Business Finance in Australia: What You Need to Know

Whether you are a seasoned international investor or a first-time entrepreneur, you should be trying to make the best financial decisions possible for your business from the very start. Often, the first big decisions that can really impact your company’s financial future come at the registration stage. This is true in Australia, which has become a popular destination for businesses from all around the globe. This short guide explores how you can set your Australian business up for financial success.

Choose the Right Structure

Australia offers entrepreneurs the chance to operate as a sole trader, partnership, trust, or company. The business structure that you choose will have a lasting impact on your business’s financial future because it affects how your business will scale, its investment potential, and the legal protections that it affords investors and directors. There are also recurring fees related to some structures. For example, if you choose to register a proprietary limited company, you must pay an annual review fee.

The Costs of Company Registration

As a developed and strong economy, Australian company registration is fairly straightforward, but it does come with upfront and ongoing costs. An initial registration fee must be paid upfront, and the aforementioned annual review fee is required in the case of proprietary limited companies. However, there are ongoing costs to staying compliant with the authorities, like the fees of a professional accountant or legal consultant, and the cost of setting up a business bank account.

GST

Businesses which generate a certain amount of income are required to register for Goods and Services Tax. The financial cost of this can be passed onto customers, although that may mean making adjustments to prices which could affect sales. If you plan to grow your business or generate income above the threshold in your first year of operations, then this should be factored into your financial planning. Once registered for GST, you will need to submit regular business activity statements.

Other Tax Obligations

Registered companies in Australia must pay corporate taxes, and there is usually a flat rate charged for registered companies. Most companies pay in quarterly installments, which is a shorter timeframe than in some other countries and should be planned for from the outset in order to avoid financial trouble and penalties down the line. The Australian government also offers tax relief and deductions on some operational costs and expenses, so be sure to take advantage of them.

Seeking Finance for Your Business

There are ample opportunities to receive traditional bank loans, government grants, and private investment to fund your business in Australia. Government assistance is available through several programs designed to encourage entrepreneurship, and private investment can be sought in various ways depending on the size of your business. These include angel investments and venture capital. In order to seek funding from any of these sources, it is important to have a comprehensive business plan ready.

Paying Employees

Hiring employees comes with additional costs that you will have to account for in your business plan. Besides paying their wages, you also have to contribute to a pension and insurance scheme. Salary and tax information must also be reported in real-time to the tax authorities, which may require you to outsource your payroll management at an additional cost.

Conclusion

Doing business down under can be highly rewarding if you are well-prepared financially. That means understanding and budgeting for all your fees and obligations, as well as forming your company with the right structure and seeking the right type of funding. Doing these things, remaining compliant with the statutory requirements, and practising good business habits will lay the foundations for your business’s long-term success.