Legal Basics for Starting a Small Business in Australia
Last updated: June 2026
Choosing a Business Structure
The four main business structures in Australia:
| Structure | What it is | Personal liability |
|---|---|---|
| Sole trader | You trade in your own name (or a registered business name) | Unlimited, personal assets at risk |
| Partnership | Two or more people in business together | Unlimited (each partner liable for all) |
| Company (Pty Ltd) | Separate legal entity, owned by shareholders | Limited to share capital (usually) |
| Trust | Assets held by a trustee for beneficiaries | Trustee has unlimited liability |
Most small businesses start as sole traders (lowest cost, simplest compliance) or private companies (limited liability, better for investment and growth).
Registrations and Numbers
- ABN (Australian Business Number): Register at the ATO (free). Required for most business activity.
- Business name: Register with ASIC (abn.business.gov.au) if trading under a name other than your own. Fee applies.
- Company registration: Via ASIC. Sets up a Pty Ltd with an ACN (Australian Company Number). Fee applies.
- GST: Register if turnover is $75,000 per year or more. Also register for PAYG withholding if you employ staff.
Contracts
Written contracts protect your business. Key contracts include:
- Client/service agreements (scope, payment terms, IP ownership)
- Employment contracts (see below)
- Supplier agreements
- Website terms and conditions and privacy policy (required if you collect personal data)
Employment Law Obligations
If you employ staff:
- You must pay at least the award rate or minimum wage
- Provide National Employment Standards (NES) entitlements (leave, notice, etc.)
- Pay superannuation (currently 11.5%) by the quarterly due date
- Comply with Fair Work Act (unfair dismissal, adverse action protections)
- Provide a safe workplace under WHS legislation
Casual and contractor arrangements have strict rules, misclassification can result in back-pay liability.
Consumer Law Obligations
If you sell goods or services to consumers, the Australian Consumer Law applies. Key obligations:
- Goods must be of acceptable quality, fit for purpose, and match descriptions
- Services must be rendered with due care and skill
- You cannot engage in misleading or deceptive conduct
- Consumers have statutory guarantees, you cannot contract these away
Privacy
If you collect personal information, you may need to comply with the Privacy Act 1988 and the Australian Privacy Principles. Small businesses with turnover under $3M are usually exempt, but this threshold may change, and health information always attracts obligations.