Deciding to expand your company overseas and into the Australian market is a big decision.
When considering setting up your business in Australia, there will be various information required.
The usual business structure for multinationals is a foreign branch of a foreign company, or as a wholly owned subsidiary of a foreign company? More details on a business structure are here.
Resident Director or Local agent
You are required to have at least one resident director for a Pty Ltd company, or a local agent for your foreign branch. More on director requirements are here.
Register your business
Before you register your business, you will need to check if your business name is available and identified its business structure.
Registered and Principal place of business
One of the legal requirements when setting up business in Australia, is to provide a registered office address and a principal place of business address. The registered office cannot be a postal box and must be a physical location.
All registered bodies are required under the Corporations Act 2001 (Cth) to have a registered office where all business communications and notices to the company will be sent.
The principal place of business is where your company mainly conducts its business from. Your principal place of address can be in any state or territory of Australia, even if this is a different address to where the business is registered.
Australian Business Number
An Australian Business Number (ABN) is your unique 11-digit number that identifies your business to the government and business community. This number is required for legal and financial documents such as, collecting GST on behalf of the ATO, setting up a bank account and generally identifying your business.
Tax File Number (TFN)
If you’re operating a business as a partnership, company, or trust, you will need to register for a TFN for your business through the ATO.
Goods and Services Tax (GST)
The Goods and Services Tax (GST) is a broad-based tax of 10% on the cost of most goods, services and other items sold or consumed in Australia.
For consumer products and services, the 10% GST is included in the charge for goods and services. More on business taxes here.
Fringe Benefits Tax
A fringe benefits tax (FBT) is paid by the employer if they provide other benefits to an employee. Some examples include, private use of a company car, providing parking or rent assistance, or paying school fees or health insurance on behalf of an employee.
The FBT year is 1 April to 31 March and is calculated, submitted, and paid yearly with the ATO.
Each of the states and territory charge a state tax on wages paid by employers. Depending on which state or territory your employees are located, each revenue service will calculate a percentage of these wages to be paid, over and above the stated threshold.
Payroll tax is submitted and paid monthly to the state or territory your employees work in.
Register your intellectual property
Registering a trademark can protect your business brand, such as your business name or logo. a trademark is an asset that gives you the sole right to use, license or sell it to others.
You can apply for your trademark through the IP Australia website.
Licenses and Permits
Your business may need licenses and permits to conduct certain activities and/or help protect your business and employees. These requirements depend on business type, business activities and which state or territory you will be conducting business.
A part of setting up a business in Australia is a business bank account. Australia has a competitive banking system so there are many banks and financial institutions to choose from.
During the process, you will need personal identification documents as well as business set up documents to verify and satisfy the regulations.
Australia has tight laws to fight money laundering and terrorism financing. Businesses must meet the minimum obligations set out in the AML/CTF Act and AML/CTF Rules. More on Australian banking here.
Payroll and HR
Fair Work Australia is the government body which oversees, regulates, and guides employers hiring and employees working in Australia. Employers must be compliant with the laws giving their employees the right to minimum wages, pay slips, superannuation, leave entitlements and notice of termination.
As an employer you must also ensure that your staff are legally able to work in Australia – Australian citizens, Australian permanent residents and New Zealand citizens are all eligible to work. Any visitors to Australia must apply for the appropriate visa from the Dept of Immigration and businesses are responsible that all visas are current and applicable for the position and industry. More on Australian payroll and HR here.
Tax File Number
Every employee must have a unique Tax File umber which is obtained from the ATO. The employer uses this number to pay the staff member their wages, taxation, and superannuation.
Wage rates are already set by national minimum wages, industry awards, enterprise agreements or other registered agreements. They can be paid weekly, fortnightly, or monthly.
Employees must pay a tax on their wages and salaries, called Pay as You Go (PAYG). This is deducted from the employees’ wages before being paid and paid monthly to the ATO.
Employee Leave Entitlements
Employees are eligible to a minimum number of leave entitlements, including sick leave, carers leave, compassionate and bereavement leave, public holiday leave, annual holiday leave, maternity, and paternity leave as well as community leave.
Superannuation is an employee savings for retirement. Every employer must pay the employees superannuation directly to their approved superannuation account. It is called the super guarantee and is based on a percentage of their wages (currently 10.00% of gross including bonuses, overtime, commissions, and loadings). It is paid quarterly into each of the employees’ superannuation account.
Whilst some insurance is compulsory for Australian businesses, other types of insurances can vary and provide protection for your business and minimise its exposure to risk.
Public Liability Insurance
In some industries and circumstances, public liability insurance is mandatory before you can legally operate.
Public liability insurance helps protect you and your business against the financial risk of being liable for negligence. Negligence in this case, is causing reasonably foreseeable harm, such as injury or death, property damage, consequential loss, or negligent advice.
Workers’ compensation insurance is mandatory if you have employees.
Workers’ compensation protects employees if they are injured at work or become sick due to their work. The workers compensation insurance payments are paid to injured or sick employees to cover their wages while they are not fit for work, as well as medical expenses and rehabilitation.
The cost of workers compensation is based on the total wages, salaries and superannuation paid to employees and each industry is weighted in terms of risk (using an industry classification rate).
Each state and territory in Australia have differing workers compensation insurance regulations, so it is important to check the workers compensation regulator in your state or territory.
Other business insurances to consider
There are many other insurances to cover your business. Depending on the risk level, these policies can include insuring your business, your income, and your commercial risk.
Business Interruption or Loss of Profits
This insurance covers you if your business suffers through damage to property by fire or other insured perils. It covers a short-term financial loss from an interruption to a business’s operations because of damage to a business’ premises or equipment.
It helps pay your ongoing expenses and maintain profits over the insured period. Business interruption insurance includes loss of gross profit / rent, any additional expenses incurred because of the event (such as renting temporary premises), plus reasonable claim expenses such as your accountants fees, less any savings in expenses.
This insurance is designed to put your business back into the same financial position you were in before the damage or interruption occurred.
Management Liability Insurance
Management liability insurance protects the personal assets of directors and officers from any liability for mismanaging a company. It covers the business for claims when a manager, employee, director, or officer conduct illegal or unethical management practices that cause losses to individuals or businesses.
This insurance will cover any damages and claimant costs awarded against you including any investigation costs, legal expenses, and financial penalties.
Inland Transit insurance provides cover for business goods or personal items while being transported on land, within Australia by road and rail. The insurance is calculated on the type of goods being transported.
For importers, Marine Cargo insurance covers damage to goods that are imported or exported to/from the nation, as well as within the national boundaries, through any means of transport. It is specified and calculated on the annual sales or turnover of the business.
Cyber Liability Insurance
In a cyber event, your organisation is solely responsible for the financial costs pertaining to any data breaches or business disruptions due to the event. A business is responsible for regulatory fines, loss of business, damage to a brand or reputation, notifications to customers of a breach, and forensic investigations if required.
Cyber liability insurance covers a range of breaches related to the security of electronic information such as a denial-of-service attack, a ransomware attack, or even an outage of Internet infrastructure. This insurance offsets the financial risk in the event of a significant data breach or business disruption caused by these incidents.
The aim of cyber liability insurance is to bring the risk of cyber breaches and attacks, down to a level that your business can endure.
Cyber liability insurance is highly recommended if your business collects, processes or store employees’ or customers’ personal or financial data, or if you have proprietary intellectual property
Specific advice will help you consider your options for your business. Call us on +61 2 8916 6259 or contact us now, with over 20 years of experience we have helped countless businesses like yours weigh up their options and get off to a strong start.