Sole Trader Formation, trading under a business name
This is the simplest and cheapest form of business structure. The sole trader has exclusive control over the business however also has unlimited liability for debts of the business.
If you wish to trade under a name that is not your name you will need to register the business name with the Consumer Protection Authority of the State or States in which the business name is used.
New business names must be different from existing names and must not be misleading or offensive.
It is important to note that the registration of a business name does not confer any propriety rights in that business name. However once trading commences under the business name the name generates goodwill or reputation. This goodwill can be protected. The business name you choose should project your desired image.
Ten tips for your business
Corporate Express is often the first port of call when someone wants to start up their first business. To assist our start-up clients we have developed a list of 10 tips.
- Choose your business entity.
Factors to consider are:Sole trader formation is the simplest and cheapest form of business structure. The sole trader has exclusive control over the business however that trader also has unlimited liability for debts of the business.
If you wish to operate your business as a company you must incorporate your company. The advantages of incorporation include:
- Choose your business name
If you wish to trade under a name that is not your name you will need to register your business name with the Consumer Protection Authority of the state in which the business name is used.
The name you choose should reflect your desired image and must not be misleading or offensive and must be available as a domain name if you wish to have a website.
- Design a logo/letterhead/distinctive mark
If you want to establish your business as a brand you may need to create a distinctive mark or logo.
- Consider whether you need to register your business
name/logo as a trade mark.
The registration of your business name does not confer any proprietary rights in that name or your logo.
By registering your name/mark/logo as a trade mark the identity of your goods or services are protected in the sense that you can prevent others using it.
- Obtain an ABN prior to the commencement of trading.
The Australian Business Number (ABN) is a number allocated to businesses by the Australian Taxation Office (ATO) and is used for all dealings the company has with the ATO. The company must place its ABN on all tax invoices irrespective of whether you are registered for GST.
- Consider whether you need to register for GST
If you carry on a business, you must register for GST if your GST turnover is at, or above the GST turnover threshold, that is, it is $75,000 or more.
- Consider whether you need special licences to commence
trading.
This information can be obtained from website of the Consumer Protection Authority of the State in which the business name is used. For NSW that is the Office of Fair Trading.
- Your business will need a TFN
A Tax File Number (TFN) is a unique number issued by the ATO to individuals, companies, partnerships and trusts. Sole traders use their individual TFN, there is no need to apply for another one. You can apply for a TFN at the same time as you apply for an ABN on-line at www.business.gov.au or phone the ATO on 13 28 66.
- Open a bank account for your business
Even if you are a sole trader it is often wise to open a separate bank account for your business. This will assist you and your accountant in identifying income and allowable deductions for your business.
