In the wise words of Harriet Tubman, “every great dream begins with a dreamer”.

Starting your own business can feel like a daunting dream, especially when you don’t know where to begin.

As someone who recently went through this process, I would love to share with fellow dreamers a few important things I learnt along the way.

‍1. Implement the right structure for your business

When setting up your business, you want to ensure you implement the most appropriate legal structure. For example, you can operate as a sole trader, partnership (if there’s two or more owners), trust or company.  

Whilst getting the structure right from the beginning is important, there are ways to re-structure at a later stage when your business matures. However, this can have adverse tax implications.

Each structure has its own advantages and disadvantages so it’s important to choose the most effective structure for your circumstances.

There are a few factors to consider, including:

• The tax consequences of each legal structure – some structures can be more tax effective than others. For example, a company pays tax at the corporate tax rate (which is capped at 30% or 25% if you’re considered a Base Rate Entity). However, a sole trader pays tax at the personal income tax rates which can be as high as 47% if your business is super successful.

• Reducing your personal liability – as the business owner, you want to safeguard the assets you own personally by ensuring the structure limits your personal liability and provides asset protection. Some structures do this better than others. For example, a company is considered a separate legal entity and therefore your liability as a shareholder will be limited.

• The costs of establishment and ongoing maintenance – complex structures that involve companies and trusts can be more costly to set up and maintain. They also require additional accounting and tax compliance.

2. Secure your company name and website domain

This was a lesson I learnt the hard way.

The name of your business is important, as it forms the foundation of your brand identity.

There are two types of names you should consider. The first is the legal name and the second is the business name (i.e. the trading name). It’s not mandatory to have a business name, but let’s look at two examples of when you might wish to register for one.

• Example 1: Jane Smith wants to operate her dessert business as a sole trader. The legal name of her business will be her birth given name. When she sells her desserts, she wants her customers to identify her products under a different brand name. She decides to register for a business name under Jane’sSweet Treats. This is the name that consumers will identify as her business.  

• Example 2: Jane’s business outgrows the sole trader operating structure. She decides to re-structure her business into a company. The legal name of her company is Good Bakery Pty Ltd. However, as she has built her brand under the name Jane's Sweet Treats, she decides to transfer this business name to her new company.

Any business name or company name will need to be registered with the Australian Securities and Investments Commission (ASIC). The name must be unique and not similar to existing company or business names. You can check the availability of your desired name through the link below.

https://asic.gov.au/online-services/search-asic-s-registers/companies-and-organisations/check-name-availability/

If you later decide to change your company or business name, you can do so through ASIC. You’re not stuck with the name forever. However, processing this change does have a fee attached to it.

Once you’re comfortable that your name is available, you can go one step further and secure the domain name for your website. Ideally, you want to create consistency across your business name and domain name.

Personal reflection: don’t make the same mistake I did. I waited too long to secure the domain name until I found out someone else had purchased it before me. It is true that the early bird catches the worm! My mistake worked out for the better as the original business name I had selected was uncreative and boring (I’m quite embarrassed just thinking about it). This experience reminded me that God always has a way of working things out for our good!

You can check the availability of domain names through GoDaddy in the link below.

‍https://www.godaddy.com/en-au/domains

‍3. Design your logo  

Before you start designing your website, you should first settle on the branding for your business. This will guide the theme for your website, such as the colours and aesthetic.

Unless you’re a gifted artist, it would be wise to hire a graphic designer to design your logo for you.

Once you have your logo, you can go one step further and legally protect it by registering a trademark through IP Australia. The trademark will protect your logo from unauthorised use by others.

Although you might not be thinking about this right away, keep in mind that the trademark application can take 4 months to be processed. Yes, you read that correctly, 4 months!

This would be wise especially if you’re going to invest in marketing your logo and brand.

You can apply for a trademark yourself or hire an IP lawyer to prepare and submit the application for you.

https://www.ipaustralia.gov.au/trade-marks/how-to-apply-for-a-trade-mark

4. Secure your social media handles

You're probably thinking about marketing your business through social media or wanting to create an online presence for your business. Although you might not start working on this during the setup stage, you can plan ahead and secure the handles (@) as they can be hard to come across.

Consider the platforms where you can best reach your target customers. Some of the most popular social media are Twitter (which is now called X), Instagram, Facebook, TikTok, LinkedIn and so on.

To create a consistent social brand, you want to ideally secure the same/similar handles on each platform. This can feel like an impossible task, but it’s a good thing there are tools out there that help you check the availability across all platforms. Check out the link below.

https://brandsnag.com/social-media-handle-checker

‍5. Tax and accounting compliance

Last but not least, my favourite part. You will need to make sure your business stays compliant with the various state and federal taxes that are applicable.

Tax compliance

The most common types of taxes are:

• Income tax – this is a federal tax that is payable on the business’s earnings. Once the business has registered for a Tax File Number (TFN), it will be required to prepare and lodge an annual Income Tax Return with the Australian Tax Office (ATO). The Australian income tax period starts on 1 July and ends on 30 June. The typical lodgement date for most businesses is 15 May in the following income year. However, this date may be earlier for businesses that are larger and have higher turnover.

• Goods and Services Tax (GST) – GST is a 10% tax applied on taxable supplies consumed in Australia. It is paid by the end consumer, but as a business, you may need to collect and remit GST to the ATO. If you are a for-profit entity, you are required to register for GST if your GST turnover is (or forecasted to be) $75,000 or more. You may wish to also voluntarily register for GST even if you are below this threshold as you may be entitled to claim GST credits on eligible business expenses.

• Pay-As-You-Go Withholding (PAYGW) – if your business has employees or certain types of contractors, it will need to remit PAYGW on their wages. This tax is taken from the employee’s gross wages whereby the business only pays wages net of tax to staff. The business is essentially pre-paying tax on behalf of its employees so that staff don’t have a large tax bill come tax time. The frequency of this tax will depend on the amount of PAYG that you need to withhold. If the business is withholding less than $25,000 per year, then it can remit PAYGW quarterly. If withholding above $25,000, it will need to remit PAYGW monthly. Additionally, there are Single Touch Payroll reporting requirements that need to be submitted each time the business pays staff.

Remaining tax compliant is important, as late lodgement of taxes can lead to penalties and interest charges being imposed by the ATO. It also impacts your risk rating with the ATO.

Accounting compliance

All of the above-mentioned taxes rely on well prepared and timely accounting records. Regular bookkeeping will allow for relevant accounting information to be available. This information will also aid your understanding of the performance of the business.

There are specific rules under the Corporations Act for reporting obligations of small and large businesses. A small proprietary company can generally prepare Special Purpose Financial Statements which can be tailored to meet the needs of the business stakeholders. Whereas larger companies typically need to prepare General Purpose Financial Statements (GPFS) which comply with accounting standards. Further, these GPFS may need to be audited and lodged with ASIC.

As a Chartered Accounting firm and Registered Tax Agent, Hive Wise can help you with all your accounting and tax needs.

We’d love to be part of your business journey!

Contact us today for a free consultation.