Starting a new business is a dream come true for many aspiring entrepreneurs.
Being your own boss offers the potential for financial freedom and increased earning potential. However, it's important to keep in mind that the rewards of owning a business come with their own set of challenges.
In addition to the daily management of the business, there are also certain requirements that must be met in order to successfully launch your venture.
If you’re starting a business in 2023, here’s your eight-step guide to make sure you’re setting up a foundation for success.
Pick a business that is in line with your passion
When considering what type of business to start, it's important to align your choice with your passions and expertise.
For instance, if you are a skilled baker, you may have various options, such as operating as an independent contractor, launching an online business, or becoming a franchisee.
Keep in mind that each industry and business structure comes with its own set of legal and regulatory requirements. Before deciding on a business structure, make sure you have a clear understanding of the type of business you want to venture into.
Choose your business structure
In Australia, there are four main structures to choose from when building a business: a sole trader, company, partnership, and trust.
As a sole trader, you will be solely responsible for all legal and financial aspects of the business, including profits and losses. Alternatively, a company is a legal entity that is separate to you, but will likely require greater set-up costs and paperwork. A partnership involves multiple individuals managing the business together and sharing financial responsibility, whilst a trust holds properties, sources of income, or other assets for the benefit of a third party.
It's important to keep in mind that the structure you choose for your business will greatly impact the taxes, paperwork, and finances involved. To make an informed decision, it is best to seek expert advice from a business accounting expert. Additionally, if you are unsure which structure is best for you, watch our podcast episode on sole traders, trusts, and companies before making your decision.
Apply for an Australian Business Number (ABN) and register your business name
Starting a new business in Australia requires certain legal steps to be taken in order to ensure the smooth functioning of your business.
One of the most important steps is obtaining an Australian Business Number (ABN). This unique identification number serves as a way to identify your business and is an essential aspect of the registration process. It is important to note that obtaining an ABN should be done simultaneously with registering your business name. This allows you to ensure that the name you choose is not already taken and is legally protected.
When developing your brand, it's crucial to prioritise addressing the legal aspects of your business first. Registering your business name and obtaining an ABN before moving on to creating a logo and website will save you from the hassle of having to change your branding materials later due to issues with the legal registration of your business.
Find the ideal business location
The location of your business plays a crucial role in determining its success.
As you select a location, consider whether it is the appropriate setting for your business operations. For instance, businesses that operate exclusively online will have different location needs than those that sell directly to customers.
Furthermore, the location should align with the product or service you offer. Factors such as visibility, costs, demographics and competition will play an enormous role in the ultimate success and performance of your business.
Identify your initial funding source
The biggest reason behind small business failures is poor cash flow management.
Positive cash flow is essential for a new business to sustain itself, so it is important for new business owners to be aware of potential sources of funding in the early stages of their venture.
Carefully plan your funding and cash flow strategies with your accountant to help protect and prepare yourself from financial challenges in the future.
In Australia, there are various resources available to new businesses, including cash grants to support growth during the initial phase. Keeping an eye on these resources can help ensure your business has the financial support it needs to succeed.
Build your website
Having a functioning website is an essential aspect of running a business in today's digital age.
In the past, building a website was a costly and time-consuming process that required some level of technical expertise. However, with the availability of user-friendly website-building platforms, even those with limited technical knowledge can create a professional-looking website for their business needs.
When building your website, be sure to secure your desired domain name, include all necessary information, and consider implementing basic SEO strategies to increase your online visibility.
Register for the correct taxes
In Australia, you need to register for the appropriate taxes to avoid legal repercussions.
The taxes you must register will depend on the type of business you are starting. GST, company tax and payroll tax are among the most common types of business taxes and are essential to stay on top of. It is important to familiarise yourself with the taxes that apply to your specific business and register accordingly.
To find out more about the different types of business tax in Australia, you can check our complete list of business taxes here.