Despite being more famous for glorious weather, a relaxed social culture, and snakes and spiders that are big enough to give anybody the creeps, Australia has quietly established itself as a great place to do business.
With an open trading market and diverse population, trading Down Under could reap great rewards.
Does Australia welcome overseas businesses?
Australia is a land built on immigration, and the authorities welcome overseas investment and business interests to this day. The national economy has steadily grown for decades, thanks in no small part to a strategic policy of importing skills that the local labour force may lack. If your business model acts in the national interest, your application to trade in Australia will likely be embraced.
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What industries are most popular in Australia?
The most significant industry in Australia in terms of revenue is state government, which will not interest anybody looking to start a business. The next most noteworthy and profitable industries are as follows:
- Financial services
- Professional business services
- Public and private health services
- Retail and consumer goods
- Mining
As you’ll see, this provides a broad opportunity to open a business in any number of sectors.
Is it easy to set up a business in Australia?
Setting up a new business venture in Australia is comparatively straightforward. As always, a range of administrative tasks will be involved, but nothing too overwhelming. This is the process for getting your trade up and running:
How to set up a business in Australia
- Secure a trading address in Australia
You’ll need a mailing address for all official communications, and this cannot be a PO box number
- Decide on your business structure
Your options include sole trader, Limited company (Ltd) and Proprietary limited company (Pty Ltd). We’ll elaborate upon these shortly
- Choose a name for your business
You’ll need to ensure this name will not infringe on existing copyright – the government website has a helpful business name checker that will confirm if your chosen moniker is available, as well as suggesting web domains.
- Apply for a nine-digit Australian Company Number (ACN)
Do this through the Australian Securities and Investments Commission (ASIC).
- Using your ACN, apply for an eleven-digit Australian Business Number (ABN)
Do this through the Australian government website.
- Using your ABN, apply a Tax File Number (TFN)
And register for Goods and Services Tax (GST) through the Australian Taxation Office (ATO).
- Return to ASIC
And register your business using your ABN.
- Check if you will need a license to run your business
Do this here – this varies depending on your location and industry.
- Open a local bank account
Armed with all the documents completed above, you can open an Australian business bank account.
That’s a lot of acronyms to remember, but it’s a faster and less laborious process than in many other countries.
Can I run a business in Australia while living overseas?
You can start a business that trades in Australia and remain living overseas, but at least one local company director must be appointed.
This could be anybody over the age of 18, and obviously, you need to be able to trust them to make significant decisions that impact your business affairs.
Due to time differences between the Northern and Southern hemispheres, waiting for you to approve or decline a request will not always be an option.
Cultural considerations when running a business in Australia
If you’re going to do business in Australia, you’ll do business with Australians. Here are some cultural considerations to take under advisement.
- Business dealings in Australia strike a balance between formality and informality. Your counterparts will take their responsibilities seriously but are not interested in pomp and circumstance. Do not be afraid to break the ice with a joke or make personal conversation before getting down to brass tacks
- Learn the lingo! Even in the biggest business deals, Australians are likely to use slang terms. Expect to be invited to attend a “prezo” (presentation) on “Tuesday arvo” (afternoon). If you bring “choccie biccies” you’ll be a “legend”
- Despite these relaxed sensibilities, punctuality is a big deal in Australia. Avoid being late if you want to make a good impression
- Bragging will get you nowhere. Walk into a meeting with a sense of superiority, talking about your educational or workplace achievements, and Australians are likely to yawn and stop listening
- Everybody is equal in Australia. Treat receptionists, chauffeurs and waiting staff with the same respect that you do businesspeople – never shut down somebody’s opinion without hearing them out, or judge people by their job title
- Australians do not like drama in the workplace. Try to keep stress out of your dealings – focus on solutions rather than complaining about problems
What business structures are supported in Australia?
These are the most popular structures if you wish to set up a business in Australia.
| Type of Australian business entity | What is it? |
|---|---|
| Sole trader | You can register as a sole trader in Australia and employ people to work for you. You may be able to save money on taxation with this model, but you’ll be personally liable for any financial and legal issues related to your business |
| Limited company (Ltd) | A business interest independent from your personal legal or financial obligations (unless you have taken out secured director loans or failed to keep up with tax or superannuation payments.) You can choose to list a Ltd company on the Australian Stock Exchange and sell shares of the business to the public or employees, but there will be limitations on this |
| Proprietary limited company (Pty Ltd) | The most popular business model in Australia, a Pty Ltd company can have up to 50 shareholders. To qualify as a Pty Ltd, you’ll need to meet at least two out of three of the following criteria – 50 or more employees, at least AU$5 million in assets, and annual revenue that exceeds AU$10 million |
Alternatively, you can open a branch of your existing business that operates from overseas. This enables you to benefit from brand recognition, but it also means your parent business is liable for any legal or financial difficulties encountered while doing business in Australia.
The process of opening a branch is also very similar to opening a separate business entity, so you will not save any time or labour by taking this approach.
Taxation in Australia
If you want to do business in Australia, you must understand the taxation rules and regulations that will impact your bottom line.
What is the corporate tax rate in Australia?
The corporate tax rate for most SMEs in Australia – businesses with an annual turnover of AU$50 million or lower – is 25%. If you exceed this threshold, the tax rate increases to 30%.
What are the employee income tax brackets in Australia?
All employees in Australia that earn above a certain threshold need to pay income tax. For Australian nationals, these tax contributions break down as follows.
| Annual salary (AU$) | Income tax payable |
|---|---|
| $18,200 or lower | 0% |
| $18,201 – $45,000 | 19% |
| $45,001 – $120,000 | 32.5%, plus a flat fee of $5,092 |
| $120,001 – $180,000 | 37%, plus a flat fee of $29,467 |
| $180,001 or higher | 45%, plus a flat fee of $51,667 |
Tax is simplified for non-Australians living and working in the country.
| Annual salary (AU$) | Income tax payable |
|---|---|
| $120,000 or lower | 32.5% |
| $120,001 – $180,000 | 37%, plus a flat fee of $39,000 |
| $180,001 or higher | 45%, plus a flat fee of $61,200 |
These numbers seem high, but Australia ranks relatively low in global employee taxation. That’s because employees in Australia do not pay any additional social security taxes. All government spending is funded by income tax alone.
Overall, Australians pay around 5% less tax than an equivalent employee in the UK once National Insurance contributions are considered.
Businesses do not need to make social security contributions on behalf of employees, aside from a 10.5% contribution to a superannuation fund, which theoretically saves you money as an employer.
However, Australians expect this to be reflected in a higher salary than you may be used to paying a British employee for the same role.
It is the responsibility of the employer to withhold income tax from an Australian employee’s wages upon running a monthly payroll.
How are taxes paid in Australia?
The Australian tax year runs from July 1st to June 30th, and all tax returns must be filed with the ATO by October 31st of the same year. So, a business owner will need to file their tax return for the 2023–24 financial year, and pay their bill, by October 31st 2024.
Businesses also need to submit quarterly expense reports to the ATO. As taxation in Australia is quite complicated, it is generally advisable to enlist the services of a professional accountant or agency to act in your stead.
Payroll & hiring employees in Australia
Hiring the right talent can make or break a company. Ensure your Australian business interests are staffed by the best possible talent.
Does Australia welcome overseas talent?
Like most countries, the Australian authorities will always look to prioritise jobs for the local labour force. However, there are some roles that the government considers specialist, and they are always looking for imported talent.
The following vocations are considered Skilled Occupations in Australia at the time of writing and are thus likelier to be awarded a visa to enter the country and work:
- Accountants and financial auditors
- Architects
- Cartographers
- Chefs
- Engineers
- Medical practitioners
- Nurses
- Pharmacists
- Social workers
- Surveyors
- Veterinarians
Who needs a visa or work permit to work in Australia?
Unless you hold a passport issued by Australia or New Zealand, you will need a visa to work in Australia. Visas and work permits are awarded based on a points system – the more the skills of an imported employee will serve in the national interest, the more points they will accrue.
What employee benefits are compulsory in Australia?
Employees of an Australian business are entitled to the following mandatory benefits by law.
- No less than 20 days of personal leave, plus at least 7 public holidays
- 13 weeks of long service leave for any employee that completes 10 years of service
- Superannuation payments of 10.5% of a monthly salary into a retirement pension fund
- Worker’s compensation insurance in the event of injury
- 18 weeks of Parental Leave Pay (PLP) at no less than minimum wage
- Minimum of 10 days of paid sick leave for full-time employees
Of course, if you wish to attract the very best talent to your business, you may want to offer additional supplementary benefits.
Employment law considerations in Australia
The Fair Work Act governs Australian employment law. Nothing in this act is revolutionary – Australian employees are afforded all the usual protections against discrimination. Three key things to note are:
- The minimum wage in Australia is $21.38 per hour
- Employees cannot be asked to work more than 38 hours in a single week without a written agreement
- Australian employees cannot have their jobs terminated at will without an excellent reason – you’ll need to provide evidence of gross misconduct. Low standards of performance, timekeeping, or attendance are not grounds for immediate termination
Cultural considerations when hiring employees in Australia
As with doing business with partners and associates, there are some cultural considerations when hiring employees in Australia.
- It’s not a secret that Australia is a hot country. In the height of summer, your employees may want to start work earlier and get home before the heat becomes unbearable
- Don’t get hung up on the hierarchy. A common term in Australia is “tall poppy syndrome,” built on the belief that a poppy that towers over all others is detrimental to the field and needs to be cut down. Treat everybody equally – nobody will tolerate being spoken down to just because you outrank them
- Your employees will likely be straight with you, and if they disagree with a decision, they’ll tell you. Learn to welcome this open dialogue. Don’t try to hide behind a closed door all day, either – Australian employees will expect the opportunity to talk to you
- Australian employees will likely get along socially and spend time together outside work. If you’re invited to join, it’s considered good manners to accept, even if just for a while
- Australians are not afraid to crack jokes or use profanity. Unless your employees are using racist, sexist, or homophobic language that contravenes the law, turn a blind eye – it’s not the done thing to discipline an Australian employee for colourful language
- Unions are prevalent in Australia, and it is illegal to discriminate against employees that choose to join such a body. It’s in your interests to work with unions, not against them
FAQs about setting up a business in Australia
Still have questions or are seeking a swift answer to a basic query? Here are some of the most frequently asked questions about establishing a business in Australia.
Minimum notice periods vary depending on the length of employee service. If an employee has worked for you for less than a year, it’s one week. Two years of service or less equals two weeks. Up to five years of service means three weeks, and over five years of service leads to a notice period of four weeks. Again, let us stress, these are minimums – you can protect yourself by writing longer notice periods into an employment contract.
Superannuation is an employer pension. You’ll need to pay 10.5% of a full-time employee’s monthly salary (excluding bonuses and overtime) into this pension pot.
A single Australian dollar will be sufficient capital to set up your business.
Not as long as many other countries. If you get help from a local expert, you can complete the whole process online in weeks.
Yes, you will need a business account registered in Australia to do business in the country.
Yes, at least one director of a business must be an Australian resident aged 18 or over.
The official working week in Australia is capped at 38 hours by law. This typically breaks down to 7.6 hours per day, Monday to Friday.
Australian employees value flexible working hours, so this is a common supplementary perk. Many companies reward loyalty by increasing personal holiday packages based on time in service or financial rewards upon service milestones.
Only on the grounds of gross misconduct, such as turning up for work while intoxicated, theft of company property, or violent and abusive behaviour. If you wish to terminate at will, you must provide evidence of this misconduct.
Most jobs in Australia come with 20 days of personal leave as standard, rising to 25 for shift work.
You can open a branch of an existing business in Australia, but the process is similar to opening a separate business entity. Unless you have significant name brand recognition, opening a new limited company and separating your liabilities is likely preferable.