Step 1: Validate the Idea First

Before spending money on registrations and setup, confirm there is genuine demand for what you are offering. Talk to potential customers. Offer the service informally to a few people and see if they will pay. Look at competitors — if similar businesses exist and are doing well, demand is proven. The leading cause of small business failure is building something people do not actually want to pay for.

Step 2: Choose a Business Structure

  • Sole trader (most common for starting out): You and the business are the same legal entity. Simplest and cheapest to set up. You report business income on your personal tax return. You are personally liable for business debts.
  • Partnership: Two or more people sharing a business. Simple to establish but all partners share liability.
  • Company (Pty Ltd): Separate legal entity. More complex and expensive to set up but provides limited liability and often better for growth. Annual ASIC fees apply.
  • Trust: Useful for tax planning and asset protection, but requires more complex administration. Consider this once established.

For most people starting their first small business, sole trader is the right starting point — you can always change structure later.

Step 3: Register Your ABN and Business Name

  1. 1

    Register an ABN — free at abr.gov.au

    An Australian Business Number (ABN) is required to issue invoices, register for GST and be taken seriously as a business. Apply free online at abr.gov.au — takes about 10 minutes. Approval is usually instant for sole traders.

  2. 2

    Register a business name if needed

    If you trade under a name other than your own name, register it at asic.gov.au. Cost is $41 for 1 year or $96 for 3 years. If you trade under your own full name (e.g. “John Smith Consulting”), no business name registration is needed.

  3. 3

    Register for GST if turnover exceeds $75,000

    If your annual turnover is expected to exceed $75,000, you must register for GST. You can also register voluntarily below this threshold. Register through myGov or your tax agent.

Step 4: Practical Setup

  1. 4

    Open a dedicated business bank account

    Keep business and personal finances completely separate from day one. This makes bookkeeping, tax and financial management vastly simpler. Many banks offer free or low-cost small business accounts.

  2. 5

    Set up basic bookkeeping

    Track all income and expenses from the start. Free tools: Wave (free invoicing and accounting). Paid tools: Xero (most popular in Australia, from $32/month), MYOB or QuickBooks. Even a well-maintained spreadsheet is acceptable at the start. The ATO requires you to keep financial records for 5 years.

  3. 6

    Check insurance requirements

    Public liability insurance protects you if a client or customer suffers injury or property damage because of your business. Professional indemnity insurance is important for service businesses (consultants, designers, advisers). Both are available through brokers or comparison sites.

Free resources for Australian small businessesbusiness.gov.au — the official government small business portal with guides, checklists and registration links. ATO small business — tax obligations explained clearly. SCORE and SBDC mentoring — free mentoring from experienced business people. Your local council may also offer free small business advisory services.

Frequently Asked Questions

Not necessarily for a simple sole trader business. A basic one-page plan covering what you offer, who your customers are, how you will reach them and a simple financial projection is more useful than an elaborate formal document. A detailed business plan is required if you are seeking bank loans or investors.
Minimum costs: ABN registration (free), business name registration ($41), business bank account (often free). A very simple service business can start for under $200. Add insurance ($500–2,000/year), accounting software ($0–400/year) and any equipment or materials specific to your business. Many service businesses (freelancing, consulting, tutoring) have very low startup costs.