As a foreigner, thinking of starting a business in Australia can be daunting. But the process can be made smoother if you know what to do. There are a lot of rules and regulations concerning setting up a business by foreign owners, but the benefits of investing in Australia outweigh all these.
The legal aspects of setting up a business in Australia vary based on the type of business you want to put up. So without further ado, let’s outline the steps.
Table of Contents
- What Visa Should I Get When Starting a Business in Australia?
- What type of business in Australia can I set up?
- What permits should I apply for?
- What is an Australian Business Number (ABN)?
- How Can I Register My Business Name?
What Visa Should I Get When Starting a Business in Australia?
If you intend to start a business in Australia, you must first get a business visa. You will not be allowed to set up a business. If you are already in Australia and have a different visa, you would still have to apply for a business visa.
There are two types of business visas that you can get depending on your situation. These are Business Innovation and Investment Visa (subclass 188) and Business Talent Visa.
Business Innovation and Investment Visa
Business Innovation and Investment Visa holders can do the following in Australia:
- Own a business;
- Manage a business;
- Be a part of various business activities;
- Manage investments.
However, this visa requires that you be invited by a region’s government. To be invited, you must first submit an EOI or Expression of Interest through the Department of Home Affairs’ SkillSelect. There are no fees payable when submitting an EOI. SkillSelect will evaluate your test and documentation to see if you are fit for the visa you would like to apply for. If your SkillSelect points are deemed qualified, you will be considered to be invited.
You need to score at least 65 points in the SkillSelect points system in order to qualify for this visa. The following qualities will earn you significant points:
- English fluency and proficiency
- Educational background
- Previous business management experience or investments
- Your net worth
For more information, visit our guide on how to apply for Business Innovation and Investment Visa.
In 2018 alone, 390 foreign nationals have been nominated for the Business Innovation and Investment Visa. Again, the region or state governments are the ones nominating foreign nationals. However, there is no guarantee that submitting an EOI means you will receive an invitation to apply for a visa. Therefore, all fees associated with increasing your SkillSelect points cannot be reimbursed.
Once you have been nominated by a state or region, you will receive an invitation to apply for a visa. You have a maximum of 60 days to apply for the visa. Whatever information you have placed in your EOI in SkillSelect must be exactly the same as that of the information you submit when applying for a visa. If you fail to apply for a visa within the time frame allotted, your EOI will be deleted from SkillSelect and your invitation will become invalid. If you want to get the same visa (or other types of visas that require a SkillSelect account), then you will have to submit a new Expression of Interest.
Business Talent Visa
The Business Innovation and Investment Visa allows you to manage and own existing businesses in Australia. But what if you want to set up a new business? Then you would need a Business Talent Visa. This type of visa allows you to:
- Create and launch a new business;
- Advance and improve existing business in Australia.
Similar to the previous visa, this one requires that you are invited by a state or region to apply for a Business Talent Visa. To be invited, you must again submit an Expression of Interest through SkillSelect. Also, depending on the type of stream you will be applying for, a specific minimum funding amount or capacity to pay will be required.
You and your partner (if you have one) have a combined investment of AUD $400,000 for two out of the past four years. Your combined personal assets must be at least AUD $1.5 million in order to qualify. Once your visa is approved, the AUD $1.5 million must be transferred to Australia within the first two years of visa approval.
One of the most important requirements of this visa is that you do not have outstanding debts in any country, and you have paid or arranged to pay for any previous loans with the Australian government.
For more information, review our guide on getting a Business Talent Visa.
What type of business in Australia can I set up?
There are several types of businesses you can setup in Australia. The type of business you should register depends upon the needs your business may have in the future. The type of business will also affect the taxes you will be paying and the laws that you will have to follow.
Here are the most common types of businesses in Australia:
If you are a single individual who wants to run and fund your business on your own, then this business type is the right for you. However, any debts that your business incurs will also be your debts. Whatever income the business earns and expenses it incurs will go into your personal income, and will therefore go against your income tax.
A partnership is when there are two or more people involved in the managing and funding the business. As opposed to popular misconception, you can have more than two people in a partnership. But similar to sole proprietorship, whatever earnings and expenses incurred are counted towards and against every partner’s personal income.
There are two types of partners: the general partner and the limited partner. The general partner is involved in the management and/or funding of the business, while the limited partner is only limited to funding.
If you want your business to be a separate entity from yourself, you can put up a corporation. This means that the profit and expenses of the company are derived from the company’s own funding. If in case the business incurs debt, the incorporators will not be help liable. However, this type of business is more complicated to set up, and will be up for more regulations to follow and higher taxes to pay.
What permits should I apply for?
As expected, there are several permits you need to apply for when your start a business in Australia. The following are the most common types of permits, although there may be a few more you need to get depending on the state you are in:
- Advertising permit
- Sales tax license
- County permit
- Health department permit
- Fire department permit
What is an Australian Business Number (ABN)?
An Australian Business Number, simply put, is an 11-digit identification number for your business. It is different from your personal tax file number, so it is necessary to get this even if your business is of sole proprietorship. You will need this number for when paying for GST or Goods and Services Tax.
To be qualified for an ABN, you must provide proof that your business structure is already setup and you are performing startup activities such as:
- Getting one of the permits mentioned above;
- Purchasing of business cards;
- Setting up your website and/or your social media accounts;
- Attaining business license;
- Leasing or buying property for business purposes;
- Getting financing;
- Purchasing a business.
These are just some examples of proof that the business is underway; it is not an exhaustive list.
When applying for an Australian Business Number, you can do so online via the Australian Business Register or the Business Registration Service. You can also seek the help of a registered tax agent to help you.
How Can I Register My Business Name?
You can actually start trading or providing services without having a business name, provided that you are a sole proprietor and you use your name alone. For instance, you don’t have to register if your name is Jane Smith and you are using J Smith or Jane Smith in your trade. But if you will be using Jane Smith Interior Design or J Smith Landscaping, then you are required to register the business name. The ASIC requires trading names to be registered as business names come October 31, 2018.
Requirements to Registering a Business Name
- ABN – Before you are able to apply for a business name, you must already have an ABN, or at least applied for it.
- Check availability of your business name –No two businesses can have the same names, so you have to check if the business name you want to use is still available. Checking a name’s availability can be done using ASIC’s search tool.
- Business Name Registration – Once you found that no other business possesses the name you want to use, you can now register your business name. You can register your business name through the following:
- Pay for Business Name Fees – the validity of a business name lasts for as long as it is being paid annually. The fee per year is AUD $36. If you pay for three years in advance, you will get a discounted fee of AUD $84.
Once you start a business in Australia, no doubt you would need a place to stay in. You can always go rent a home, but the best route would be to invest in a residential property of your own. This way, your rental payments will not go to waste, and you will have at least two investments in Australia: your business and your home.
Starting a business in Australia is enough to keep you occupied. To reduce the hassles of finding the right home while you are busy setting your business up, you would need the help of qualified professionals. Whether you are looking for a buyer’s agent or a solicitor, we can help you. Send us a message and we’ll link you to the best service provider for your needs.