Starting a business shouldn’t feel like learning a new language, but sometimes it does. Here’s the plain-English version.
If you’ve recently decided to start a business in Australia, you’ve probably been hit with a wall of acronyms. ABN. GST. BAS. PAYG. TFN. ATO. It’s enough to make your head spin, and half the information out there seems to assume you already know what it all means.
Let’s break it down in plain English, no jargon, no assumptions, just the stuff you actually need to know to get set up properly.
ABN, Australian Business Number
Your ABN is your business identity number. It’s 11 digits, it’s unique to your business, and you’ll use it on invoices, contracts, and when dealing with other businesses and the government. Getting one is free and you can apply online through the Australian Business Register. Most applications are approved instantly.
Do you need one? If you’re running a business in Australia, even as a side hustle, yes, you almost certainly do. Without an ABN, other businesses may withhold 47% of your payments for tax purposes, which is not ideal.
GST, Goods and Services Tax
GST is a 10% tax on most goods, services, and other items sold or consumed in Australia. If your business turns over $75,000 or more per year (or you reasonably expect it will), you must register for GST. Below that threshold, it’s optional, but some businesses choose to register voluntarily because it lets them claim GST credits on their business purchases.
Once you’re registered, you charge GST on your sales and can claim back the GST you pay on business expenses. The difference gets reported and paid (or refunded) to the ATO through your BAS.
BAS, Business Activity Statement
Your BAS is a form you lodge with the ATO, usually quarterly, though some businesses do it monthly. It reports your GST collected, GST paid, and PAYG withholding if you have employees. It’s essentially how the government keeps track of what you owe (or what they owe you).
The thought of BAS terrifies a lot of new business owners, but if you’re using decent accounting software and keeping your records up to date, it’s mostly a matter of clicking a few buttons. Your accountant or BAS agent can also handle it for you if you’d rather not deal with it yourself.
PAYG, Pay As You Go
PAYG comes in two flavours. PAYG withholding is the tax you hold back from your employees’ wages and send to the ATO on their behalf. PAYG instalments are pre-payments toward your own income tax, the ATO asks for these once your business starts earning above a certain level, so you’re not hit with a massive tax bill at the end of the year.
If you have employees, PAYG withholding is mandatory from the moment you pay your first wage. PAYG instalments kick in automatically once the ATO determines you should be making them.
Super, Superannuation
If you have employees, you’re legally required to pay superannuation on top of their wages. The current rate is 12% of their ordinary time earnings, and it’s paid quarterly into their nominated super fund. Missing super payments comes with serious penalties, so make sure this is locked into your processes from day one.
As a sole trader, super for yourself isn’t compulsory, but it’s smart. Your future self will thank you for putting money away, even if it’s a small amount.
Bringing It All Together
Here’s the practical sequence for most new Australian businesses: get your ABN, decide on your business structure, register for GST if required, set up your accounting software, open a business bank account, and find a good accountant. Once those foundations are in place, everything else, BAS, PAYG, super, becomes much more manageable.
It might feel like a lot upfront, but once the systems are in place, most of this runs in the background. The key is getting it right from the start rather than trying to untangle a mess six months down the track.