So you’ve found your passion and you’re ready to start a brand new small business. This can be an extremely exciting time. Many new businesses owners want to get their business up and running as soon as possible. But, when you start a new business, there are a few rules to follow. Specifically, all new small businesses need to be set up in accordance with the rules and regulations of ASIC – the Australian Securities and Investment Commission.
At times, it can be confusing to understand what you really need to do. So, we’ve decided to simplify the process for you. In this article, we outline who ASIC are and what you need to do to kick-start your business accordingly.
Who are ASIC?
As referred to above, ASIC stands for the Australian Securities and Investment Commission. They are an Australian Government body that maintains and facilitates a range of businesses, companies, financial services and credit services. ASIC is basically a body that overlooks all things business.
Regarding small businesses, ASIC sets down a range of legal requirements and obligations that all small business owners must abide by. This includes rules relating to the registration, renewal and de-registration of small businesses.
ASIC has an active role in the creation of most small businesses. Because of this active role, it is important that new business owners are aware of their responsibilities to act in accordance with ASIC.
For further information on ASIC’s role, click here.
Small Businesses and ASIC
At the beginning of your businesses creation, and throughout its life time, you must ensure that your business is abiding by Australian rules and laws that surround running a business. In this way, ASIC not only regulates new businesses, but the entire life-cycle of a business.
When individuals and businesses do not abide by Australian laws, ASIC has the power to make actions out against them. So basically, ASIC is able to enforce the laws and start proceedings against businesses, their owners or directors. At times, ASIC has banned individuals from being company directors and taken both civil and criminal action against individuals whose businesses are illegitimate or engaging in illegal activities.
How to Ensure Legal Compliance with ASIC
When you are just starting your business, you will be required to ensure that the setting up of your business is ASIC compliant. Don’t worry, we can help you with every aspect of this process to ensure your business is operating in accordance with ASIC rules and regulations.
For your new business to be ASIC compliant it must:
- Be started by a legitimate and eligible person,
- Have a business structure,
- Have a registered business name,
- Register for an ABN and/or ACN.
Let’s break down each of these legal requirements.
Must be a Legitimate and Eligible Person
In order to legally register your business, ASIC must find that you are eligible to start your small business. Now, most people will be eligible to start their small business. However, there is a list of individuals who are not eligible, including individuals that have been:
- Bankrupt,
- Banned from managing a business,
- Convicted of certain offences.
Let’s go into this a bit further.
Bankrupt Individuals
If an individual is bankrupt at the time they wish to start a new business, ASIC may stop that person for starting that business. In other words, a person cannot manage a business during the period for which they are bankrupt.
Banned Individuals
If ASIC has previously banned or disqualified you from managing a business, you will not be eligible to start a new small business. In general, a person will be banned by ASIC if they have been involved in two or more failed/liquidated companies in the last seven years.
Individuals Convicted of Offences
Lastly, individuals that have been convicted of certain offences, such as fraud, you will not be eligible persons to start a new small business.
Set up your Business Structure
ASIC requires individuals to set up a structure for their small business. An acceptable business structure can include any of the following:
- Sole trader,
- Partnership,
- Joint venture,
- Trust or,
- Company.
Once you decide on a business structure, you will be required to apply for an Australian Business Number (ABN). Additionally, if you decide to operate your small business as a company, then you will also need to apply for an Australian Company Number (ACN).
Click here to learn about the differences between an ACN and ABN.
Register your Business Name
Individuals must also register their business name. The business name must be an acceptable business name and in general cannot be identical to other already registered business names. Upon deciding on your business name, ASIC will verify your chosen name.
Key Takeaways
At times, setting up a business can be tricky. ASIC lays down a list of rules and requirements to ensure that your business is legal and legitimate. We have outlined the steps that all new business owners must take to legally and legitimate set up their business with ASIC. Accordingly, this includes ensuring your firstly eligible to do so, setting up your structure and registering your business name, ABN and/ACN. Here at Lawpath, we’ve made things simple. Our platform enables new business owners to set up their businesses needs in one swift go, ensuring you don’t miss a single thing.
