A practical guide to setting your business up properly from the start

Starting a business is exciting, and most people jump straight into the part they enjoy. Getting clients, making sales, building something of their own. Then at some point, the questions start coming. “Do I need an ABN for this?” “Should I be charging GST yet?” “Am I actually doing this right?”

This is usually where I come in.

The compliance and bookkeeping side of things can feel confusing at first, but it does not need to be. Once it is set up properly, it becomes part of your routine and stops feeling like something hanging over your head.

I often explain it like this. Your bookkeeping is the dashboard of your business. If it is clear and working, you know exactly where you are. If it is not, you are guessing.

Are You Running a Business or a Hobby?

This is one of the most common conversations I have with new clients.

A lot of businesses do not start as “businesses”. They start as something small on the side. A bit of extra work, a creative outlet, something that brings in a bit of income. Then it grows. The question becomes, when does it stop being a hobby?

The reality is, if you are earning income from it, the ATO wants to know about it. It is that simple. If you are getting regular income, promoting what you do, and looking to grow it, then it is not a hobby. It is a business, and it needs to be treated like one.

The good news is that if you are earning income, your expenses may offset that income as well. So getting it set up properly can actually work in your favour.

I see people leave this too long, thinking they will sort it out later. Later usually turns into trying to piece everything together at lodgement time, which is never fun.

Setting Up Your Business Properly

This is where doing things properly from the start makes a big difference. When I sit down with clients, this is usually the first thing we go through. How the business is structured and what needs to be set up.

You have a few options when it comes to business structures:

• Sole trader
• Partnership
• Company
• Trust

Each one has different implications for how you operate, your level of protection, and your obligations. There is no perfect structure that suits everyone. It depends on what you are doing and where you want to take it.

Choosing the right structure is something you would need to discuss with an accountant, as they can look at the full picture of your personal and business circumstances. I work alongside a number of accountants and I am always happy to introduce clients to someone who can help with that conversation.

From there, we look at the basics. Most businesses will need an ABN and a business name. And then depending on the situation, GST registration and PAYG withholding if staff are involved.

This is the part that people sometimes rush through, but it is like setting the foundations. If it is done properly, everything else sits a lot more comfortably on top of it.

Income, Side Hustles and Contractor Work

This is another one I talk through with clients all the time, especially now with side hustles being so common. The biggest thing to understand is that income is income. It does not matter if it comes from your main business, a side job or weekend work.

If you are earning money, you need to declare it, track it, and keep records around it. I often hear, “It is only a little bit here and there.” That might be true at the start, but it adds up quickly. And more importantly, the ATO does not look at it as “just a little bit”.

If you are working as a contractor or subbie, there is another layer to it. You are responsible for:

• Your own bookkeeping
• Your own super
• Your own insurances

One thing that catches people out is the assumption that having an ABN automatically makes you a contractor. That is not always the case. You could be working under your ABN but still be deemed an employee based on the nature of the arrangement. This does not generally affect the worker, but it can have serious implications for the business owner paying them incorrectly. If you are unsure about a working arrangement, the ATO has information on the difference between employees and contractors that is worth looking at.

A simple way I explain it is this. When you are an employee, someone else is taking care of the backend. When you are a contractor, that responsibility shifts to you.

Understanding BAS and Staying on Top of Things

BAS is one of those things that sounds more complicated than it actually is. Most businesses will need to lodge a Business Activity Statement (BAS). Lodgement frequency varies from monthly, quarterly and annually, and this depends on your annual turnover and the type of obligations your business has. This covers things like GST, PAYG withholding, and other obligations.

When clients come to me stressed about BAS, it is rarely the BAS itself. It is the fact that everything has been left until the last minute.

When your bookkeeping is up to date, BAS is straightforward. You know what to expect and there are no surprises. When it is not, it turns into a scramble.

I always say, it is like staying on top of your washing. A little bit regularly is easy. Leaving it all at once makes it feel ten times bigger than it is.

Hiring Staff and Super Obligations

Hiring your first employee is a big milestone, but it also comes with responsibilities that need to be set up properly. This is something I always walk clients through before they hire.

You will need to:

• Set up payroll reporting
• Register for PAYG withholding
• Set up super contributions
• Take out workers compensation insurance if wages exceed $7,500
• Check any payroll tax requirements

And importantly, as an employer, you are required to pay 12% super (from July 2025) on eligible earnings. This is not something to figure out as you go. It needs to be built into your process from the start.

If you are a sole trader, you are not required to pay yourself super, but it is something I always recommend thinking about early. However, if your business operates as a company and you are a director taking a wage, super still applies to those wages.

Record Keeping That Actually Works

If there is one thing I could get every business owner to do consistently, it would be this. Keep your records clean and up to date.

You need to keep records of your income and expenses, super obligations, business registrations, and payroll records.

The standard requirement is to keep most records for at least five years from when you obtain the record or complete the transaction, whichever is later. However, payroll and employee records must be kept for seven years. If you hold assets, those records may need to be kept for longer as well, particularly if you sell the asset or close the business down the track.

It is also worth knowing that while five years is the standard, the ATO can go back further if they identify issues during an audit. There is no hard cutoff if they start looking into things. So keeping thorough records is always in your best interest.

But beyond the requirement, this is what gives you clarity. When your records are organised, you know where your money is going, you can make better decisions, and lodgement time becomes a lot easier. When they are not, everything feels harder than it needs to be.

I usually compare it to a messy desk. You can still work, but everything takes longer and feels more frustrating.

Final Thoughts

This is exactly what I work through with clients every day. It is not about overcomplicating things or trying to know everything at once. It is about getting the right pieces in place early and building good habits from there.

Once your business is set up properly and your bookkeeping is working in the background, everything becomes clearer. You can focus on running and growing your business, knowing the numbers are doing what they should be.

And if you are ever unsure, that is completely normal. It is always easier to ask early than fix things later.