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Starting your own small business
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Halcyon:
I figured there would be a lot of experience on this forum. I'm looking to start my own small business, however not having any experience in this, I'd love to hear from those who have done it.

The business will be based within and servicing clients in Australia only, so I'd need to do some research on the relevant tax rules etc... I have spoken to an accountant already to gain some basic advice.

It will involve a few other people, so it won't be set up as a sole-trader, rather a partnership or a company. It will have no "employees" as such, the partners/directors will be doing all the work and taking a cut of the profit.

I don't want to go into too many details but it is very much technology/electronics related (and no, I'm not going up against Dave or his many pies). I think our business plan is solid and the products/services we will be providing are very sought-after. We are targeting a very specific market so what we do and sell won't be open to just anybody. What makes it slightly more difficult is that we'll be running this company in addition to (and totally independent) of our full-time jobs. Essentially we aren't hoping to make millions, but rather boost our existing income.

We looked at running this as a "hobby" but according to Australian laws, we tick all the boxes of a "business". We would be hard-pressed trying to claim this was merely a hobby.
julianhigginson:
I have my own (just me) Pty Ltd business... had looked into sole trader instead but decided the extra hassle was worth it for me and my situation.
I'm happy to talk about what I understand of it all...

What do you want to know?

A Pty. Ltd. company requires a tax return at the end of the year, and yearly registration fees with ASIC.
so expect to spend around $500 to form the company, then maybe $800/year in registration and tax return fees with your accountant to run it.

The good thing about Pty Ltd is that you personally have limited liability - Even if the wheels really fall off this venture, nobody should lose their house (unless you've done something as a director you can be sued personally for...)

Since it's a thing with friends - you should still have a formal agreement as to who owns what of the business and how profits should be shared, and how you should work together and resolve disputes - just  to put everything in black and white, in case things go weird one day.

Western Sydney Business centre has some really good advisors in my experience. They even run little regular courses on starting a business..
https://wsbusiness.com.au/
On top of the courses, you get a few free consultation hours from them (gov funded) which can be useful if you have no idea what you're trying to do or why, in relation to the business structure or even developing the business. You might even get one of their consultants to talk to you prior to doing the legals side of the setup, if you want some more advice over which form is best for you?
BradC:

--- Quote from: Halcyon on May 09, 2018, 06:51:40 am ---The business will be based out of Australia
--- End quote ---

I can't figure out if you are saying the business will be based inside or outside of the country. Having done both (and currently inside) there is quite a bit of difference.
I currently have a business for my consulting work (just me) which is a pty ltd, and then have one in partnership with my brother (so 2 directors) which is another pty ltd for something entirely different.

I set the first one up mostly myself and we had an accountant set the second one up for us. Find a good accountant and have them do it for you. It's worth it.
Make sure you get your insurance in order and keep abreast of the tax legislation and any changes as they come up.

DerekG:

--- Quote from: Halcyon on May 09, 2018, 06:51:40 am ---The business will be based out of Australia

It will involve a few other people, so it won't be set up as a sole-trader, rather a partnership or a company. It will have no "employees" as such, the partners/directors will be doing all the work and taking a cut of the profit.

--- End quote ---

Generally, Australian companies cannot pay the shareholders "a cut of the profit" (ie a dividend) until they have firstly submitted their tax return & paid company tax on the profits.

You will need to decide if you wish to register for GST or not. If you turn over less than $75K pa then you don't have to (with some noticeable exception like Uber), but if you don't, you cannot claim the GST you have paid to your suppliers. If you are going to mainly sell to customers who are likely to be able to claim the GST back, then it is probably best for you to register for GST.

You will need to register for an ABN & have a TFN issued. You can apply for these on-line with the ATO.

Once you have an ABN you will be able to apply for a bank account in the business name.

Consider how people will pay you (ie direct to your bank account, via credit card or perhaps via Paypal).

Navigate to https://abr.business.gov.au/Search/Index to see if the name you wish to use has already been taken.

I hope this helps.

ADDED: You can locate an on-line provider of companies/trusts/partnerships agreements. These will generally be a LOT cheaper than asking your ordinary accountant to form it for you.

Speaking from experience, don't bring on anyone else unless you REALLY need them. Further down the track you may well end up paying them for doing very little. If you needs funds, try & borrow the funds that you need & then pay back with interest, rather than bringing on another shareholder, even if he/she is willing to lend the funds with no interest.
Ice-Tea:
Make sure you have a good and concise agreement in place with your companions. Equal shares sound great untill someone is not willing or able to do an equal part of the job (or just stinks at it). Who gets to decide stuff? What if you buy a cheap Rigol to do your measurementts and your brother in arms figures he needs an 8.5 digits Keithley to do his job? Etc. etc...
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