Legal Compliance: Complete Handbook for Australian Small Business

Getting the legal side right from day one protects your business and unlocks access to government grants, tax benefits, and business opportunities. This handbook covers everything you need to know about operating legally in Australia.

Quick Compliance Checklist

✅ Essential (Must Do)

• Register for Australian Business Number (ABN)
• Register business name (if not using your personal name)
• Open separate business bank account
• Register for GST (if turnover >$75,000 or voluntary)
• Obtain appropriate business insurance
• Set up basic bookkeeping system
• Understand tax obligations and deadlines

⚠️ Conditional (If Applicable)

• Company registration with ASIC (if choosing company structure)
• Trademark registration (if unique branding)
• Industry-specific licenses and permits
• Workers’ compensation insurance (if hiring employees)
• Workplace health and safety compliance
• Consumer law compliance (if selling to public)

Business Registration Requirements

Australian Business Number (ABN)

What It Is: Your unique 11-digit business identifier, essential for all business transactions in Australia.

When You Need It:

• Earning business income
• Claiming GST credits
• Applying for government grants
• Opening business bank accounts
• Establishing supplier relationships

How to Apply:

1. Visit Australian Business Register
2. Complete online application (15 minutes)
3. Provide personal identification details
4. Describe your business activity
5. Receive ABN immediately (if application is straightforward)

Cost: Free for legitimate businesses Processing Time: Usually instant, up to 28 days if manual review required

Common Mistakes: ❌ Using ABN for non-business activities (tax consequences) ❌ Not updating details when circumstances change ❌ Sharing ABN with unauthorized parties

Business Name Registration

When Required: If trading under any name other than your own legal name

Examples:

• ✅ “John Smith Plumbing” (requires registration)
• ❌ “John Smith” trading as plumber (no registration needed)

How to Register:

1. Check availability at ASIC Connect
2. Ensure name complies with ASIC guidelines
3. Pay $37 registration fee (1 year) or $87 (3 years)
4. Receive instant confirmation if approved

Name Requirements:

• Must be available (not identical to existing registrations)
• Cannot suggest government affiliation
• Cannot include restricted words without approval
• Must include business type identifier if required

Renewal: Business names must be renewed annually or triennially

Company Registration

When to Consider:

• Annual turnover expected to exceed $100,000
• Multiple business partners
• Need for limited liability protection
• Planning to raise investment
• Want tax benefits and flexibility

Company Types:

1. Proprietary Limited (Pty Ltd)

   • Most common for small businesses
   • 1-50 shareholders maximum
   • Can’t fundraise from public

2. Public Company Limited

   • Can raise funds publicly
   • More compliance requirements
   • Usually not appropriate for small businesses

Registration Process:

1. Choose company name (check availability)
2. Appoint at least one director (Australian resident required)
3. Complete application at ASIC Connect
4. Pay $537 registration fee
5. Receive Australian Company Number (ACN) within 1-2 business days

Ongoing Obligations:

• Annual review of company details ($53 fee)
• Financial reporting (if above thresholds)
• Director identification number (DIN) for all directors
• Maintain registered office and address

Tax Obligations

Goods and Services Tax (GST)

Registration Thresholds:

• Mandatory: If annual turnover exceeds $75,000
• Optional: Register voluntarily if under threshold

Benefits of Early Registration:

• Claim GST credits on business purchases
• Appear more established to B2B customers
• Required for many government contracts

How GST Works:

• Charge 10% GST on most goods and services
• Pay GST collected to ATO
• Claim GST paid on business purchases
• Net position determined quarterly or annually

GST-Free Items:

• Basic foods (bread, milk, meat, vegetables)
• Medical and health services
• Educational courses
• Exports
• Water and sewerage

Input Tax Credits: Can claim GST credits on:

• Equipment and supplies used in business
• Business-related travel and accommodation
• Professional services (legal, accounting)
• Motor vehicle expenses (including fuel)

Income Tax

Business Structure Tax Implications:

Small Business Tax Benefits:

• Instant Asset Write-off: Deduct assets up to $20,000 immediately
• Small Business Income Tax Offset: Up to $1,000 annual tax reduction
• CGT Concessions: Reduced capital gains tax when selling business
• Simplified Trading Stock Rules: Easier inventory accounting

Payroll Tax

Thresholds (2025):

• NSW: $1.2 million annually
• VIC: $700,000 annually
• QLD: $1.3 million annually
• WA: $1 million annually
• SA: $1.5 million annually
• TAS: $1.25 million annually
• ACT: $2 million annually
• NT: $1.5 million annually

What’s Included:

• Wages and salaries
• Commissions and bonuses
• Allowances and benefits
• Contractor payments (in some circumstances)
• Directors’ fees

Registration: Required 7 days before reaching threshold

Employment Law Compliance

Fair Work Act 2009

Key Requirements:

• Pay minimum wages (National Minimum Wage or Award rates)
• Provide minimum employment conditions
• Follow dismissal procedures
• Maintain employment records
• Provide payslips within 1 day of payment

National Minimum Wage (2025):

• Adult: $24.10 per hour
• Junior rates: Vary by age and experience
• Apprentice minimum: $19.28 per hour
• Casual loading: Additional 25% for casual employees

Modern Awards

What They Are: Industry-specific minimum standards for pay and conditions

Common Awards:

• General Retail Industry Award
• Restaurant Industry Award
• Cleaning Services Award
• Building and Construction General On-site Award
• Professional Employees Award

Key Award Provisions:

• Minimum hourly rates
• Overtime and penalty rates
• Annual leave entitlements
• Sick and personal leave
• Public holiday payments

Employee vs. Contractor

Employee Indicators:

• Works set hours at set location
• Uses employer’s equipment
• Subject to direction and control
• Integrated into business operations
• Entitled to paid leave

Contractor Indicators:

• Controls how work is performed
• Uses own equipment and tools
• Bears financial risk
• Can subcontract work
• Invoices for services

Consequences of Misclassification:

• Backpay of entitlements
• Superannuation shortfall
• Penalty rates and overtime
• Workers’ compensation claims
• ATO taxation adjustments

Workers’ Compensation Insurance

When Required: When you hire your first employee (even part-time)

State Requirements:

• NSW: WorkCover NSW
• VIC: WorkSafe Victoria
• QLD: WorkCover Queensland
• WA: WorkCover WA
• SA: ReturnToWorkSA
• TAS: WorkSafe Tasmania
• ACT: Comcare or approved insurer
• NT: NT WorkSafe

Penalties for Non-Compliance:

• Fines up to $55,000
• Daily penalties while uninsured
• Personal liability for claims
• Criminal charges in severe cases

Consumer Law and Protection

Australian Consumer Law

Key Obligations:

• Products must be of acceptable quality
• Services must be provided with reasonable care and skill
• No misleading or deceptive conduct
• Clear pricing and terms
• Honor consumer guarantees

Consumer Guarantees:

• Goods are of acceptable quality
• Goods match description
• Services provided with reasonable care
• Title to goods is clear
• Access to manufacturer’s warranty

Refunds and Returns

When Consumers Entitled to Refund:

• Product has major fault
• Service not provided with reasonable care
• Product significantly different from description
• Unacceptable delay in service delivery

When Refunds Not Required:

• Customer changed their mind
• Customer found product cheaper elsewhere
• Customer misused product
• Fault was clearly pointed out before purchase

Privacy Act Compliance

When It Applies:

• Annual turnover over $3 million
• Handle health information
• Provide credit reporting
• Commonwealth contractor

Australian Privacy Principles:

1. Open and transparent management
2. Anonymity and pseudonymity
3. Collection of solicited information
4. Dealing with unsolicited information
5. Notification of collection
6. Use and disclosure
7. Direct marketing
8. Cross-border disclosure
9. Government identifiers
10. Quality of information
11. Security of information
12. Access to information
13. Correction of information

Industry-Specific Requirements

Food Business

Food Safety Standards:

• Food Safety Program required
• Notification to local council
• Regular inspections
• Temperature monitoring
• Staff training in food safety

Required Licenses:

• Food business license (council)
• Liquor license (if applicable)
• Outdoor dining permits

Construction and Trades

Licensing Requirements:

• Building license (varies by state)
• Electrical license
• Plumbing license
• Trade contractor license

Insurance Requirements:

• Public liability insurance
• Professional indemnity insurance
• Contract works insurance
• Home warranty insurance (residential work)

Financial Services

Australian Financial Services License (AFSL): Required for providing financial advice or services

Credit License: Required for credit assistance or lending

Compliance Requirements:

• Responsible lending obligations
• Anti-money laundering reporting
• Privacy and data protection
• Dispute resolution schemes

Health and Beauty Services

Required Registrations:

• Health practitioner registration (AHPRA)
• Cosmetic injectables certification
• Local council permits

Insurance:

• Professional indemnity insurance
• Public liability insurance
• Product liability coverage

Intellectual Property Protection

Trademarks

What Can Be Trademarked:

• Business names and logos
• Product names
• Slogans and catchphrases
• Colors and sounds (in some cases)

Application Process:

1. Search existing trademarks at IP Australia
2. File application ($330-$790 depending on classes)
3. Examination period (6-8 months)
4. Opposition period (2 months if accepted)
5. Registration (if no oppositions)

Benefits:

• Exclusive right to use trademark
• Legal protection against infringement
• Asset value for business sale
• Enhanced business credibility

Copyright

Automatic Protection: No registration required in Australia Duration: Life of creator plus 70 years Covers: Original literary, dramatic, musical, and artistic works

Patents

Types:

• Standard patent: Up to 20 years protection
• Innovation patent: Up to 8 years (being phased out)

Requirements:

• Novel invention
• Inventive step
• Useful application
• Complete disclosure

Cost: $370-$1,760 application fees plus examination fees

Insurance Requirements

Essential Business Insurance

1. Public Liability Insurance

   • Coverage: Claims from third parties for injury or property damage
   • Typical Amount: $5-20 million
   • Cost: $300-$2,000 annually
   • Required For: Most businesses dealing with public

2. Professional Indemnity Insurance

   • Coverage: Claims arising from professional advice or services
   • Typical Amount: $1-10 million
   • Required For: Consultants, advisors, service providers

3. Product Liability Insurance

   • Coverage: Claims from defective products
   • Required For: Manufacturers, importers, retailers

4. Business Insurance

   • Coverage: Business assets, equipment, stock
   • Options: Replacement value or agreed value
   • Additional: Business interruption coverage

Industry-Specific Insurance

• Motor Vehicle: Commercial vehicle insurance if using vehicles for business
• Cyber Liability: Protection against data breaches and cyber attacks
• Directors and Officers: Protection for company directors
• Key Person: Protection against loss of key personnel

Record Keeping Requirements

Financial Records (Minimum 5 Years)

Income Records:

• Sales invoices and receipts
• Bank statements and deposit slips
• Cash register tapes
• Credit card merchant statements

Expense Records:

• Purchase invoices and receipts
• Supplier statements
• Petty cash vouchers
• Travel and meal receipts

Employment Records:

• Payroll records and timesheets
• Superannuation contribution records
• PAYG withholding records
• Workers’ compensation records

Business Records (Minimum 7 Years)

• Contracts and agreements
• Lease documents
• Insurance policies
• Business registration documents
• Board minutes (for companies)
• Financial statements

Digital Record Keeping

Acceptable Formats:

• PDF documents
• Digital photographs of receipts
• Cloud-based accounting systems
• Electronic invoicing systems

Requirements:

• Must be easily accessible
• Maintain backup copies
• Ensure data security
• Regular system updates

Avoiding Common Legal Pitfalls

Verbal Agreements

Problem: Disputes over terms and conditions Solution: Always put agreements in writing, even simple ones

Mixing Personal and Business Assets

Problem: Piercing the corporate veil, tax complications Solution: Maintain separate bank accounts and clear boundaries

Ignoring Industry Regulations

Problem: Fines, closure, liability claims Solution: Research specific requirements for your industry

Poor Contract Management

Problem: Scope creep, payment disputes, liability issues Solution: Use written contracts for all significant transactions

Inadequate Insurance Coverage

Problem: Catastrophic financial losses Solution: Regular insurance reviews with qualified broker

Non-Compliance with Employment Laws

Problem: Lawsuits, penalties, reputation damage Solution: Stay updated on Fair Work requirements, use proper contracts

Getting Professional Help

When to Engage Professionals

Accountant/Tax Agent:

• Business structure decisions
• Tax planning and compliance
• GST registration and returns
• Payroll setup and management

Lawyer:

• Business structure setup
• Contract drafting and review
• Employment law compliance
• Intellectual property protection
• Dispute resolution

Insurance Broker:

• Risk assessment
• Policy comparison and selection
• Claims management
• Regular coverage reviews

Choosing Advisors

Questions to Ask:

• What’s your experience with businesses like mine?
• What are your fees and billing structure?
• How do you stay current with regulatory changes?
• Can you provide references from similar clients?
• What’s your response time for urgent issues?

Red Flags:

• Guarantees of specific outcomes
• Unusually low fees
• Poor communication or responsiveness
• Lack of relevant experience
• No clear fee structure

Compliance Calendar

Monthly Tasks

• Reconcile bank accounts
• Review and pay supplier invoices
• Process employee payroll
• Review cash flow and budgets
• Update business records

Quarterly Tasks

• Lodge BAS (Business Activity Statement) if GST registered
• Pay PAYG installments
• Review insurance coverage
• Update business planning
• Conduct safety reviews

Annual Tasks

• Lodge income tax returns
• Pay annual leave loading (if applicable)
• Review and renew business name registration
• Update company details with ASIC
• Conduct comprehensive business review
• Review and renew insurance policies
• Audit compliance procedures

FAQ

What happens if I don’t register for GST when required?

Penalty: Up to $13,320 for individuals, up to $66,600 for corporations, plus having to pay the GST you should have collected from customers.

Can I change my business structure later?

Yes, but there may be tax implications. Consult an accountant before making changes, especially regarding capital gains tax and stamp duty.

What if I can’t pay my taxes on time?

Contact the ATO immediately. They offer payment plans and may waive penalties if you proactively communicate difficulties.

Do I need workers’ compensation for contractors?

Generally no, but some contractors may be deemed employees. When in doubt, seek legal advice to avoid costly misclassification.

How long should I keep business records?

Minimum 5 years for tax records, 7 years for business records. Some industries have longer requirements.

What insurance do I absolutely need?

Public liability is essential for most businesses. Professional indemnity if you provide advice or services. Workers’ compensation if you have employees.

Can I operate without registering a business name?

Yes, if you trade under your own legal name. Any other name requires registration with ASIC.

Need personalized advice? This guide covers general requirements, but every business is unique. Consider consulting with qualified professionals for your specific situation.

Next Steps: Once you’ve handled the legal basics, explore our Business Operations Guide to optimize your day-to-day operations and growth strategies.