5 Top Tips for Your New Business Venture or Start-up
Hobby now a business? Now what? With the emergence of social media platforms such as Instagram, Etsy and eBay, we have seen the rise of hobbies evolving into businesses. With any start-up or business venture it is important to understand your legal obligations and ensure you seek legal advice where possible.
So what is it that you should know when turning your hobby into a business venture?
1. Research your business structure
There are many advantages and disadvantages of using different business structures commonly used by small businesses. Careful consideration of the various structures may assist you to determine:
The licences you require;
How much tax you pay;
Your relationship to the business as an employee or owner;
Potential liability; and
Your control over the business.
The four main business structures commonly uses by small businesses in Australia are: sole trader, partnership, trust and company.
2. Set up an Australian Business Number (‘ABN’)
An ABN is a unique 11 digit number that identifies your business to the government and the community. To be eligible for an ABN, you are required to be carrying on an enterprise.
Although in some instances you can run a business without an ABN, it does make running a business easier. Without an ABN, other business must withhold 49% from payments they make to you for tax purposes.
3. Register for Goods and Services Tax (‘GST’)
Goods and Services Tax (GST) is a broad based tax of 10% on most goods and services sold or consumed in Australia.
In most circumstances, if your business turnover is $75,000 or more (or provides taxi travel as part of your business irrespective of annual turnover), the business may, in all but the most exceptional of circumstances, be required to register for GST.
Once registered for GST, the business will be required to collect from its clients, and remit the GST to the Australian Taxation Office. The obligation to furnish business activity statements to the ATO arises upon registration for the purposes of the GST regime.
4. Consider your obligations as an employer
Many start-ups and business ventures take off suddenly and with the increased demand, business owners require an extra set of hands and decide to hire staff.
It is important to understand your obligations as an employer. You ought to provide your employees with an employment contract. An employment contract details the employee’s role, remuneration, entitlements (such as sick leave, annual leave and superannuation) and employer obligations.
It is important to seek legal advice or assistance in drafting an employment contract to ensure the most pertinent provisions have been considered and the document reflects the needs and demands of your business.
5. Arrange insurance
Insurance is an essential part of every business to manage risk. Your insurance requirements will vary depending on the business you are operating, structure, size and type of industry. Some forms of insurance are compulsory in Australia such as:
- Workers compensation (if you have employees);
- Third party personal injury insurance (if you own a motor vehicle); and
- Public liability insurance for certain types of companies.
You should consider carefully whether your business requires further insurance to minimise your risk and protect your business.
If you are interested in turning your hobby into a business venture, speak with one of our friendly staff at Bambrick Legal today. We can help you understand your legal obligations and manage your risk. Contact us for an initial appointment on 08 8362 5269, email [email protected], fill in our enquiry form here or visit our office at Suite 12, 15 Fullarton Road, Kent Town SA 5067.