4 key steps when setting up your business
ABN, GST, TFN - setting up a business can be a minefield of confusing acronyms. Here’s what they all mean, plus four key steps you should take to get you on your way.
Unless you plan to trade under your legal name, you’ll need to decide on a business or company name. Think about making it catchy, easy to recall, and logical to spell (so customers can Google you). Then you should:
An Australian Business Number (ABN) helps identify your business in public records and facilitates interactions with banks, the tax office (for GST registration), and other government departments. If you’re required to be registered for GST (see below), you’ll need to have an ABN – otherwise it’s not mandatory for solo business owners to have one. However, your business may need one for invoicing or to create purchase orders, as those paying you may be required to withhold tax at the highest marginal rate if you don’t have one.
ACN and TFN:
If you plan on operating as an incorporated entity, the company needs to be registered with the Australian Securities and Investments Commission. ASIC issues an Australian Company Number (ACN) for use in all business transactions. You need this before applying for an ABN.
Additionally, partnerships, trusts and companies need a separate tax file number (TFN) to do business. (Sole traders use their personal TFN when dealing with any business tax matters).
You can apply for an ABN and TFN through the Australian Business Register.
If you think your business will earn $75,000 or more, you’ll need to register for GST (goods and services tax) through the ATO. GST matters can vary by business type but in broad terms, the 10% GST you levy on customers is generally offset against any GST you incur in doing business. Then any difference is calculated when completing your business activity statement (BAS).
There are a few other reasons why businesses might register for GST. Check with your tax adviser about your particular situation.
You may need to send your customers written invoices. The invoices could include key pieces of information such as your ABN, invoice amount, tax included and for what products/services (if registered for GST and GST applies) and payment details.
If you’re a Westpac customer with a Business One Low Plan or Business One High Plan account you can use our handy Biz Invoice invoicing tool, which is complimentary with your account (though adding BPAY® as an option will incur fees). It is available within Westpac Live Online Banking and lets you create an invoice template, then generate, email and manage invoices from your PC, tablet or smartphone1.
This webinar is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.
1. To be eligible for Biz Invoice you must hold a Business One Low Plan or Business One High Plan account and be registered for Westpac Live Online Banking. Terms, conditions, fees and charges apply. Before making a decision, read the disclosure documents for your selected product or service, including the Product Disclosure Statement and T&Cs for Westpac business bank accounts, by clicking the above links; and consider if the product is right for you.
The information in this article is general in nature; does not take your objectives, financial situation or needs into account; and does not constitute financial or taxation advice. Consider its appropriateness to these factors; and we recommend you seek independent professional advice about your specific circumstances before making any decisions.
BPAY® is a registered trademark of BPAY Pty Ltd ABN 69 079 137 518.