5 Top Tips for Your New Business Venture or Start-Up
Is your hobby now a business?
With the emergence of digital platforms such as Instagram and eBay, we have seen the rise of hobbies evolving into businesses.
What is it that you should know when turning your hobby or interests into a business venture?
There are many advantages and disadvantages of using different business structures commonly used by small businesses.
Careful consideration of the various structures may assist you to determine:
- The licenses you require;
- How much tax you pay;
- Your relationship to the business as an employee or owner;
- Potential liability; and
- Your control over the business.
The four main business structures commonly used by small businesses in Australia are:
- Sole trader
- Trusts; and
Careful consideration and implementation of your business structure is vital to ensure asset protection and lawful tax minimisation.
Set up an Australian Business Number (‘ABN’)
An ABN is a unique 11 digit number that identifies your business to the government and the community.
To be eligible for an ABN, you are required to be carrying on an enterprise.
Although in some instances you can run a business without an ABN, it does make running a business easier.
Without an ABN, other businesses must withhold 49% from payments they make to you for tax purposes.
Register for Goods & Services Tax (‘GST’)
GST is a broad-based tax of 10% on most goods and services sold or consumed in Australia.
In most circumstances, if your business turnover is $75,000 or more (or provides taxi travel as part of your business irrespective of annual turnover), the business may, in all but the most exceptional of circumstances, be required to register for GST.
Once registered for GST, the business will be required to collect from its clients and remit the GST to the Australian Taxation Office (ATO).
The obligation to furnish business activity statements to the ATO arises upon registration for the purposes of the GST regime.
Consider your Obligations as an Employer
Many start-ups and business ventures take off suddenly.
With the increased demand, business owners may require an extra set of hands and hire staff.
It is important to understand your obligations as an employer.
For example, you ought to provide your employees with an employment contract.
An employment contract details the employee’s role, remuneration, entitlements (such as sick leave, annual leave, and superannuation), and employer obligations.
It is important to seek advice and assistance in drafting an employment contract to ensure the most pertinent provisions have been considered and the document reflects the needs and demands of your business.
Insurance is an essential part of every business.
Your insurance requirements will vary depending on the business, structure, size, and industry.
Some forms of insurance are compulsory in Australia, such as:
- Workers compensation (if you have employees);
- Third-party personal injury insurance (if you own a motor vehicle); and
- Public liability insurance for certain types of companies.
You should consider carefully whether your business requires further insurance to minimise your risk and protect your business.
For more information, contact us at Bambrick Legal today:
You can also read more about our Business and Commercial services here.