Home – New Forums Starting your journey Questions on starting an online business.

  • This topic is empty.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • #965404
    adrian
    Participant
    • Total posts: 181
    Up
    0
    ::

    Hi,

    A warm greetings to everyone here. Im stumbled upon this site while trying to get more information about starting my own online business. Well before i get to the questions, let me just explain my situation. I intend to setup an online business, mainly doing transactions through paypal and bank transfers, and only trading ONLINE. I am not an australian, or a permanent resident (yet, as i am on a bridging visa waiting for my application to get approved). I dont see the site earning more than $75k a year. I would mainly be selling apparels and bags. Well, having explained all that, my questions are :-

    1 – Must i register myself as an Australian business? Am i able to do it with my residency status? (My brother is an Australian PR if its an issue, but in another state). how much will it cost? and what are the implications on not doing so?
    2 – Must i get an ABN? I understand it doesnt cost anything to get one, and the benefits of getting one is that i can use a .com.au domain which increases the trust customers can have with my site. However does that require my site/company to be an registered Australian Business?
    3 – Fees and Taxes. Am i liable to pay any taxes or any other charges for doing business in Australia, but online and to customers around the world (inc. Australia)?
    4 – Receiving payments. Am i able to receive payments under a paypal account without using a merchant account? Is this advisable? I understand that i can setup a merchant account with a bank and receive online payments through creditcard, bank transfers, and paypal, however it seems to have hefty setup costs and monthly fees. I have found information from the banks but i dont know if this is something i should be going for due to my only receiving small payments.

    ======================================

    So far i’ve worked out and dealt with my suppliers, and i’ve got a business plan and a targeted market. Im pretty technical so setting up a website and marketing it wouldnt be much of a problem. I just need to know more information regarding the stuff above so i can weight my options.

    Much thanks and appreciation for your help and advise.
    – Adrian.

    #1011725
    david.pagotto
    Member
    • Total posts: 19
    Up
    0
    ::

    Hello Adrian,

    1 – Must i register myself as an Australian business? Am i able to do it with my residency status? (My brother is an Australian PR if its an issue, but in another state). how much will it cost? and what are the implications on not doing so?

    “Must i register myself as an Australian business?” – simply the answer is NO, you do not. If your business does not have a “GST turnover of $75,000 or more” you are not obligated by law to register yourself as an Australian Business or for GST. At any rate you can always register yourself as a sole trader once you are up and running.

    The only initial downfall I see is the registration of a .com.au domain name.

    Have a look at the ATO website for further information on business and residency, I do not think it will be an issue, and if it is simply do not register. After all it is not required if your turnover is under $75,000.

    2 – Must i get an ABN? I understand it doesn’t cost anything to get one, and the benefits of getting one is that i can use a .com.au domain which increases the trust customers can have with my site. However does that require my site/company to be an registered Australian Business?

    “Must i get an ABN?” No, Same as above.

    To have an ABN you do need to register as an “Australian Business” or a sole trader in your case.

    3 – Fees and Taxes. Am i liable to pay any taxes or any other charges for doing business in Australia, but online and to customers around the world (inc. Australia)?

    You will need to pay income tax based on profits of your business (as a sole trader).
    If you register for GST (which is not compulsory) you will also have to collect 10% GST for all Australian purchased goods and services.

    4 – Receiving payments. Am i able to receive payments under a pay-pal account without using a merchant account? Is this advisable? I understand that i can setup a merchant account with a bank and receive online payments through credit card, bank transfers, and pay-pal, however it seems to have hefty setup costs and monthly fees. I have found information from the banks but i don’t know if this is something i should be going for due to my only receiving small payments.

    I would strongly suggest sticking with paypal for the time being. It is simple, easy and with no setup costs.
    You will need to create a “merchant or business” account with paypal to collect all kinds of payments.

    I hope this helps,

    Regards,
    David Pagotto

    #1011726
    adrian
    Participant
    • Total posts: 181
    Up
    0
    ::

    Hi David,

    Thanks for the helpful information. It seems that not registering myself as a soletrader and not getting an ABN would limit me to 2 things that i think are vital :- a .com.au domain, and ability to create a business bank account to receive Australian direct deposit bank payments. I do think i would be limiting myself to alot of customers who prefer to do a bank transfer for payments, or, rather not paypal funds to a random [email protected] email address. Based on your advise, here’s the options i have based on the information i gathered.

    ======================================
    1 – I would first need to register myself as a sole trader which would cost me $82, (http://www.consumer.vic.gov.au/). I believe as a sole trader that would be the only cost i need to be paying (aside from taxes). Now after that is done i can apply for an ABN which is free. Now because i am a sole trader/have an ABN, i am liable for income tax, which means that i need to keep track of all my income made and file it at the end of the current financial year while i am applying for my own personal tax returns from other income. Is this generally easy to do by my own using e-tax, or is it advisable to get an accountant?

    And my last step would be to setup a business bank account to receive payments. I’ve taken a look around and it seems quite troublesome to set one up. I would need to persuade them with a business plan and setup cost is quite hefty. However i found this site, http://www.stratapay.com.au/, which enables me to receive transactions made thru bpay, credit cards with a fee of $2.50 per transaction (+1.80% for cc), and with an initial one time only startup cost of $199. Seems like i can just use my personal savings account with stratapay. Based on your experience, is this option advisable? Would you say their fees are expensive?

    ======================================

    2 – Now im really new with all this, would be great if i could get a clarification on my other options in case option 1 is too much for me to handle. Basically my other option is to not register myself as a sole trader, not getting an ABN, and therefore not liable for any taxes. All my transactions will be made towards a [email protected] email through paypal which would be my only payment option. And in a case where my business builds up quick and i want to switch to option 1, i can always register as a sole trader, get an ABN, enable more payment methods thru stratapay, at any time? Is this all correct? and how does registering as a sole trader mid way throughout a financial year affect taxes? Would i be liable for income tax made when i wasnt a sole trader? Also i dont project the business to have a turnover of 75000, but what if it were to midway throughout the financial year, can i then only file for taxes etc?

    ======================================

    Sorry for the wall of text and questions, but thats practically all my doubts. Thanks so much for your advise, i really do appreciate it.

    Regards,
    Adrian.

    #1011727
    david.pagotto
    Member
    • Total posts: 19
    Up
    0
    ::

    Hello Adrian,

    I bank with the Bendigo Bank and I know for a FACT that you do not need to be registered as a sole trader or have an ABN to open a business bank account (This will vary with other banks). All you need is to register a “Buisiness Name” from “Consumer Affairs Victoria” (If you are residing in Victoria). Bendigo allow you to then open a business account in that name.

    A .com.au domain name is certainly preferable, and if you will not budge based on that, registering as a sole trader is the easiest option.



    1 – I would first need to register myself as a sole trader which would cost me $82, (http://www.consumer.vic.gov.au/). I believe as a sole trader that would be the only cost i need to be paying (aside from taxes). Now after that is done i can apply for an ABN which is free. Now because i am a sole trader/have an ABN, i am liable for income tax, which means that i need to keep track of all my income made and file it at the end of the current financial year while i am applying for my own personal tax returns from other income. Is this generally easy to do by my own using e-tax, or is it advisable to get an accountant?

    I think you are a little confused here, The $82 (or $81.80) is to register a “business name” not yourself as a sole trader.
    Registering as a sole trader and getting an ABN are the same process. e.g. Once you register as a sole trader you are issued an ABN.

    I believe in the ABN application you specify what the ABN is for, just select sole trader.

    More details here – http://www.ato.gov.au/businesses/content.asp?doc=/content/15772.htm

    Registering as a sole trader is free.

    As a sole trader you will only need to fill out one income tax return, and if you keep your books well you could do it yourself.



    And my last step would be to setup a business bank account to receive payments. I’ve taken a look around and it seems quite troublesome to set one up. I would need to persuade them with a business plan and setup cost is quite hefty. However i found this site, http://www.stratapay.com.au/, which enables me to receive transactions made thru bpay, credit cards with a fee of $2.50 per transaction (+1.80% for cc), and with an initial one time only startup cost of $199. Seems like i can just use my personal savings account with stratapay. Based on your experience, is this option advisable? Would you say their fees are expensive?

    $2.50 per transaction (+1.80% for cc) is VERY VERY expensive.

    I hire an EFTPOS machine with .20c per transactions and 1% for cc.
    Merchant Link is the name of the company we deal with.

    It is great for credit card payments over the phone etc.



    2 – Now im really new with all this, would be great if i could get a clarification on my other options in case option 1 is too much for me to handle. Basically my other option is to not register myself as a sole trader, not getting an ABN, and therefore not liable for any taxes. All my transactions will be made towards a [email protected] email through paypal which would be my only payment option. And in a case where my business builds up quick and i want to switch to option 1, i can always register as a sole trader, get an ABN, enable more payment methods thru stratapay, at any time? Is this all correct? and how does registering as a sole trader mid way throughout a financial year affect taxes? Would i be liable for income tax made when i wasnt a sole trader? Also i dont project the business to have a turnover of 75000, but what if it were to midway throughout the financial year, can i then only file for taxes etc?

    You will need a business bank account, that is an essential.
    If you offer: Paypal, CC through Paypal, bank deposit and money order as your payment options you are covering all bases.

    You are able to apply for an ABN as a sole trader at any time, you just specify when your business activities began and pay your income tax accordingly.

    Would i be liable for income tax made when i wasnt a sole trader?
    You will ALWAYS need to pay income tax, regardless if you are registered or not.

    Once you hit 75K turnover you are required by law to register for GST which means you need to register an ABN.

    Regards,
    David Pagotto

    #1011728
    adrian
    Participant
    • Total posts: 181
    Up
    0
    ::

    Thanks for the reply/clarification David.

    Based on all your advise what im going to do is register my business name, and then register myself as a sole trader and get an ABN. Doing so will allow me to get mybusiness.com.au. There seems to be zero advantage for me to NOT register as a sole trader/get an ABN, since any income made into my business bank account will be taxable.

    I’ll take your advise and setup a business bank account with Bendigo [http://www.bendigobank.com.au/public/business/transaction_banking/transaction_banking_non_cheque_dbdetail.asp?ID=1%5D which would allow me to receive paypal and direct deposit payments, and i can stay away from credit card payments until my site grows bigger. Thanks so much for helping me get a foot out the door, hope everything works out, wish me luck :)

    Much thanks and appreciation again for all the help once again, cheers mate.

    #1011729
    david.pagotto
    Member
    • Total posts: 19
    Up
    0
    ::

    Sounds good Adrian,

    As for a shopping cart website I would go for Zen Cart.

    If you have anymore questions about the “website” stage of things please let me know.

    Regards,
    David Pagotto

Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.