Starting a business
When you start a business, there are tax and super responsibilities you need to be aware of, including:
- the tax implications of your business structure
- whether you’re entitled to an ABN
- registering your business
- records you need to keep
- deductions you can claim.
As you get your business up and running, there are a few things you may need to consider, including:
- when your tax and other obligations start – this will depend on whether you are in business yet
- the implications of the structure you choose – tax and legal
- the location of your business (such as working from home).
There are four commonly used business structures in Australia:
- Sole trader
It’s important to understand the responsibilities of each structure because the structure you choose may affect:
- the tax you’re liable to pay
- asset protection
- You’re not locked into any structure and you can change the structure as your business changes or grows.
Register your business name
Step 1 – Log in to ASIC Connect and select the ‘Licences and Registrations’ tab at the top of the page
If you don’t have an ASIC Connect account, you can register online.
If you’re logging in for the first time, make sure you say ‘No’, you don’t have a current business. You don’t need an ASIC key to register.
Step 2 – Select ‘Business name’ from the drop-down box
Select ‘business name’ from the drop-down box and select ‘Go’. Read the information and make sure you tick the boxes. Select ‘Get started’.
Step 3 – Enter your Australian Business Number (ABN)
You must have an Australian Business Number (ABN) or have applied for an ABN to register a business name. Select the relevant option, enter your ABN, and select ‘Next’. You must enter your ABN without any spaces.
Step 4 – Enter the proposed business name
Enter the proposed business name exactly as you would like it to appear on our register. Business names are case sensitive.
Step 5 – Select the registration period
You can register a business for one year or three years. After this period, it must be renewed.
Step 6 – Enter the business name holder’s details.
Enter the proposed business name holder details (e.g. the holder’s date of birth)
Step 7 – Enter the proposed business name’s addresses
Enter the addresses of the proposed business name.
Step 8 – Confirm the eligibility to hold the business name.
To hold a business name, the holder cannot be disqualified or convicted of criminal offences outlined in the Business Names Registration Act 2011.
Step 9 – Review your application
Review your application; make sure your business name is spelt correctly. Complete the declarations and confirm you’re authorised to submit the application.
Step 10 – Make payment and confirm your transaction.
You can pay by credit card, BPAY, or request an invoice. If you don’t pay within 10 days, your application will be cancelled, and you will need to reapply.
Once you’ve made payment, you’ll see a confirmation screen. Once payment has been made, your business name should be registered within 48 hours.
Is it a business or hobby?
If you are currently undertaking an activity or intend to start a business, it is important to know whether your activity is a business or hobby. Unlike a hobby, a business has reporting requirements such as declaring income earned and claiming expenses. It is important to understand the differences between a hobby and a business for tax and other purposes. Your tax and other obligations start once you are in business. There is no single factor that determines if you are in business, but some of the factors you need to consider include:
- You’ve decided to start a business and have done something about it to operate in a businesslike manner, such as registered a business name, or obtained an ABN.
- You intend to make a profit – or genuinely believe you will make a profit from the activity – even if you are unlikely to do so in the short term.
- You repeat similar types of activities.
- The size or scale of your activity is consistent with other businesses in your industry.
- Your activity is planned, organised and carried out in a businesslike manner. This may include
- keeping business records and account books
- having a separate business bank account
- operating from business premises
- having licenses or qualifications
- having a registered business name.
If you aren’t in business yet, it is important to keep these factors in mind as your activities change or grow, so you’ll know when you need to register for tax and other business responsibilities.
If you determine your activities are a hobby then you do not have any additional tax or reporting obligations. If your activities are a hobby but you supply goods or services to businesses, they may request your ABN when they pay you. Because you do not have an ABN and your activity is done as a hobby, you should use the ‘Statement by a supplier’ form. This will avoid the business you are supplying having to withhold an amount from their payment to you.
Prepare for tax
Tax returns cover the financial year from 1 July to 30 June. If you’re lodging your own tax return it is due by 31 October.
Lodging with myTax
MyTax is the quick, easy, safe and secure way to lodge your tax return online. It’s web-based, so you don’t need to download anything. You can lodge on a range of devices – computer, smartphone or tablet – just make sure to lodge by the 31 October deadline.
To lodge online you need a myGov account linked to the ATO. MyTax is available to all individuals completing their own return (including sole traders).
MyTax is accessed through myGov. Clicking this link will take you away from ato.gov.au. Once logged in, follow these menu options: Tax > Lodgements > Income tax
You need to lodge your tax return by the 31 October.
If you are completing your own tax return and are unable to lodge by 31 October, contact us as soon as possible.
Most registered agents have special lodgment schedules and can lodge returns for clients later than the 31 October deadline. If you are using a registered agent, ensure you contact them before 31 October.
If you’re having difficulties meeting your tax obligations, contact us as soon as possible.
Even if the deadline has passed, it is important to lodge as soon as you can.
If you expect a tax bill, don’t delay lodging. If you’re finding it hard to pay on time, it’s important to contact us early so the ATO can work with you to make a payment plan tailored to your circumstances.