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 must have an ABN. But even if you don’t charge GST, you should still feature an ABN on purchase orders and invoices – otherwise those paying you may be obliged to withhold tax at the highest marginal rate.
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.
Tax time can be simpler if you separate your business income and expenses from your personal finances. Plus, separate accounts give you more control of your cash flow with better visibility of ways to cut costs and increase profits. Learn more in our 4 reasons to separate business banking from personal article.
How do I open a business bank account in Australia?
As long as your business operates in Australia and you’re over 18, you should be able to apply for a business account online or drop into any branch. Get tips on choosing the right types of account in our How to set up business banking article.
What do I need to open a business bank account?
Most types of business - plus trusts, not-for-profits and associations - can apply for most Westpac business accounts online. Before you apply, have two of these handy:
New customers with two or more signatories will need an ID and document check in branch before they can complete account activation. Find out what information Westpac needs from new customers.
What should I look for when opening a business bank account?
Some things you may wish to consider:
This webinar is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.
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.