-owners act on behalf of each other in business.

The Partnership Act 1891 sets out various rules for partnerships. This act places joint liability on all partners for the business's debts and obligations incurred during their involvement in the partnership.

Partners are obligated to keep their co-owners properly informed.

To establish a partnership, you may need: Australian Business Number business name registration trademark registration limited partnership formation (only if you have a silent partner).

Find more information at partnership.

A joint venture is two or more people or entities who join to do business together for a particular purpose, usually a single project, rather than as an ongoing business. A joint venture will often have a joint venture agreement.

Do you want your small business to operate as a nonprofit or for-profit? Start by asking yourself about your goals for your business. Is your main to make money? Then you should start a for-profit business, as most businesses are. But if you want your business to donate profits and services to the public, consider starting a nonprofit business.

Nonprofit businesses typically have a detailed purpose that focuses on benefiting society rather than making money for owners or stockholders. Unlike for-profit businesses, nonprofit companies do not share any profits with owners or shareholders.

A not-for-profit (NFP) organisation is an entity that is operating for its purpose and not for the profit or gain (either direct or indirect) of its individual members.. NFP organisations (including charities) operate in many areas of society.

Some NFP examples are; churches and church schools, community child care centres, cultural organisations, environmental protection organisations, neighbourhood associations, public museums and libraries, scholarship funds, scientific organisations, scouts, sports clubs, and surf lifesaving clubs etc.

Find more information at Starting an NFP.

A sole trader is a type of structure where the business has no separate legal existence from its owner.

As a sole trader, you’ll be responsible for the liabilities of your business. If you operate as a sole trader, you're responsible for all aspects of the business, including any debts the business incurs and there are no limits on this liability.

You need to report your business income on your personal income tax return, along with any other income. A sole trader is the simplest business structure and it is inexpensive to set up because there are few legal and tax formalities.

Sole traders declare their business income (or loss) in their personal income tax returns and pay tax at individual tax rates. When the ATO receive an income tax return for a sole trader, partnership or company they advise the business owners if they are to pay PAYG instalments. Instalments paid are credited against the income tax assessment raised after you lodge your income tax return at the end of the financial year.

You do not need to register the business with ASIC unless you are conducting business under a name other than your personal name.

Find more information at  ATO Sole trader.

A trust is a relationship where a business is transferred to a third party who has legal control and has a duty to run that business to benefit someone else.

A trust is an obligation imposed on a person (a trustee) to hold property, income, or assets (such as business assets) for the benefit of others, known as beneficiaries.

A trust will have no tax liability where the whole of the net trust income is distributed to adult resident beneficiaries. Each beneficiary pays tax on their share of net trust income according to the individual tax rates.

You must lodge a separate trust income tax return.

If you want to set up a trust, keep in mind that trust structures; can be expensive to set-up and operate, require a formal trust deed that outlines how the trust operates, and require the trustee to undertake formal yearly administrative tasks.

If you operate your business as a trust, the trustee is legally responsible for its operations. A trustee of a trust can be a company, providing some asset protection.

Find more information at ATO Choosing-your-business-structure/trust.