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.

1. Registering a business name

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:

• Check the National Names Index to see if the business name you want is available.
• Register your business name in each state or territory you intend to trade in (only for sole traders, partnerships and trusts; a registered company does not need to register a business name).
• Register a domain name that’s the same or similar to your business name.

2. Apply for an ABN, and potentially an ACN and TFN

ABN:

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.

3. Register for GST

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.

4. Set up your invoices

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.

Next steps: Watch Getting Started in Business webinar
 

This webinar is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.