Last editedDec 20203 min read
Taking your business from a great idea to a living, breathing entity is a serious challenge. It doesn’t just require a ton of hard work, but a significant amount of money. Understanding the initial costs of starting a business is vitally important, otherwise you could be blindsided by unexpected expenses that torpedo your company before it’s even had a chance to grow. So, how much does it cost to start a business in Australia? Read on to find out.
Initial costs of starting a business in Australia
First off, let’s look at the mandatory costs associated with registering a business in Australia. Although there’s no fee for obtaining an ABN (Australian Business Number) or to lodge a TFN application, you will need to pay a fee to register as a company and to obtain a business name. You can register as a company for a fee of $506 (for a proprietary limited company), while obtaining a business name costs $37 for 1 year or $87 for 3 years.
Common business start-up costs and expenses
Beyond the mandatory business start-up costs, there are a broad range of expenses that you will need to plan for. Some of the most common small business start-up cost examples include:
Salaries – Wages for your staff is probably the most important expense to consider. Minimum wage in Australia is currently $19.84 per hour, or $753.80 per week (38 hours), however depending on what sort of roles you’re hiring for, you’ll probably need to pay considerably more to attract the level of talent you need to take your business to the next level.
Rent – Another significant cost to start-up a business that you need to consider is rent. The amount you can expect to pay will depend on where you’re renting, as well the size of premises that you need. According to commercialrealestate.com.au, average office rentals in Australia range from $1025 per square metre per annum in Sydney CBD to $380 per square metre per annum on the Gold Coast.
Professional fees – You also need to think about the critical business functions that you may need to outsource, and the fees that go along with that. Paying legal and accountancy fees isn’t cheap, but it’s vital for businesses in the early stages to get the compliance and regulatory side right from the start, which could lead to a significant expenditure in professional fees.
Insurance – Even if your business’s risk protection needs are relatively low, it’s vital to pay for insurance. Some of the most useful types of insurance for Australian businesses include professional indemnity insurance, public liability insurance, and product liability insurance. The amount you’ll need to pay will depend on several factors, including your history of claims, the type of business you’re running, and the provider you choose to go with.
Additional small business start-up cost examples
So, we’ve covered the mandatory business start-up costs, as well as the common expenses that virtually all businesses are going to need to account for, but what about additional expenses that may not be strictly necessary, but could be enormously beneficial to your chances of success? These small business start-up cost examples cover items like vehicle rentals (especially important for businesses where logistics play a key role), office supplies (paper, printers, stationary, desks, computers, etc.), and marketing fees. To alleviate some of these fees, why not consider investing in a paperless office?
Dealing with the cost to start up a business
We know this may seem like a significant capital expenditure just to get your business off the ground, but don’t be too discouraged – there are many ways to navigate the initial costs of starting a business. First off, it’s important to remember that there are many different funding options for new business ventures in Australia, including bank loans, crowdfunding, government grants, venture capital, and equity financing. Explore the different options and see if any of them are right for you.
Clearly, it’s also important to ensure a steady cash flow right from the jump. That’s why an automated payment collection service like GoCardless could be an ideal early investment. Making use of Direct Debit, you can collect payments automatically on due dates. That means no more waiting around for your clients to pay you, wondering if you’ve got enough capital to see you through to the end of the month – just a simple, stress-free payments process that keeps your cash flow healthy.
Who is GoCardless?
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.