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Starting a small business is different for every business owner. As such, so is the cost of starting a small business.
Many different factors influence setting up a small business. Industry, size, location – to name a few. Therefore, there’s no singular answer when it comes to deciding how much it will cost to start a small business in Australia.
Rather, it’s best to take a look at all the different expenses you may incur when starting your individual business. That way, you’ll be able to better plan for your business’s future.
How Much Money Is Needed To Start A Small Business?
Before you start calculating specific sums of money, it’s natural to want a ballpark number or an estimate of just how much it may cost to start a small business. Understanding the unavoidable costs is a good way to get an idea of how much you might need to spend to get your business off the ground.
Fixed payments such as fees, licences and permits are often legally necessary to start your business. Without making these payments, you may not be able to set up your small business at all.
Start with assessing the process of setting up your business. You’ll need to register your business and this might cost you, depending on the kind of registration you opt to go for.
Getting an Australian Business Number (ABN) is necessary for most Australian businesses. If you’re registering your business as a sole trader or in a partnership, then applying for an ABN will be your first step. Acquiring an ABN is completely free and the application form can be completed online. However, if you’re using a name that is different to your personal one, then you will need to complete a separate application and pay a fee to register your Business Name.
If your small business is a serious business endeavour, then it’s wise to register your new venture as a company. Setting up a company is much more complex and costly than simply registering as a sole trader, however it does come with a lot more legal protection. The costs of registering your company will vary based on the type of company you want to set up. We always recommend getting the help of a legal expert when setting up your company, that way you’ll be able to make sure everything is being done the right way.
We’ve written in more detail about the costs of setting up a company in our article, How Much Does IT Cost To Set Up A Company? Check it out to learn more.
So, if you want to have an idea about how much it may cost to start your small business, then it’s important to start the research process. Other than researching company registration, you will also need to look at any business licences or local permits, as these could add to the cost of starting your business. If you need help or just someone to steer you in the right direction, then our legal experts are always happy to chat.
Can You Start A Business With No Money?
Technically, it’s not impossible to start your business with zero funds.
As getting an ABN is free, setting up as a sole trader won’t cost you anything. However, it’s important to keep in mind that this is the bare minimum for setting up your business. If you want to start your small business in a way that protects it and secures its future, then you’ll need to invest a little into your business during the early days.
Once registration is complete, it’s highly recommended that you look into getting the right legal agreements to help your business function smoothly. The legal agreements your small business will need is going to depend on its operations, however a few that you may want to consider include:
- Privacy Policy
- Service Agreement
- Employment Agreement
- Website Terms and Conditions
- Supply Agreement
- IP Licence
Remember, every business is open to some sort of risk. Having strong legal agreements in place can help manage these risks. A common mistake business owners tend to make is thinking they don’t need to account for the legal aspect of starting a small business.
Unfortunately, the severity of this mistake is often realised when it’s a little too late. Therefore, we highly suggest setting aside funds to invest in the legal protection of your business. Not doing so could end up proving more costly in the long run.
How Do I Get Money To Start A Small Business?
Sometimes, figuring out how to finance your business can be the biggest factor in getting from point A to B. There’s a number of different options you can utilise to get funding for your small business. For instance, you can opt to take out a loan, dig into your personal savings or get crowdfunding. If you’re running a company, then you might decide to raise capital through investors.
No matter which path you deem to be right for your business venture, it’s important to make sure you have the necessary legal protections in place when financing your business. Legal documents such as a Loan Agreement, Term Sheet or a Safe Note can help you achieve this – be sure to talk to a legal expert about your options so they can help you out.
Next Steps
When starting a small business, it’s important to take into account all the different costs that come with venturing into the business world. To summarise what we’ve discussed:
- Starting a small business in Australia varies in cost for each owner, depending on factors like industry, size, and location
- There is no singular answer for the overall cost, so it’s essential to assess individual business expenses for better planning
- Fixed payments such as fees, licences, and permits are legally required for business setup and must be considered
- Registering a business requires an Australian Business Number (ABN), which is free, but registering a business name incurs a fee
- If opting for a company registration, it is more complex and costly, but it provides additional legal protection
- While technically possible to start a business with no money, it’s advisable to invest in legal agreements for protection
If you would like a consultation on the costs of starting a small business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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