Setting up a new business in Australia requires a number of preparations. Here’s what you need to consider.
3 Considerations When Setting up a New Business in Australia
Written by Global Expansion
18 | 08 | 20
Global Expansion |
6 minute read
There are a few things to think about before you can set up a business in Australia. For example, all businesses in those markets need an Australian Business Number (ABN), a unique number that identifies your organization in the eyes of the government.
If you’re weighing up whether Australia is the right place for your business growth to continue, read this blog for more information on the process.
Initially, you have to consider the physical costs of a foreign entity. In Australia, the prices of renting commercial spaces vary greatly depending on the area. For example, in Sydney Central Business District, office space rentals are the highest in Australia, with net rental levels of $992 per square meter per annum. If you decide to set up a physical entity on-premise, you’ll have to factor in the costs of:
And any associated taxes. In terms of tax itself, there are several types that you must learn about. All individuals and entities are issued with a unique Tax File Number (TFN) by the Australian Taxation Office, as it’s a mandatory requirement to have one. Businesses have to apply for one, where you’re expected to give the following:
Tax registration number.
Business location and authorized contacts.
The taxes that you as a business are expected to pay will vary depending on your circumstances. Some of these may be:
Goods and Services Tax (GST)
This applies to different circumstances. For example, you may be operating in the Goods and Services industry and have a turnover of $75,000 or more. Alternatively, it could be if you’re a business importing digital goods or services worth less than $1,000 and make more than £75,000 per annum.
Fringes Benefit Tax (FBT)
If you provide fringe benefits such as company cars, fee payments or health insurance costs, it’s required that you register for FBT.
Pay as You Go Withholding Tax (PAYG)
If you’re required to withhold payments to workers or other entities, such as contractors, you’ll have to register for PAYG, before the first time you withhold tax.
Other than tax, there are financial benefits you’re liable to receive for doing business down under. Australia has an extensive funds and grants system which your organization could be eligible for. For example, start-ups in Adelaide can receive a Small Business Development Fund worth $20,000.
Like many countries, there are multiple choices when it comes to Australian visas. For example, foreign entrepreneurs are entitled to apply for a Business Innovation and Investment Visa, provided they’ve been nominated by a state or territorial government.
The more likely option that you may apply for within an international expansion process is a Business Talent Visa. This allows you to establish an existing business within Australia, but there are stipulations. To apply, you must:
Have a net value of AUD 1.5 million.
Have a business turnover of at least AUD 3 million per annum, for at least two of the four fiscal years immediately prior to application.
Have total net assets of at least AUD 400,000 as the ownership interest in one or more qualifying businesses. This also needs to have been the case for at least two of the four fiscal years before application.
You also will be eligible if you’ve obtained at least $1 million in venture capital funding in Australia through a high-value business idea.
Fair Trading Laws
These laws ensure your business is trading fairly in an equal and just market. They’re essential for you to study. For example, take your time to get to grips with:
Furthermore, in an international expansion, one of the main issues for expatriated employees can be culture shock. No two countries are fully alike, with some pairs being at completely opposite ends of the spectrum.
Companies from the UK and the US will have a natural advantage over others when it comes to expanding into Australia. There are many cultural similarities, such as cuisine, pop culture, humor and media.
There’s also no risk of a language barrier (although Australian slang can be confusing at times). Even for European countries or other places with a high level of English speaking citizens, it’s a desirable expansion target. This is one reason why Australia is such a popular destination for travelers, entrepreneurs and businesses alike.
Australia is the most popular destination in the world for British expats, with over one million Brits living there. However, it’s always best to get the expert’s opinion. Consider working with a Professional Employer Organization to ease yourself into this new territory.
Also, don’t be immediately lulled into a false sense of security just because of potential cultural similarities. The key to judging whether an expansion will be a success is about finding a market for your product or service. If Australia doesn’t have it, it’s not the wisest target.
Expanding into any new market requires a lot of planning. There are many hidden obstacles within international regulations that are just waiting to trip you up. To begin planning your expansion process on a much better footing, download our helpful guide.
The Top Considerations for Business Expansion
Our guide, ‘Expansion Considerations for Rapidly Growing Businesses’ features some of the most important areas of expansion that you’ll have to prepare for. For example, what kind of growth option are you pursuing? Licensing arrangement or In-Country Partnership? Another method? It’s worth exploring all possible avenues and finding out what will fit your business venture best.
If you’d like to discover more about international growth options and more, simply click the banner below for your free copy.