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So, you want to start a small business in Australia? Great! Maybe you’re going out on your own, chasing freedom, or finally turning that side hustle into something real. Before you dive into logos, Insta handles, and naming your van “The Money Maker”—let’s talk about how to actually get set up properly. Because I’ve seen what happens when you don’t. Spoiler: it’s not pretty.

When my husband and I launched our first business, he was a wizard with his hands and tools… but spreadsheets? Budgets? Paying his BAS? Not exactly his area of expertise. I wasn’t heavily involved in the financial side back then—until 2.5 years in, pregnant with our first child, I discovered he’d racked up over $100,000 in unpaid tax. He’d been carrying the stress alone, completely overwhelmed and riddled with guilt, too ashamed to tell me what was really going on.

Yep. $100K. Owing to the ATO. Morning sickness and financial panic? 10/10 do not recommend. We had no systems, a basic accounting software, and no clue what we were doing behind the scenes. We were working in the business, not on it—and we paid for it. Literally.

Thankfully, we eventually dug ourselves out. It took planning, support, and a whole lot of uncomfortable conversations—but we turned it around. And now? I want to help you avoid that kind of chaos.

This guide is packed with practical steps, simple tools, and real-world advice on how to start a small business in Australia—the smart way. Whether you’re a tradesman, an artist, a freelancer, or somewhere in between, and you’re looking to start a small business in Australia—this is the stuff I wish someone had handed me on day one.

Let’s get into it.

Step 1: Choose the Right Business Structure

Your structure impacts your legal obligations, tax, and how you get paid.

👤 Sole Trader

Simple, cheap, and quick—this is the most common starting point for solo business owners.

As a sole trader, you and your business are the same legal entity, which means you get full control over everything… but also full responsibility. If something goes wrong (like debt or legal issues), your personal assets—yep, even your house or car—could be on the line.

• Pros: Easy to set up, low cost, minimal paperwork
• Cons: You’re personally liable for everything
• Setup: You can register your ABN and business name yourself at abr.gov.au in under 30 minutes—no accountant needed (though it’s smart to get one eventually). Perfect for freelancers, tradies, and side hustlers just getting started.

Ideal for Solo operators, freelancers, tradies, creatives, or anyone testing a business idea with minimal risk and overheads. Great if you want to keep things simple while you get off the ground.

🏢 Company (Pty Ltd)

A company is a separate legal entity, which means it can own assets, earn income, and be sued—independent of you personally. This offers more protection to you personally, but it also comes with more compliance, paperwork, and higher costs.

• Pros: Limited personal liability, more credibility, potential tax benefits
• Cons: More complex setup, ongoing admin, must follow company laws
• Setup: You’ll need to register through ASIC and it is recommended to engage an accountant or company setup service to help with the setup. Expect to pay upwards of $1,000-$2,000 to get started

Ideal if you plan to grow, hire staff, or need a more formal structure for contracts or tenders.

🤝 Partnership

Two or more people go into business together and share income, decisions, debts, and responsibilities. Think: spouses, siblings, mates—what could go wrong? A partnership is relatively easy to set up, but it’s crucial to have a solid partnership agreement to avoid disputes (especially if you’re in business with family or friends).

• Pros: Shared workload and startup costs, simple setup
• Cons: You’re each personally liable for the debts—even if the other person racks them up
• Setup: You can register as a partnership at abr.gov.au, but it’s wise to get legal and accounting advice to draw up a partnership agreement first.

Ideal setup for two or more people starting a business together with shared responsibilities and are happy to split everything (including the stress).

🛡 Trust

A trust is a legal structure where a trustee (person or company) holds and manages business assets on behalf of beneficiaries (usually family members). It can be a very tax-effective and asset-protective setup—but it’s not DIY-friendly.

This structure is often used by families or people planning to build wealth and protect assets long-term. The ATO and banks love good paperwork with trusts, so you’ll need a savvy accountant from the get-go.

• Pros: Excellent for asset protection, flexible income distribution
• Cons: Expensive to set up and maintain, complex rules, must have a trust deed
• Setup: 100% accountant territory. Expect to pay $1,500+ for setup and ongoing admin.

Ideal for Family businesses, high-income earners, or those wanting strong asset protection and flexible tax planning—especially if you’re thinking long-term wealth building.

👉 Tip: Speak with an accountant or business advisor before setting up any of these business structures. It’s a 30-minute conversation that could save you years of headaches.

Step 2: Register for an ABN and a Business Name

Easy and essential. Head to abr.gov.au for your ABN (Australian Business Number) and ASIC Connect to register your business name.

💡 ABNs are free. Business name registration starts from $39/year.

Every business in Australia needs an ABN —but whether or not you also need to register a business name depends on how you’re setting up your business.

Here’s what you need to know based on your structure:

👤 Sole Trader

DIY-friendly – You can do this yourself quickly and easily.

• Register for an ABN at abr.gov.au – it’s free and takes about 10–15 minutes.
• Register a business name at ASIC Connect only if you’re trading under a name that’s not your full legal name (e.g. “Joe Smith” = no name needed, but “Joe’s Carpentry” = yes, register it).

Once you’ve got your ABN and business name sorted, head straight to Step 3.

🏢 Company (Pty Ltd)

Definitely use an accountant or company setup service to help set up a company structure.

• A company is a separate legal entity, which means more paperwork, more rules, and more complexity.
• You’ll get an ABN and company registration via ASIC, and you may also need a business name if trading under something different.
• You’ll need to understand things like director responsibilities, company tax, and ASIC reporting.

Get your accountant to set this up for you (trust me, it’s worth it). Once your company is officially registered, head to Step 3.

🤝 Partnership

Accountant recommended – You can register this yourself, but it’s much smarter to involve an accountant.

• The partnership needs its own ABN.
• You’ll likely need a partnership agreement drawn up to protect everyone involved (and avoid future disagreements).
• A business name is needed if you’re not using the full names of the partners.

If you’re going this route, it’s best to get your accountant to set this up properly. Once everything’s registered, skip ahead to Step 3.

🛡 Trust

100% accountant territory. Don’t even try to DIY this one.

• Trusts require a trust deed, appointed trustee, and proper setup to ensure legal and tax compliance.
• The trust gets its own ABN, and if it trades under a name that’s not the trustee’s name, you’ll also need a business name.

Your accountant will handle this entire process. Once everything is structured and ready to go, skip ahead to Step 3.

Step 3: Open a Business Bank Account

Mixing personal and business money is the fast track to confusion (and tax nightmares). Set up a dedicated business bank account that’s simple and digital-friendly.

Two solid options in Australia offering $0 monthly fees:

Westpac Business One Account
$0 monthly fees for online-focused businesses, plus perks like free MYOB and Lawpath subscriptions for 12 months (worth over $1,200 combined).
👉 westpac.com.au

NAB Business Everyday Account
No monthly fees, unlimited electronic transactions, and quick online setup in under 15 minutes. Perfect for businesses that mostly bank online.
👉 nab.com.au

Bonus tip: Make sure your business bank account connects with your accounting software (like Xero or QuickBooks) for easy reconciling and BAS time bliss.

Step 4: Set Up Accounting Software From Day One

This is where we went wrong. We waited. We guessed. And it cost us dearly. Set yourself up with cloud-based accounting software that:

• Links to your bank account
• Tracks income & expenses
• Helps you send invoices & get paid faster
• Prepares for BAS, GST, and end-of-year tax
• Allows your accountant to log in too

Top options:

• Xero – Aussie-friendly, intuitive, built for small business
• QuickBooks – Simple, clean, budget-friendly
• MYOB – Great for more complex needs or payroll-heavy businesses

Step 5: Sort Out Licences & Insurance

Before you start invoicing, swinging hammers, or selling your genius online, make sure you’ve ticked the legal boxes. Depending on your industry, you may need specific business licences, permits, or insurance to operate safely and legally.

• Public liability insurance
• Professional indemnity
• Workers comp
• Local permits or industry licences

Check what’s required at business.gov.au.

Don’t skip this step—some insurances are mandatory and not having them can cost you way more than the premiums ever will.

If you’re looking for trusted business insurance in Australia, these three are solid options:

• BizCover – Australia’s leading small business insurance comparison site. Get instant quotes for public liability, professional indemnity, and more.
• QBE – Well-known provider with tailored insurance options for trades, retail, and service-based businesses.
• Allianz – One of Australia’s biggest insurers offering flexible cover for small businesses, including public liability and property insurance.

Step 6: Set Up a Simple Record-Keeping System

Ah, record-keeping. The unglamorous side of running a business—right up there with filing and changing your email password for the 47th time. But hear me out: good records = less stress, better decisions, and fewer angry letters from the ATO.

Think of it like doing the laundry. It’s not thrilling but skip it for a week or two and suddenly you’re buried in chaos, mismatched socks, and regret. Record-keeping is the same—ignore it, and it piles up fast.

Keeping good records helps you:

• Stay compliant with the ATO
• Track how your business is really performing
• Claim every tax deduction you’re entitled to (hello, instant asset write-off!)
• Make BAS and EOFY less of a drama
• Spot issues early (before they become $100K problems—ask me how I know)

Here’s a basic setup to keep things under control:

✅ A dedicated business email address to keep all your invoices, receipts, and client communication ion one easy-to-find place (and looks more professional)
✅ Cloud storage so you can back up important documents (Google Drive, Dropbox, or iCloud)
✅ A digital calendar for BAS and ATO due dates (and set reminders 2 & 4 weeks reminders)
✅ Use a forecasting budgeting app to stay on top of your business funds, plan ahead for upcoming bills and BAS, tax, so you’re no caught off-guard. Think PocketSmith, or Xero’s built in cash flow tool
✅ A receipt capture app—so you’re not digging through the glovebox at the end of financial year! I recommend Hubduc, a fantastic tool that syncs directly with Xero and automatically pulls in bills and receipts. Dext is another great option, linking seamlessly with Xero, MYOB, and QuickBooks to keep your records tidy and up to date.

Side Note: Stay on Top of Tax (Trust Me on This One)

Tax isn’t something you can sort out “later.” We tried that—and ended up with a $100K ATO debt. Painful, stressful, and totally avoidable.

Here’s how to stay on top of it from day one:

• Set aside 25–30% of every payment you receive. Pop it straight into a separate “Tax Savings” account. Treat it like it doesn’t exist—it’s not your money, it’s the ATO’s (sorry).
• Register for GST if your annual turnover will hit $75,000+. Once you cross that threshold (or expect to), GST registration is required. This means adding 10% to your invoices and lodging a Business Activity Statement (BAS) either quarterly or monthly.
• Don’t forget superannuation if you hire staff. As an employer, you must pay super at 11.5% of ordinary earnings. Late payments = penalties. Heads up: the rate will increase to 11.5% on 1 July 2024, and then to 12% from 1 July 2025, so make sure you’re planning ahead.
• Keep BAS lodgment dates in your calendar. Set reminders! The ATO doesn’t love excuses, but they do love prompt lodgments. Late BAS = late fees.

💡 Pro tip: Your accounting software can calculate GST, track super, and prep your BAS for you—if you keep it updated.

Final Thoughts from a Reformed Financial Hot Mess

Starting a business is exciting—but skipping the boring bits (like bookkeeping or budgeting) will bite you later. You don’t need to be a financial expert, but you do need the right tools and a little discipline. If you set things up well now, future-you (and your tax bill) will be in a much better place.

Learn from my story. Start smart. Use the tools. Ask for help. And don’t wait until your BAS is due and your baby’s kicking you in the ribs to figure it all out.

You’ve got this—and I’m here to help. If there’s something you’re still unsure about or a question I haven’t covered, drop it in the comments and I’ll do my best to give you advice that’s tailored to your situation.