Choosing a business structure

Before starting a business, it is fundamental that you decide which is the most appropriate structure. The most common business structures that we see holding businesses in South Australia are:

• Sole trader: where an individual person owns the business assets and trades
• Partnership: where more than one person owns the business assets, often with an agreement between them to set out each of their rights and obligations
• Trust: where a person or company owns the business assets for the benefit of the beneficiaries
• Company: where a company owns the business for the benefit of the shareholders, and directors perform the company’s dealings

Each structure has its advantages and disadvantages, including varying degrees of personal liability, tax implications, asset protection, record keeping and complexity. It is essential to seek professional advice from both an accountant and lawyer to choose the most suitable structure for your business. The same considerations as to structure will apply when buying an existing business.

If you would like additional insight to each of these business structures, see our blog post on business structures here.

Register your business name and protecting your intellectual property 

Ownership of a business name can be registered with the Australian Securities and Investments Commission (ASIC), which will prevent the use of that name by competitors.

Depending on your business, you may need to register trademarks, patents, or designs. Seeking advice from an IP lawyer will ensure you adequately protect intellectual property, which can be a valuable asset and an important component of the “goodwill” of your brand.

ABN and TFN

A company or trust will need to obtain a new Tax File Number (TFN) from the Australian Taxation Office (ATO). An accountant will generally assist you with this process. Individual sole traders and partners of partnerships can continue to use their existing personal TFNs.

Any business carrying on an enterprise or supply in Australia should apply for an Australian Business Number (ABN) from the Australian Business Register. An ABN is a unique 11-digit identifier that makes it easier for businesses to interact with the government and other businesses. An ABN and a TFN are separate, and you are likely to need both to operate a business in Australia.

Apply for necessary licences and permits 

Depending on the nature of your business, you may need specific licences or permits to operate legally. In South Australia, some common licences and permits include:

• Liquor licences
• Food business registration with the local Council
• Supplier of lottery products licence
• Building and development approvals
• Environmental licences
• Building licences
• Dangerous substances licences

To identify any licences and permits required for your business, visit the South Australian Government’s business website and consult a lawyer familiar with the particular industry.

Understand your tax obligations

All businesses in South Australia must comply with state and federal tax laws. These may include:

• Goods and Services Tax (GST)
• Pay As You Go (PAYG) withholding
• Payroll tax
• Fringe Benefits Tax (FBT)
• Land tax

Ensure that you register for all relevant taxes and maintain accurate records to meet your tax obligations. Consult an accountant to help you navigate the tax requirements specific to your business.

Comply with employment law

If you intend to hire employees, it is crucial to understand your responsibilities as an employer under South Australian and federal employment laws. These include:

• National Employment Standards (NES)
• Modern awards, if they apply to your industry
• Superannuation
• Enterprise agreements
• Workplace health and safety
• Workers’ compensation

Ensure that you provide your employees with the necessary entitlements, maintain a safe work environment, and adhere to anti-discrimination and privacy laws.

Starting a business in South Australia can be exciting, challenging and rewarding. It will involve navigating a myriad of legal requirements. Poorly prepared businesses run the risk of failure, penalties, or having to engage a solicitor to assist with compliance. With proper preparation and professional advice, a business can maximise profit, simplify its governance, and minimise legal risks. 

Hume Taylor & Co have solicitors experienced in business structures, compliance and employment law. We maintain good referral relationships with taxation lawyers and accountants who we can engage or refer our valued clients to when required. Contact our Adelaide office on (08) 8223 3199, our Millicent office on (08) 8733 2500 or our Whyalla office on (08) 8645 7666 today to book an appointment with one of our qualified commercial lawyers. 

This blog post was written by Partner Samuel Partridge.