Forms, forms and more forms
The World Bank Group ranks Australia the second easiest country in the world in which to start up a new business. Leighton Jenkins believes we could make it even simpler.
In June 2011 the World Bank published an economic ranking table for countries based on how easy it is to do business there.
A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm. This index averages the country’s percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic.
In 2011 Australia was ranked in 11th position, but has slipped four places in 2012 to 15th. The top four positions were taken up by Singapore, Hong Kong, New Zealand and the USA. In front of Australia were countries we like to compare ourselves with, such as Canada, the United Kingdom and Sweden.
Recently with some colleague’s I setup a new company, which I thought was bureaucracy gone mad. I was therefore really surprised to see the World Bank had rated Australia the second easiest country (behind New Zealand) in which to start a new business – so I dug a little deeper. The World Bank mapped a two-step process:
- Obtain a certificate of incorporation and an Australian company number (ACN).
- Register for ABN with the Australian Taxation Office (ATO).
This sounds so simple, but the devil is in the detail. Firstly, you need to work out who owns the company via shares; who are the officers such as directors; and, you need to have a physical address in order to register the business. Some of the items here include a constitution and consents from people to be part of the new business.
Then (as per guidance from Austrade) you need to:
- Register the company name with the Australian Securities and Investments Commission to obtain an ACN.
- Obtain an Australian Business Number (ABN) from the Australian Business Register. Register for an ABN with the Australian Taxation Office (ATO) and request a tax file number for GST registration at the same time.
- Register the trading name of the company with the relevant State Government office.
With an ACN you can then go forth and register a website domain, such as stopredtape.com or stopredtape.com.au. If your business has any patents or trademarks then it’s back to the Federal authorities to register those. Additionally, you will need to apply to a bank to setup an account.
Some of these steps are obviously necessary and the checks and balances are required. However, it seems to me that the ACN/ABN/GST number allocation could be one step – in essence the ABN/GST numbers are merely extensions to the ACN. Including the state-based trading name step at the same time would cut out another (some would say superfluous) activity. We would at this point in time match the ease of setting up a company – which would be a great thing.
In the meantime, the complexity of setting up a business does generate significant profits for accountants, lawyers and the myriad of online company registration sites that pre-print all the forms and letters that you need.
Leighton Jenkins is a business, marketing and sales consultant with a focus on IT&T and start-ups. His corporate experience includes Microsoft, Optus and SAP. He develops marketing and sales strategies and plans for growing companies. Leighton is also experienced in developing growth plans for use in raising capital or government funding.
We ask you click through to the Red Tape Consultation area and share your experiences by answering the following questions. We welcome you to provide anecdotal evidence and any supporting material to explain your circumstances.
- Which regulations and red tape affect your business the most?
- How much time and money does this compliance cost your business? How do you record/calculate this?
Leo Silver
May 22, 2012 at 3:15 am
Ah, if only it ended with
Ah, if only it ended with registering your business. Perish the thought that you ever have the mis-fortune to to change your address.
I recently went though this process and eventually determied that not only did I have to separately change my address for every individual entity of which I am a director but that I had to spearately change the address mutiple times for each entity as different components of the Tax system (eg GST, PAYG, etc) maintain separate databases. Then ASIC needed to be addressed and again, even though I was updateing a residential address, every entity needed to be separately updated.
Surely, a unique identifer (say, my Tax File Number) could be used to enable a single udpate to cascade through the system.