Depending on what regulations and laws you’re following, the definition of a small business in Australia changes slightly. For example, ASIC defines a small business as a company that has an annual revenue under $50 million, less than 100 employees, and/or consolidated gross assets of less than $25 million.
However, the Australian Taxation Office (ATO), Fair Work Australia and the Australian Bureau of Statistics (ABS) all define a small business differently. For taxation purposes, the ATO says that a small business entity is one that has an aggregated turnover of under $10 million. Fair Work Australia states that a small business has less than 15 employees whereas the ABS says less than 20 employees.
In this article, we’ll go into more depth about the different parts of a small business in Australia and what it takes to get your small business off the ground. At the end, we’ll go through whether a coworking space is right for you. Feel free to use the navigation below to click through to a certain section.
- What are the small business structures in Australia?
- What’s the importance of small business in Australia?
- Reasons to start a small business
- First steps to starting a small business in Australia
- How to go from working a normal job to running a business
- Protecting your small business
- Is a coworking space right for your small business?
What are the small business structures in Australia?
Business owners will have to decide on a business structure. This will influence factors such as tax liability, asset protection and set up costs. It will also determine the licenses you require, your personal liability, your level of control and whether you’re considered an employee or an owner. The four most common business structures used by small businesses in Australia are:
- Sole trader: You’re legally responsible for all aspects of the business and have full control, you can use your individual TFN
- Partnership: Made up of 2 or more people who share control, requires a separate TFN and an ABN
- Company: A separate legal entity, requires more set up and management
- Trust: A non-separate entity that holds property or income on behalf of owners, expensive and complex set up and management
What’s the importance of small business in Australia?
Small businesses are known to be the backbone of the Australian economy. With times being difficult currently, it’s now more important than ever to support your local small business. According to Indeed, there are approximately 2.1 million small businesses in the country, making up a whopping 97% of registered businesses.
Going by a different definition, McCrindle states that 99.8% of Australian businesses are small to medium enterprises. About 98% of all businesses employ less than 20 people. It’s clear that not only do small businesses play a huge role in the economy, they also play a huge role in the labour force.
Reasons to start a small business
Not only are there great reasons to start a business in general, there are also many reasons to start a small business in Australia as opposed to other countries. Though conditions are still shaky at the moment, this doesn’t entirely outweigh all the potential advantages. A few major reasons include:
- Despite current conditions, Australia has historically had a resilient economy, meaning the growth potential for small businesses is better
- The country has an educated labour force with a large range of skills and backgrounds
- The diverse consumers have high levels of spending, strong purchasing power, and a large variety of wants and needs
- Access to finance for a small business in Australia is fair and widely available
First steps to starting a small business in Australia
We always like to say, the most important first step to starting a business is to do proper research. Flesh out your idea, see what the competitors are and see what gaps in the market that you can fill. Then, you can start figuring out the finer details involved with registering your small business with ASIC.
The first step is to check that you’re actually eligible to start a company or a business. ASIC outlines a few criteria to determine whether you qualify. Then, you need to weigh out and choose which business structure is right for you. Finally, you can register your business name with ASIC.
If you’re setting up an online business from home, you might not want to use your home address when registering your business. As an alternative, you can sign up to a virtual office. Starting at $65/month, you’ll get access to a premium business address that you can use with ASIC, Google Maps, Apple Maps and more. Plus, you get mail scanning, mail forwarding and access to physical spaces.
How to go from working a normal job to running a business
If you’ve been working your average 9 to 5 job, you might be wondering what the best way to transition to becoming a small business owner might be. Depending on your circumstances, it might make sense to consider hybrid entrepreneurship. This involves starting your small business on the side while continuing to work your normal job.
One of our Workit female entrepreneurs, Eunica Shaw, started her business while working in a taxation role. She then transitioned from corporate to running a business when doing both become too much for her. She encourages budding entrepreneurs to start doing rather than just planning. Learning from mistakes along the way is crucial.
Protecting your small business
One of the major parts of running a business that owners tend to disregard is protecting the business legally. You’ll need to make considerations for protecting your intellectual property such as by trademarking your assets, securing your domain name, using non-disclosure agreements and setting up contracts when outsourcing.
ASIC has a few general recommendations for protecting your business interests when dealing with other businesses. Though it sounds simple, asking thorough questions about licences and registrations is important. You should also review loan and credit contracts, follow processes for solving disputes, and get business advice when necessary.
Is a coworking space right for your small business?
One of the major challenges of starting a small business, especially if you’re a solo entrepreneur, is the loneliness and lack of like-minded people surrounding you. A coworking space is right for you if you’re looking to network, learn, and share knowledge. Plus, it’s affordable, flexible and low maintenance.
If you’re starting or growing an eCommerce business, our eCommerce Hub is a tailored eCommerce coworking space that provides showrooms, storage, offices, loading docks, shipping stations, logistics and more, all under one roof. You can worry less about operations and focus on scaling your business.
