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.
Many small businesses use an Excel invoice template or cut and paste between Word documents. For a faster, more convenient solution you could use our handy Biz Invoice online invoicing tool.
Available with eligible Westpac accounts1 and managed in online banking, the tool lets you customise an invoice template, then create, send and manage invoices from your mobile or PC.
Please note that if linked to a foreign currency account, Biz Invoice will not calculate GST or any tax that may be required in your customer's country.
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 Westpac Business One Low Plan or High Plan transaction account or a foreign currency account (other than in Chinese Yuan RMB) and be registered for Westpac Live Online Banking. Terms, conditions and fees apply. Before making a decision, read the disclosure documents for your selected product or service, including the Product Disclosure Statement and T&Cs, 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.