Tag Archives: Structure

Register a Business Name

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Your business name is your reputation, and hopefully, it is worth something over time. The last thing you want is to lose it or find someone else who owns it. This guide will cover the process of registering a business name in Australia.

A business name is a name your business operates under. You need to register a name if you conduct business under a name other than your own.

WHY do I need to Register my Business name?

If you do not register your name, you may find someone is already using it, or someone else could register it. Then you would have to find a new name and waste any effort you have already taken establishing your name. There is also the potential for legal action against you.

WHAT you need to do first – Search business names

After you have chosen a potential name, your first port of call should be the Australian Business Name index. ttps://connectonline.asic.gov.au/RegistrySearch/faces/landing/bn/SearchBnRegisters.jspx?_adf.ctrl-state=q7ueeovpl_45

Here you must select “business names index” then enter your potential name in a search box. You will then be presented with a search result. Here you will see if the name is already taken or available.

Your next step should be a simple search on the internet to see if anyone else is using your name and, if so, in what way.

Assuming no one has already used it and your name is not close to someone else’s, you can now apply to register that name. Note some words like “Bank” or “Royal” cannot be used as they might mislead people about your activities.

HOW to register a business name:

  1. Determine your business structure.  Be sure to read our essential guide on choosing a Business structure
  2. Apply for an ABN (Australian Business Number) https://asic.gov.au/for-business/registering-a-business-name/before-you-register-a-business-name/australian-business-number/
    You may have 2 or more business names registered to the same ABN as long as the business structure does not change.
  3. Sign into ASIC Connect. Steps to register can be found here https://asic.gov.au/online-services/business-names/#steps-to-register
  4.  Once logged in Select ‘Business name’ from the drop-down box
  5.  You will now be required to enter your ABN, the proposed name, how many years you want to register for, and your details
  6. Review the information you have entered, most importantly did you enter your proposed name correctly?
  7. Pay for the application and wait for your registration to be processed

HINTS

Make sure you have the right spelling!

The cost of registering a business name can be found here. tps://asic.gov.au/for-business/payments-fees-and-invoices/payment-options/business-name-fees-and-payment-options/

You must have an Australian registered business name if you wish to register an Australian internet domain name like yourbusiness@com.au.

SUMMARY – Your Brand

Selecting a business name gives you an identity. Registering means you are the sole owner of the name and can also register an Australian internet domain name.

Choosing a business structure

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Right at the beginning of your Small Business journey, you need to decide which business structure is best for your situation. This will have an impact on the complexity of running it as well as taxation and personal liability implications. This guide will explain your options to help you decide which is best for you.

A business structure is the legal structure in which you set up your business

WHY does a business structure matter?

The practical impacts of this decision can affect how much tax you pay, legal implications like licensing and personal liability, and the control and procedures you have in running your business.
You cannot run a business unless it fits into a business structure.

WHAT are my business structure choices?

The four most common types are:

  • Sole Trader – one owner full control
  • Partnership – 2 or more owners split income and liability
  • Company – a legal entity where liability may be limited
  • Trust – a person manages assets for the benefit of others

HOW do I decide sole trader, partnership, company or trust?

This can be a very complicated decision therefore seeking advice from an accountant, lawyer or business advisor could be a worthwhile investment.  The good news is that if you change your mind or circumstances change, you can change your business structure at some point in the future. 

Sole Trader

This is the simplest form of setting up a business and requires the least amount of paperwork but the most risk to your personal assets. If things go wrong, you could lose your house.  On a more positive note, you make all the decisions and all the reporting is rolled into your personal tax return. 

You will have to keep all records, like receipts, for 5 years and all profits and losses fall back to you and cannot be split. If you hire employees, you are still bound by any government legislation obligations like superannuation contributions and workers’ compensation.

Partnership

There are 3 types of partnership structures you can consider:

General partnership – all partners are equally responsible for managing the business, and each has unlimited liability for the debts and obligations the partnership incurs.

Limited partnership – is a great tool for partners who want to invest in a business but not be involved in the day to day.  Here liability is limited to the amount of money they have contributed to the partnership.

Incorporated Limited Partnership – Put simply one partner has unlimited liability the rest of the partners have limited liability.

Each state has slightly different laws for partnerships and details can be found here:

A partnership must have an ABN and each partner requires a tax file number.  Each partner will be responsible for the tax implications on their share of the business and must take responsibility for their superannuation.  If a partnership earns more than $75,000 they must register for GST.

Company

A company is the most expensive option to set up and run. It is a legal entity and as such can borrow money, take legal action, and be sued by someone else.  As a shareholder of a company whether it be 10% or 100% you are only liable for any unpaid money on your shares.  So in theory they cannot come after your house, however as a director of that company, if you are found to be in breach of your legal obligations, you could be sued. A company is owned by its shareholders but controlled by its directors. More information on this can be found https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/ . All money a business makes is owned by the business and an annual tax return must be completed in its name.
You must register for the Goods and Services Tax (GST) if revenue exceeds $75,000.  The Australian Securities and Investment Commission requires companies to keep records for 7 years.  Directors also have an annual obligation to show a business is solvent which means you can pay your debts and have the cash to run your business.

Trust

This is an expensive way to run a business but might have certain tax benefits.  A formal trust deed must be established that sets out how the trust operates and also comes with annual formal administration tasks.

According to the Australian Tax Office:

Trusts are widely used for investment and business purposes.

A trust is an obligation imposed on a person or other entity to hold a property for the benefit of beneficiaries. While in legal terms a trust is a relationship, not a legal entity, trusts are treated as taxpayer entities for the purposes of tax administration.

The trustee is responsible for managing the trust’s tax affairs, including registering the trust in the tax system, lodging trust tax returns, and paying some tax liabilities.

Beneficiaries (except some minors and non-residents) include their share of the trust’s net income as income in their own tax returns. There are special rules for some types of trust including family trusts, deceased estates, and super funds.

The Australian government also provides a handy tool to help you decide. https://register.business.gov.au/helpmedecide

HINT

This handy guide can help you make your decision. Be sure to select I am not sure. https://register.business.gov.au/helpmedecide

SUMMARY – Research Business Structure

If unsure get some professional help deciding and possibly assisting you to set up your business structure.  It comes down to how many owners there will be and how you divide profits and liabilities.  For those of you worried about losing your house, this can be protected by insurance as discussed in a separate essential guide on Business Insurance.

Register a Company

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In our guide Choosing a business structure, we listed the various choices including starting a company.  In this guide, we will look at the process to register a company which is more complicated than the other business structures.

A company is a legal entity with higher set-up and administration costs. Companies also have additional reporting requirements.
A company is run by its directors and owned by its shareholders.
While a company provides some asset protection, its directors can be legally liable for their actions and, in some cases, the debts of the company.
Companies are regulated by the Australian Securities & Investments Commission (ASIC).
Australian Tax Office

WHY set your business structure as a Company?

There is less personal liability to its owners.

A company is its own legal entity and as such can borrow money, take legal action, and be legally sued by someone else.  As a shareholder of a company whether it be 10% or 100% you are only liable for any unpaid money on your shares.  So in theory they cannot come after your house, however as a director of that company if it is found you are in breach of your legal obligations to that company you could be sued. A company is owned by its shareholders but controlled by its directors.

WHAT you need to understand to register a company

A business name is not the same as registering a company name, they indeed can be identical bar the abbreviation but don’t need to be the same.  See our separate guide on Registering a Business name. However in the case of a company you must register its name as well.  For example you may have a company name “Your Town Fruit Pty Ltd” trading with your registered business name called “Your Town Fruit Shop”.  We recommend you go through the process to determine your company name listed on the ASIC website. https://asic.gov.au/for-business/registering-a-company/steps-to-register-a-company/company-name-availability/.  A company’s name must show its legal status and include an abbreviation at the end, for example, “Your Town Fruit Pty Ltd”.  The abbreviation relates to the liability of its members.

Full WordAbbreviation
No LiabilityNL
ProprietaryPty
LimitedLtd

HOW to Register a Company?

At this point it is our strong recommendation that you get assistance from a professional. You can easily find them by Googling “registering a company”.  For a minimal fee they will do all the hard work for you based on you answering some questions and providing information. These are usually accountants or solicitors and are known as Private Service Providers.  More details can be found  https://asic.gov.au/for-business/registering-a-business-name/before-you-register-a-business-name/private-service-providers/

One thing you cannot escape as a company director (assuming you make yourself a director) is your obligations to keep details up to date, maintaining records and details on a register and paying the annual fees. Australian companies also require 1 or more directors to reside in Australia depending on the structure.

HINT

The fees to register a company can be found here. https://asic.gov.au/for-business/payments-fees-and-invoices/asic-fees/fees-for-commonly-lodged-documents/starting-a-company/

If you do not go down the Private Service Provider route be prepared to understand and decide on a constitution or replaceable rules, share structures, etc.

SUMMARY – Company means less personal liability

A company structure will reduce your risk of personal liability but is more complicated to establish and maintain.  Using a private service provider is an economical and pain-free way to do the setup.