Starting a New Business Checklist

The first weeks of a new business are full of real work — the first customers, the name, the website. The admin feels like something to sort out later. But the setup steps have a natural order, and doing them out of order is how new owners end up with the wrong structure on the ABN, confusion about GST, and a first tax bill that arrives like an ambush.

The setup, in the right order

• Choose the structure first. Sole trader, partnership, company or trust — everything that follows hangs off this decision, because the registrations are tied to the entity. Changing your mind after registering means redoing the whole chain.
• Then the ABN and tax registrations. Apply for the ABN in the name of the chosen entity. Companies, partnerships and trusts need their own TFN; a sole trader uses their personal one.
• Make the GST decision deliberately. Registration becomes compulsory once GST turnover reaches the threshold — currently $75,000 for most businesses, but check the current ATO figure — and is optional below it. Voluntary registration can make sense when your customers are mostly businesses or your setup costs carry significant GST, and it brings BAS lodgements either way.
• Open a dedicated business bank account before the first sale. Mixed personal and business banking is the single biggest cause of slow, expensive bookkeeping we see, and for a company or trust the separation is not optional — the money belongs to the entity.
• Set up accounting software from day one. Connecting Xero or MYOB to an empty bank account is quick. Reconstructing months of history at BAS time is neither quick nor cheap.
• Insurance before you need it. Public liability at minimum, professional indemnity if you advise, and workers compensation once you employ. Some industries and clients require cover before you can start work at all.
• A weekly bookkeeping habit. A short, regular session keeping receipts captured and the bank reconciled is worth more than any amount of good intentions in June.

The first-year traps nobody warns you about

Employees have tax withheld before their pay lands. Business owners do not — the money arrives gross, feels like yours, and the tax on it arrives much later, after the first return is lodged. The owners who sail through year one are the ones who set aside a share of every single payment in a separate account from the very first invoice, and treat it as money that was never theirs.

The second trap follows directly from the first. Once that first return shows a tax bill, the ATO generally moves you onto PAYG instalments — prepaying the coming year in regular amounts, usually quarterly. The effect is that year two can feel like paying tax twice, with last year's bill and this year's instalments landing close together. It is not a penalty and it is not a mistake; it is just brutal if nobody told you it was coming.

What we commonly see go wrong

• Registering the ABN as a sole trader in a hurry, then paying to restructure within the first couple of years.
• Charging GST without being registered — or quoting prices without realising registration had become compulsory.
• A year of business banked through a personal account, with the untangling billed by the hour at tax time.
• Nothing set aside for tax, and the first bill met with a payment plan and a fright.

A worked example

As an illustration: a consultant leaves employment, wins strong contracts, and spends year one enjoying gross income for the first time. The first return is lodged after year end and produces a solid tax bill — followed almost immediately by the first PAYG instalment for the new year. Two significant payments land in the same quarter of year two, and none of it was set aside. The identical business, with a fixed share of every invoice parked in a separate tax account from day one, experiences exactly the same events as non-events.

When to get help

An hour with an accountant before you register anything is one of the cheapest pieces of insurance a new business can buy — structure, GST, software and a realistic tax set-aside, decided once and set up correctly. If the business is already running and some of these steps happened out of order, earlier is cheaper than later for straightening them out.

Do I have to register for GST from day one?

Only if you expect GST turnover to reach the registration threshold — currently $75,000 for most businesses, but check the current ATO figure. Below that it is optional, and worth weighing: registration lets you claim GST credits and suits business-to-business work, but it adds BAS lodgements and GST on your prices.

How much should I set aside for tax?

It depends on your structure, margins and other income, so there is no single safe percentage. The habit matters more than the number: park a fixed share of every payment in a separate account from the first invoice, then have your accountant size it properly once the first figures exist, and adjust after the first return.

Can I just use my personal bank account to start?

A sole trader can legally do so, but it is the most expensive shortcut in small business bookkeeping — every statement needs untangling at tax time. For a company or trust the money belongs to the entity, so a separate account is not optional. Open the business account before the first sale either way.