Most mistakes when setting up a business are not expensive because of the registration fee. They are expensive because they need to be undone and done again.
Registering a business name before deciding on the structure, using the wrong entity for contracts, or starting to trade before the right licences and insurance are in place can create unnecessary cost and confusion later.
There is no single registration that covers everything a new business needs to operate legally in Victoria. Starting properly usually involves several legal, tax and regulatory steps, and the right sequence depends on the structure you choose.
Starting a business? Get the structure and setup right before you begin trading.
Starting a business? Get the structure and setup right before you begin trading.
Book a Free Client Assessment →Decide the Structure First
Before applying for registrations, decide who or what will actually operate the business.
Common structures include:
- sole trader
- partnership
- company
- trust.
The structure affects how the business is taxed, who owns the assets, who enters into contracts and who may be personally responsible if something goes wrong.
It also determines which person or entity should hold the ABN, business name, bank account, licences and customer contracts.
Changing structure later is possible, but it can involve new registrations, new contracts, asset transfers and tax consequences.
That is why the structure should usually be settled first.
The Business Setup Checklist
1. Choose the Right Structure
Do not choose a structure simply because it is the quickest or cheapest to establish.
Consider:
- personal liability
- tax
- business partners or investors
- asset protection
- future growth
- succession
- whether the business may eventually be sold.
A sole trader structure may suit one business but be unsuitable for another with employees, significant risk or outside investors.
2. Register the Entity Where Required
If you decide to operate through a company, the company should be registered with ASIC.
Once registered, the company receives an Australian Company Number, or ACN, and becomes a separate legal entity.
A company generally needs its ACN before obtaining an ABN in the company's name.
This is why the common advice to “get an ABN first” is not correct for every business structure.
3. Apply for an ABN
The person or entity carrying on the business should apply for an Australian Business Number if eligible.
For a sole trader, that will generally be the individual. For a company, it will be the company itself.
An ABN is commonly needed for business dealings, tax registrations and business name registration.
Importantly, an ABN does not create a company or a separate legal entity. It identifies the entity carrying on the enterprise.
4. Register a Business Name if You Need One
You generally need to register a business name if you trade under a name other than the legal name of the person or entity operating the business.
For example, a sole trader using their own legal name may not need a separate business name. A company may need one if it trades under a name different from its registered company name.
ASIC business names are registered nationally, not separately in Victoria. A business name application also generally requires an ABN.
Before committing to a name, check existing business names, company names and trade marks.
Registering a business name does not give you the same exclusive rights as registering a trade mark.
5. Complete the Relevant Tax Registrations
The registrations you need will depend on how the business operates.
They may include:
- GST
- PAYG withholding
- fringe benefits tax
- fuel tax credits
- other industry-specific tax registrations.
Most businesses must register for GST once their GST turnover reaches, or is expected to reach, $75,000 in a 12-month period. Voluntary registration may also be available below that threshold.
If you employ staff, PAYG withholding and payroll obligations will also need to be considered.
6. Check Licences and Permits Before Trading
An ABN and business name do not necessarily give you permission to operate.
Depending on the business, you may need licences or permits from:
- a Victorian regulator
- your local council
- an industry regulator
- another government authority.
The requirements depend on the business activity, industry and location.
Examples can include food registrations, liquor licences, planning permits, occupational licences or approvals to operate from particular premises.
These should be checked before the business begins trading.
7. Set Up Banking, Accounting and Record-Keeping
Set up the financial side of the business before the first transaction rather than waiting until the first BAS or tax return is due.
This should include:
- a dedicated business bank account where appropriate
- accounting or bookkeeping software
- invoicing procedures
- expense records
- payroll systems if staff are employed
- tax and BAS records.
Keeping business and personal transactions separate makes compliance easier and can also make the business easier to value, finance or sell later.
8. Put Your Customer or Client Terms in Place
Before taking on work, consider whether you need written terms of trade, a service agreement or another form of client contract.
The document should be appropriate to the business and may address:
- scope of work
- fees and payment terms
- deposits
- cancellations
- liability
- intellectual property
- confidentiality
- dispute procedures.
You do not generally need a written customer contract simply to register a business, but trading without clear terms can make disputes harder to resolve.
9. Arrange Appropriate Insurance
The insurance required depends on the business.
Common policies include:
- public liability
- professional indemnity
- product liability
- property insurance
- cyber insurance.
Some industries have mandatory insurance requirements.
If you employ workers, you should also check whether Victorian WorkCover registration is required.
In Victoria, an employer will generally need to register where annual remuneration exceeds, or is expected to exceed, $7,500, or where apprentices or trainees are employed.
Do not assume that WorkCover registration automatically applies, or does not apply, simply because you have only one worker.
Where New Business Owners Commonly Go Wrong
One common mistake is registering a business name before deciding which entity will operate the business.
If the structure changes later, the registrations, contracts and banking arrangements may also need to change.
Another is assuming that registering a business name means the name is legally protected against everyone else.
It does not provide the same rights as a registered trade mark. If the brand is important to the business, trade mark availability and registration should be considered separately.
Businesses also commonly delay bookkeeping and tax systems until reporting deadlines approach. By then, months of transactions may need to be reconstructed.
Finally, many new owners focus on Commonwealth registrations and overlook Victorian or council licences that may be required before they are legally able to trade.
How Phan Campbell & Associates Can Help
At Phan Campbell & Associates in Footscray, our lawyers and accountants can work together on the setup of a new business.
Our lawyers can advise on business structure, companies, trusts, contracts, terms of trade and legal compliance.
Our accounting team can assist with tax registrations, bookkeeping, payroll and the financial systems needed to operate the business properly from the beginning.
Working from the same structure helps ensure that the legal documents, registrations and accounting systems are set up for the same person or entity.
If you are starting a business, speak to us before the registrations and contracts are finalised.
Book a Free Client Assessment →
Frequently Asked Questions
1. What is the correct order to register a new business in Victoria?
Start by deciding the legal structure. If you are using a company, the company is generally registered with ASIC first and receives an ACN. The company can then obtain its ABN and complete the necessary business name and tax registrations. For sole traders, partnerships and trusts, the sequence is different. The important point is to confirm the structure first so the registrations are made in the name of the correct person or entity.
2. Do I need to register for GST straight away?
Not necessarily. Most businesses must register once GST turnover reaches, or is expected to reach, $75,000 in a 12-month period. Some businesses choose to register voluntarily before reaching that threshold. Whether voluntary registration makes sense should be considered with your accountant.
3. Does registering a business name protect the name?
Not in the same way as a registered trade mark. A business name registration allows the business to trade under that name, but it does not automatically give the owner exclusive trade mark rights. If the name is commercially important, trade mark searches and registration should be considered before investing heavily in the brand.
4. Do I need a written contract before taking my first client?
Not simply to start trading, but written terms are strongly recommended for many businesses. Clear terms can deal with payment, scope of work, liability, cancellations and disputes before problems arise.
5. What insurance does a new business need?
It depends on the business and industry. Public liability, professional indemnity, product liability, property and cyber insurance may all be relevant in different circumstances. Some industries also have mandatory insurance requirements. If you employ workers, you should separately check whether Victorian WorkCover registration is required.
This article contains general information only and does not constitute legal, accounting or tax advice. Business registration and compliance requirements depend on the structure, activities and location of the business. Professional advice should be obtained for your circumstances.