What Is A Business? (2025 Updated)

We see businesses everywhere around us – whether you’re buying new clothes, ordering food or even paying someone to run an errand for you. In 2025, the dynamic nature of commerce means that understanding the fundamentals of how businesses operate is more important than ever.

Whether you’re a consumer or planning to start your own business, it pays to understand the basics of the business world. In today’s climate, where digital transformation and regulatory updates continuously reshape industries, getting a solid grasp of these fundamentals is crucial. So, what is a business?

In this article, we’ll break down what a business actually is – from its structure and key roles to buying, selling, relevant legislation, regulatory bodies, contracts and even the shift towards eCommerce. Our aim is to provide clear, updated insights to set you on the right path in 2025.

What Is A Business?

A business is an organisation that aims to generate a profit by selling goods or providing services. The key elements that define an organisation include:

Product: The item or service the business provides.
Market: Knowing your audience – the people you want to sell to – is essential.
Vision: A clear purpose and well-thought-out business plan drive a business towards success.
Finances: Managing capital, profit, and investments effectively is key to seeing tangible results.

Why Do People Start Businesses?

People launch businesses for a myriad of reasons. In 2025, many are driven by innovations and evolving market trends which create fresh opportunities. Some entrepreneurs have a product or service they believe will stand out and generate a healthy profit, while others cherish the freedom of working for themselves. The appeal of being your own boss and navigating the twists and challenges of entrepreneurship is stronger than ever.

Financial gain and security, along with the desire for creative fulfilment and flexibility, often play significant roles in the decision to embark on a business venture.

Overall, starting a business in today’s competitive landscape can be both immensely rewarding and a rich source of valuable industry connections.

What Are Some Types Of Businesses?

Not all entrepreneurs have the same purpose, resources or requirements; hence, business structures vary widely. There are several models you can adopt, and remember, you’re not locked into your initial choice. You can always change your business structure as your needs evolve. For instance, you might begin as a sole trader and later transition to a company as your operations grow.

As 2025 unfolds, emerging models such as cooperatives and social enterprises are gaining traction alongside traditional structures. When choosing your structure, consider not only your current financial situation and risk tolerance but also future growth and market trends – factors explored in depth in our business structure guide.

Sole Trader: An individual running their business solo. It’s simple and cost-effective to set up, but comes with higher risk due to unlimited liability (more on that later).
Partnership: When two or more people start a business together. The structure and liability vary based on the type of partnership you form.
Company: A company is a separate legal entity. You can choose between a private or public company based on your business needs and regulatory obligations.

Each structure comes with its own advantages, disadvantages, and required documentation. It’s crucial to assess your financial circumstances and the level of risk you’re prepared to manage before finalising your decision.

Example
Consider a company, which is typically more complex and will require more key personnel to manage day-to-day operations. Since a company is its own legal person, any legal or financial difficulties belong to the company itself. For instance, if a company incurs debt, you might choose to sell certain assets (like a company car) without risking your personal assets, such as your house.

Which Business Types Have Unlimited Liability?

Sole traders and partnerships carry unlimited liability. This means if the business encounters financial difficulties – say, owing money to a creditor – the business owner’s personal assets could be used to settle the debt.

In some cases, you may even need to sell your personal assets to cover these liabilities. Therefore, when choosing your business structure, carefully consider the risk level relative to the expected returns.

In contrast, companies benefit from limited liability, which offers greater protection by ensuring that the company, as a separate legal entity, is responsible for its own debts.

Is A Business And Company The Same Thing?

Every company is a business but not every business operates as a company. As explained above, a company is simply one type of business structure that offers the benefit of limited liability and is subject to additional regulatory requirements.

The key distinguishing feature of a company is its limited liability, as well as obligations under the Corporations Act 2001. For instance, a company must have at least one director, and depending on its type, may also require a company secretary – although private companies are exempt from this requirement.

How Do I Buy Or Sell A Business?

Buying or selling a business is a complex process that requires several key considerations. Many entrepreneurs engage business brokers for expert advice. Initially, you’ll need to have your business valued and decide which aspects you are selling – be it intellectual property, tangible assets, or both. The same diligence applies when purchasing a business.

It’s essential to clarify whether you’re obtaining the business outright or acquiring part of it, and to work through details such as transferring ownership via an IP Assignment Deed, transferring a trademark, dealing with existing staff, handover training, special tax requirements, lease transfers and documentation for transferring your registered business name.

Before finalising any sale, go through a checklist for selling a business. Our expert lawyers can guide you through every step to ensure nothing is overlooked.

Franchises

If you’re looking to buy a business, consider purchasing a franchise. Franchising allows you to operate an established brand in a new location, giving you access to tried-and-tested business plans and intellectual property – all in exchange for a franchise fee paid to the franchisor.

The legal landscape for franchises can be complex. It’s important to understand your obligations under the Franchising Code of Conduct and the terms detailed in your Franchise Agreement. For further guidance, check out our resource on key aspects every potential franchisee should consider.

We also offer additional insights and resources on franchising, covering topics such as Selling A Franchise, Terminating Franchise Agreements and handling problematic franchisees.

What Are Some Of The Key Roles In A Company?

Directors

Directors are the decision‐makers who oversee the company’s operation and ensure it meets its legal obligations. In 2025, their role remains critical, and they have a number of director duties to adhere to. Breaching these obligations can lead to serious consequences, so it’s essential to be fully informed of your responsibilities.

Employees

Employees are contracted to perform specific roles within the company – from managers and receptionists to IT technicians. It’s important not to confuse employees with contractors, as the legal obligations and rights associated with each are different. For more insights, explore our guide comparing contractors and employees.

Shareholders

Shareholders own a percentage of the company and hold specific rights and responsibilities. Although their role is predominantly external, their influence can be significant in steering strategic decisions.

Stakeholders

Stakeholders include anyone with an interest in the operations of the company – be it a high-level employee, a customer or even a vendor. Their various perspectives can provide valuable insights into the company’s overall performance.

Are Charities, Not For Profits and Social Enterprises Considered Businesses?

Charities and not-for-profits are not considered traditional businesses because they do not exist primarily to generate profit – they rely on donations and grants to operate. However, a social enterprise is a business model with a philanthropic focus, where profits are generated through goods or services while also aiming to achieve a social, economic, environmental or political cause.

What Laws Regulate Businesses?

Corporations Act 2001

Any business that registers as a corporation is governed by the Corporations Act 2001. This Act covers everything from business registration and taxes to the duties of directors and shareholders. As updates continue to be implemented in 2025, it’s essential for companies to remain compliant with these regulations.

If managing your compliance with ASIC seems daunting, our Company Set Up services can assist you in keeping your details up-to-date and ensuring you meet all regulatory requirements.

ASIC

All business owners should be familiar with the Australian Securities and Investments Commission (ASIC), which handles business registration, changes to company details, and annual fees. Some businesses choose to employ a registered agent to manage these obligations, and our team is here to help with tasks like notifying ASIC of changes or managing updates after engaging in crowd-sourced funding.

Fair Work

The Fair Work Commission sets out the standards for how employers should treat their employees. For instance, when hiring, you must provide new staff with a Fair Work Information Statement and comply with the relevant awards that determine pay and leave entitlements.

NCAT/ACCC

Disputes that arise within a company or with customers, which cannot be resolved internally, are often taken to the New South Wales Civil and Administrative Tribunal (NCAT) or the Australian Competition and Consumer Commission (ACCC). Our team can also offer guidance on compliance with Australian Consumer Law.

Australian Consumer Law (ACL)

ACL outlines the rights of consumers when purchasing goods or services. Governed largely by the Competition and Consumer Act 2010, ACL ensures that businesses do not engage in misleading or deceptive conduct – a standard that remains critical in 2025.

The Privacy Act

As businesses interact with customers, they invariably collect personal information. The Privacy Act 1988 sets out the rules for how this information should be managed and protected. In 2025, with cyber threats on the rise, it’s essential to have robust data protection measures in place.

If your business collects data – whether through a website or a mobile app – you must ensure you comply with the Privacy Act by having a comprehensive Privacy Policy and a solid Data Breach Response Plan. Our IP and privacy experts are available to help you navigate these obligations.

Australian Taxation Office (ATO)

The ATO administers tax matters for businesses. Depending on your business structure, different tax obligations apply. For example, a sole trader is only required to register for GST if their annual turnover exceeds $75,000. Keeping abreast of the latest tax regulations ensures you remain compliant and avoid any penalties.

What Contracts Would I Need As A Business?

Contracts are essential for mitigating risks and clarifying obligations in any business operation. The specific contracts you might need depend on your business activities, but generally include:

Can I Do Business Overseas?

It’s increasingly common for Australian-based businesses to expand internationally. Before going global, consider starting with a few select regions and familiarise yourself with each area’s specific regulations regarding privacy, tariffs, customs and other national requirements. For detailed guidance on expanding overseas, take a look at our article on starting a business overseas.

How Do I Start An Online Business?

Starting a business online – often referred to as e-commerce – has become increasingly popular due to its convenience, simplicity and wide reach. The same legal obligations apply online as they do for traditional businesses, including registering a business name and paying relevant taxes and fees.

What is E-Commerce?

E-commerce refers to businesses that operate primarily online, where goods and services are sold over the internet. Operating an online business means you must also comply with the Privacy Act 1988 and take extra precautions to protect customer data.

In 2025, enhanced cybersecurity measures have become indispensable. It is vital for online businesses to implement verified payment methods and secure their transactions with robust encryption technology. Our comprehensive guides on e-commerce Terms & Conditions and Website Terms & Conditions can help you set up a legally compliant online operation.

Where Do I Get Funding?

Attracting investors is often essential to secure the capital your business needs. In 2025, with a variety of fintech options and crowdfunding platforms available, there are more avenues than ever to raise funds. Building a robust business plan and demonstrating clear financial accountability are key to appealing to investors – tips you can explore further in our capital raising guide.

Key Takeaways

A business involves many elements – here are the key takeaways:

There are multiple types of business structures – choose the one that best fits your circumstances.
Not-for-profits and charities require different structures compared to profit-driven businesses.
Engaging a legal professional for drafting contracts is crucial to protect your business interests.
Stay abreast of relevant legislation and understand the regulatory bodies you may need to report to.
Online businesses are subject to both traditional and digital-specific rules and regulations.

Next Steps

If you have any questions regarding business setup, contract reviews or funding options in today’s ever-changing market, our expert legal team is here to help. We can provide detailed guidance tailored to your situation, whether you’re starting from scratch or expanding your existing operation.

For a free, no-obligations chat with one of our legal consultants, call us at 1800 730 617 or email team@sprintlaw.com.au. Let’s ensure you’re fully prepared to navigate the evolving business landscape of 2025.

Sapna Goundan

Sapna has completed a Bachelor of Arts/Laws. Since graduating, she's worked primarily in the field of legal research and writing, and she now writes for Sprintlaw.

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