- Pick the structure that sets your liability and tax rate
- If you are not building alone, settle founder terms early
- The registrations that make the business official
- The moment you hire: classification, awards and super
- The exit: what a buyer checks before you can sell
- Where a lawyer fits into your lifecycle
- The ownership question runs through every stage
Most business owners meet the law in instalments. The first encounter is usually practical: an ABN, a business name, a lease. Later come the first employee, the first franchise enquiry, the first term sheet, the first offer to buy the business. Each of those points carries its own obligations, and several have hard deadlines attached. This guide sets out what is actually required at each stage of the Australian business lifecycle, with the current thresholds and the primary sources to check them against.
Pick the structure that sets your liability and tax rate
The structure you choose at the start determines who is liable for the business's debts, what tax rate applies to its profits, and how easy it is to bring in investors later. It is genuinely painful to reverse, because changing structure later can itself trigger tax, so it is worth getting advice on before you commit.
The three common starting points are:
- Sole trader: You operate as an individual with an ABN and pay tax at your personal marginal rates. There is no separate legal entity, so you are personally liable for every debt and claim against the business.
- Partnership: Two or more people share control, profits and, unless an agreement says otherwise, liability. A written partnership agreement is the difference between a workable arrangement and a dispute, and since the Corporations Act does not regulate partnerships, the agreement is the whole governance document.
- Company (Pty Ltd): A company is a separate legal entity with its own Australian Company Number (ACN). It provides limited liability: the shareholders' exposure is generally capped at what they paid for their shares. Directors, however, have personal duties and can be personally liable in some situations, for example for insolvent trading.
Tax follows the structure. Companies pay the company tax rate of 30%, but a base rate entity with aggregated turnover under $50 million and no more than 80% passive income pays the lower rate of 25%. A sole trader pays at personal marginal rates, which exceed 25% once income passes roughly $45,000. If profits stay in the business and you plan to raise outside capital, the company structure is usually the one that fits.
Once you incorporate, two obligations follow immediately. First, every director must hold a director identification number. Second, the company needs internal governance. Under s 134 of the Corporations Act 2001 (Cth), a company can rely on the default replaceable rules in the Act, adopt a bespoke constitution, or use a combination. For a single-owner company the replaceable rules are usually fine. Once there are co-founders, different share classes or investors, a constitution that reflects the actual deal matters more.
A fourth structure, the trust, is common for family businesses and property holding, but it carries its own complexity: a trustee runs the business and typically has unlimited liability unless the trustee is a company. Model the tax outcomes of each option before you pick.
If you are not building alone, settle founder terms early
Misunderstandings between co-founders are one of the most common reasons early businesses stall. Decide who makes which decisions, what happens if someone wants out, and what happens to their shares if they leave. A shareholders agreement formalises those terms: voting thresholds, board seats, share transfers, vesting and a dispute process, and it sits alongside the constitution covering the things the constitution does not.
Vesting is the term that gets the most attention in practice. If shares vest over three or four years, a founder who leaves after six months does not walk away with half the business. The agreement should also record who owns the intellectual property each founder brings in, because that matters more at sale time than at formation.
The registrations that make the business official
Once the structure is settled, the registrations are largely mechanical. For a company the sequence is short: apply for an ABN, and a tax file number if you will employ staff, through the Australian Business Register; register the company with ASIC to get its ACN; have each director obtain their director ID; and register a business name if you will trade under anything other than your own or the company's name. As ASIC explains, a registered business name does not give you exclusive rights to the name; that is a separate trade mark question. Then register for GST if your GST turnover is at or above the registration threshold.
On GST, the figures are in the legislation. Section 23-15 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) sets the base registration turnover threshold, and the GST Regulations 2019 fix the operative amounts: $75,000 for most businesses and $150,000 for non-profit bodies. You must apply for registration within 21 days of becoming required to register, which happens when your projected turnover crosses the threshold. Taxi and ride-sourcing operators must register regardless of turnover. If you are under the threshold you can still register voluntarily, which lets you claim GST credits on purchases.
Once you have employees, PAYG withholding and superannuation registration follow, and state-based workers compensation insurance is compulsory in most states as soon as you have workers. Both are covered in the hiring section below.
Consumer law and privacy apply from the first sale
Consumer guarantees cannot be contracted out
If you sell goods or services to consumers, the Australian Consumer Law (ACL) applies from your very first sale. The consumer guarantees are automatic and cannot be taken away by a no-refunds sign or a clause in your terms. A product must be of acceptable quality, fit for any purpose you advertise, match its description, and come with spare parts and repair facilities for a reasonable period. Services must be supplied with due care and skill and within a reasonable time. The guarantees also protect some business buyers: a product or service bought for business use is covered if it costs under $100,000 including GST, or is a vehicle or trailer used mainly to transport goods, unless it is bought for resupply or for use in production.
Since 9 November 2023, proposing, using or relying on an unfair term in a standard form consumer or small business contract is itself banned and carries penalties, not just the risk of a term being void. If you trade on standard form terms, that is a direct reason to have them reviewed.
Privacy: the $3 million threshold is still the starting point
The Privacy Act 1988 (Cth) (the Privacy Act) applies to APP entities: agencies and organisations, but generally not small business operators. Section 6D of the Privacy Act defines a small business as one with annual turnover of $3 million or less, and a small business operator is generally exempt from the Australian Privacy Principles. That exemption is still in the current text of the Act, but it is narrower than it sounds: a business is not a small business operator if it provides health services and holds health information, discloses or collects personal information for a benefit (in effect, trading in personal information), is a contracted service provider for a Commonwealth contract, is a credit reporting body, or is related to a larger group company.
Businesses that do fall under the Privacy Act have real obligations: comply with the 13 Australian Privacy Principles, maintain a privacy policy, and report eligible data breaches under the notifiable data breaches scheme that has applied since February 2018. For a serious interference with privacy, the maximum civil penalty for a body corporate is the greater of $50 million, three times the benefit obtained, or 30% of adjusted turnover under s 13G of the Privacy Act, with individuals facing up to $2.5 million.
There are also two recent changes worth knowing even if you are exempt. The Privacy Act now contains a statutory tort for serious invasions of privacy, giving individuals a direct right to sue for intrusion upon seclusion or misuse of information where there was a reasonable expectation of privacy and the conduct was intentional or reckless. From 10 December 2026, automated decision transparency requirements commence, and the government has flagged further reform of the small business exemption, so treat the $3 million threshold as today's position rather than a permanent one.
If you are under the threshold and exempt, a clear privacy policy is still best practice: enterprise customers, app stores and payment platforms routinely require one, and it protects you if your turnover later crosses the line.
Contracts before you trade
Three agreements do most of the work at launch. Customer terms define scope, payment, warranties and limits of liability. Supplier agreements lock in quality, price, delivery and who owns any IP produced. Contractor agreements must address IP assignment explicitly, because work created by a contractor belongs to the contractor unless the contract assigns it. That single clause is the most common gap found during due diligence later.
The moment you hire: classification, awards and super
Hiring changes the legal picture more than any other single event, and the biggest trap is classification. Under s 15AA of the Fair Work Act 2009 (Cth), as amended in 2024, the ordinary meaning of employee is determined by the real substance, practical reality and true nature of the relationship, looking at how the contract is performed in practice. The label on the contract is not decisive: if you engage someone as a contractor but they work like an employee, they may be an employee for Fair Work purposes, with all the minimum wage, leave and super obligations that follow.
For employees, the minimums are set by the national system. The national minimum wage is $26.44 per hour, or $1,004.90 per week, from 1 July 2026. Most employees are covered by an award instead, which sets higher minimum rates, penalty rates and allowances for their industry and role, and the National Employment Standards apply to all employees regardless of award coverage. Job advertisements must not offer pay below the award or agreement rate.
Superannuation is a fixed percentage, not a negotiation point. Under s 17A of the Superannuation Guarantee (Administration) Act 1992 (Cth), the charge percentage is 12%, and from 1 July 2026 the payment timing changes significantly. Payday super means contributions must reach the employee's fund within seven business days of each payday, calculated on qualifying earnings which include commissions and salary sacrifice amounts, rather than the old quarterly cycle. Late payment triggers the super guarantee charge plus penalties of 25% or 50%.
Independent contractors gained their own protections in August 2024. Contractors below the indexed contractor high income threshold can challenge unfair contract terms before the Fair Work Commission, and those above it can seek court review of a harsh or unfair services contract under Part 3 of the Independent Contractors Act 2006 (Cth). The correct response is not to relabel employees, but to structure genuine contractor relationships and document them properly.
Scaling: capital, franchising, brands and data
Raising capital
If you raise outside investment, the paperwork multiplies: term sheets, subscription documents, a cap table that records who owns what, and updated governance documents that reflect new board seats and decision thresholds. Each issue of shares must be recorded, and your shareholders agreement needs to deal with investor rights such as information rights and exit mechanisms.
Franchising
Franchising is now a heavily regulated business model. The new Franchising Code of Conduct, in the Competition and Consumer (Industry Codes, Franchising) Regulations 2024, commenced on 1 April 2025 and replaced the 2014 code. It imposes a duty of good faith on franchisors, franchisees and prospective franchisees, requires a disclosure document and information statement before a franchise agreement is entered, and gives new franchisees cooling-off rights. It also sets a mandatory dispute resolution path: internal complaint handling first, then an alternative dispute resolution process. One of the biggest changes is the Franchise Disclosure Register: franchisors must now lodge their disclosure documents publicly and update them annually. If franchising is on your roadmap, the compliance burden starts before the first franchisee signs, not after.
Trade marks
Brand value compounds, but only if the brand is protected. A registered trade mark with IP Australia gives exclusive rights across Australia, lasts up to 10 years and can be renewed indefinitely. Registration takes at least seven months and costs a minimum of $250 per class, so the search matters more than the filing: before you spend on branding, check that your name and logo are not already taken. A business name registration or domain name does not give you exclusive rights to the name; only a trade mark does.
Data at scale
As data volumes grow, so does exposure. If you are an APP entity, your privacy policy must reflect what your systems actually do with personal information, including any tracking, analytics or overseas transfers. Even if you are exempt under the $3 million threshold, the statutory tort applies to everyone, and a data breach that harms individuals can now land a business in court on that basis alone. When you add features such as subscriptions, marketplaces or user-generated content, review your website terms and privacy arrangements at the same time.
The exit: what a buyer checks before you can sell
Buyers run due diligence on financials, contracts, IP, employment and litigation. The specific things that derail small business sales are usually title problems: trade marks registered in the founder's personal name rather than the company's, contractor IP never assigned, or customer contracts that cannot be assigned without consent.
The two basic structures are an asset sale, where the buyer takes specific assets and contracts, and a share sale, where the buyer takes the company including its liabilities. The choice turns on tax, risk and the need for third-party consents, and it should be modelled before terms are signed.
Tax planning for the exit deserves attention well before the sale. The small business CGT concessions can reduce or eliminate capital gains tax on the sale of an active business asset. The four concessions are the 15-year exemption, which disregards the whole gain where the asset has been held continuously for 15 years and you are retiring or permanently incapacitated; the 50% active asset reduction, which halves the gain and stacks with the CGT discount; the retirement exemption; and the rollover. Basic eligibility requires either aggregated turnover under $2 million or a maximum net asset value of no more than $6 million, and the asset must pass the active asset test. Amounts disregarded under the 15-year and retirement exemptions can be contributed to superannuation without counting against the usual non-concessional cap. None of this works retrospectively, so the 15-year holding requirement has to be planned for from the start.
Where a lawyer fits into your lifecycle
A commercial lawyer is not needed for every step, but there are points where the judgement calls are genuinely legal. Choosing a structure and modelling the tax, drafting a shareholders agreement and constitution that match the actual deal, reviewing standard form customer terms against the unfair contract terms rules, assigning IP in contractor and supplier agreements, getting the employee-contractor classification right, structuring a franchise disclosure package, and running a sale including the CGT strategy are all places where a lawyer adds value you can measure in avoided risk. At Artificer Legal we work across the full lifecycle, and the earlier you bring a document or a decision to us, the cheaper it is to fix.
The ownership question runs through every stage
The sharpest lesson from the lifecycle is that the most expensive legal problems are created years before they are discovered, and most of them are ownership problems. A contractor's IP that was never assigned, a trade mark sitting in a founder's personal name, an employee classified as a contractor for four years: each one was a small omission at the time and a six-figure problem at exit. The stage where you fix these is the stage where the omission happens, not the stage where it is found. A structure chosen with advice, founder terms written down, IP assigned at the point of creation and employees classified correctly make every later stage cheaper.
The rest of the lifecycle is largely procedural. Register on time: ABN and business name at launch, GST within 21 days of crossing $75,000 in projected turnover, PAYG and super from the first employee with 12% super paid within seven business days of payday from 1 July 2026. Comply with the consumer guarantees and, if your turnover is over $3 million or you fall into one of the carve-outs, the Privacy Act. Protect the brand with a trade mark before it becomes valuable. If you franchise, work inside the 2025 code from day one. And when you plan the exit, check the small business CGT concessions before you sign anything, because the 15-year exemption cannot be manufactured after the sale.