How Can a Foreigner Start a Business in Australia?

Now-a-days, people prefer to grow and expand their business globally. Australia is a popular location for foreigners to establish a company as it has untapped resources, a prospering economy and abundant raw materials. Plus, it is multilingual with a stable regulatory environment, highly adept work personnel, and progressive culture of innovation.

The Australian government also encourages foreign citizens to start a business in Australia and contribute to the country’s economy. Entrepreneurs can have an already established business in their home country and wish to take it to Australia. Alternatively, they may also have a new business idea that would have a great market in Australia and would want to establish a business there.

Benefits of Starting a Business in Australia 

• A business can be incorporated as a company, partnership firm or sole partnership.
• There is a lower rate of corporate tax.
• A minimum paid-up share capital is not required.
• A business is faster to incorporate in Australia.
• Australia has numerous free-trade agreements with countries in Europe, Asia and America.
• Australia has a multilingual workforce that helps to employ people across cultures.

Visa Requirements to Start a Business in Australia

The Australian government is committed to encouraging entrepreneurial talent and diversifying business expertise. Australia’s business innovation and investment programme provides visas to eligible foreigners who wish to start a business. The following are the visa options for foreign citizens who want to start a business in Australia:

Business Innovation and Investment (Provisional) Visa

An individual with business skills is eligible for a business innovation and investment (provisional) visa. It allows an entrepreneur to operate an existing or new business in Australia. However, before a foreign entrepreneur can apply for this visa, he/she must be nominated by a territory or state government. 

The following is the process to apply for this visa:

• Submit an Expression of Interest (EOI) through Australia’s Department of Home Affairs’ Skillselect online service.
• Check if a territory, state government or the CEO of Austrade gives an invitation to apply for a visa. Entrepreneurs can wait for the territory or state government to contact them after submitting the EOI or contact them directly.
• When entrepreneurs receive an invitation, they can then apply for this visa. However, they must meet certain requirements and provide documents supporting their application.

The business innovation and investment (provisional) visa is valid for four to five years. Provisional visa holders can apply for a permanent visa when they meet the required criteria.

Business Innovation and Investment (Permanent) Visa

When entrepreneurs have met the requirements of the provisional visa, they can apply for the business innovation and investment (permanent) visa subject to meeting additional requirements. Entrepreneurs should meet additional financial thresholds and character and health tests. This visa gives the entrepreneurs and their families permanent residency in Australia and can also apply for citizenship later.

Prerequisites For Starting a Business in Australia

Below are the prerequisites that a foreign entrepreneur must have before starting a business in Australia:

Choose Business Structure

An entrepreneur can choose from different business structures for his/her business to establish it in Australia. The business can be established as a sole proprietorship/trader, partnership firm or company. A sole proprietorship is the simplest form of business where the proprietor/entrepreneur owns all the assets and liabilities of the business. It is one of the most common types of business structures in Australia.

A partnership firm is established by a minimum of two partners who enter into a partnership agreement to establish the business. The partnership agreement should be filed with the Australian Securities and Investments Commission (ASIC). Each partner is responsible for maintaining accounting records and paying tax on profit from the business.

A company is a legal entity registered with the ASIC having its own finances, property and employees. The directors run the company and must have at least one shareholder. A company can use its profits to grow the business or distribute them to the shareholders.

In Australia, the different types of business structures have different tax implications. Thus, an entrepreneur must choose the right structure for their business based on targets and goals.

Select a Business Name

After choosing the business structure, the next step is to choose the name of the company, partnership firm or sole proprietorship, i.e. business name. Entrepreneurs should register the selected business name with the ASIC to carry on business in Australia unless they are not trading under their own name. However, entrepreneurs should ensure that the business name is available to register with the ASIC and doesn’t infringe any trademarks or similar business names in Australia before finalising the name.

Entrepreneurs can use the business name check tool to check if the proposed name is available to register and is not similar to any existing business or domain name. They can also find out if the business name is available through the Australian Securities & Investments Commission (ASIC) business names register before finalising the name.

Have Business Address

A business should have a registered office address in Australia to carry on its operations unless it is a sole proprietorship. The registered business address is the registered office and the principal place of business. The ASIC will use this address to send all the official communication and will also be presented as the primary business location. The business address must not be a PO box, and it must be within Australia.

Director and Shareholder for Company

When an entrepreneur establishes his/her business as a company in Australia, it must have directors and shareholders. A public company must have at least three directors, out of which at least two directors should ordinarily reside in Australia. A proprietary company must have at least one director resident in Australia. Company directors are required to apply for a Director Identification Number (Director ID) as per the law in Australia. It must have a minimum of one shareholder of any nationality.

Steps to Start a Business in Australia

Following are the steps to start a business in Australia by a foreigner:

Register the Business with ASIC

The first step to establishing a business in Australia is registering it with the ASIC (Australian Securities and Investments Commission). Entrepreneurs can register their businesses online through the Australian Government’s Business Registration Service (BRS). Foreign companies have to appoint a local agent (Australian company or individual) that is authorised to accept notices and services on behalf of the business.

For registering a company with the ASIC, entrepreneurs must provide some basic information about the business, which includes the business name, registered office address and the contact details of the company secretary.

The information about the partners/directors and shareholders (including their financial positions and their shares) should also be provided to the ASIC to register the business. The ASIC will issue an Australian Company Number (ACN) which is required to apply for an ABN after the application is processed. The ABN will register the company and issue a certificate of registration when the application is accepted.

Register For Tax File Number (TFN)

The next step is registering for Tax File Number (TFN). The TFN registration can be done online or by visiting the Australian post office. The business must have a separate TFN to file its tax returns. However, a separate TFN is not required for a sole proprietorship, and the TFN of the sole trader is used to file the business returns. 

When the business is established as a partnership firm or company, the entrepreneurs must register for a separate TFN for the business. Usually, businesses apply for their TFN when applying for an ABN.

Apply For the Australian Business Number (ABN)

After obtaining the registration from the ASIC, businesses need to apply for an Australian Business Number (ABN) to operate in Australia. An ABN is a unique 11-digit number that identifies the business to the community and government.

It is also essential for tax purposes and other business activities performed in Australia, including invoicing, claiming GST credits, filing taxes, claiming returns, and getting an Australian domain name. Foreign companies must provide the TFN, proof of identity and the intended business statement to obtain the ABN in Australia.

Register the Business Name with ASIC

The business name should be registered with the ASIC. It can be registered after obtaining the ABN or while applying for ABN. Through the Australian Government’s Business Registration Service (BRS), entrepreneurs can apply to obtain the ABN and register their business name online. The BRS combines many business and tax registrations in one place, making it easy to start a business.

Register for GST (Goods and Services Tax)

The business must register for GST within 21 days when it fulfils the GST threshold in Australia. GST applies to goods and services sold in Australia. Special rules may apply to non-residents. Thus, foreign entrepreneurs must check if their businesses fulfil the GST threshold limit. Generally, businesses can register for GST after getting their ABN. Non-residents can register for a standard GST or a simplified GST depending on their business activities.

Open a Local Bank Account

When a business is registered in Australia, the business will require a separate bank account. The business bank account is one of the essential documents necessary for the business. An entrepreneur must have the following documents to open a local bank account in Australia:

• Proof of identity (passport or driver’s license)
• Proof of address (a rental contract or lease agreement)
• Tax File Number (TFN)

Entrepreneurs may also be required to sign a security agreement. Additional documents, such as proof of business experience or letters of reference, may also be required depending on the bank. They may also need to visit the bank to complete the identification verification (KYC) requirements.

Apply for Required Licences or Permits

The business must have the required licenses and permits for the respective industry to operate legally in Australia. The licensing and permit requirements differ by state, industry and local laws. The licences and permits required for the business depend on its activities, type and location. Entrepreneurs can visit the Australian Business Licence and Information Service website to find the licences and permits required for their businesses to operate in Australia.