A small business is defined in the Corporation Acts 2001 as a small proprietary company. For a business to qualify as small for a financial year starting on or after 1 July 2019, it must meet at least two of three criteria below
- Less than $50 million in annual revenue
- Less than one hundred employees after a financial year
- Less than $25 million in consoling gross assets after the financial year.
For the financial year that is starting before 30 June 2019, the criteria of which the proprietary company must meet at least two are as follows:
- Less than $25 million in annual revenue
- Less than fifty employees at the completion of a financial year
- Less than $12.5 million in consoling gross assets after the financial year.
The Australian Taxation Office describe a small business for the purpose of taxation as an entity with an aggregated turnover of less than $10 million.
Fair Work Australia describe small business for the purpose of employment as a business with less than 15 employees.
Australian Bureau of Statistics defines a small business as one that employs less than 20 people.
Most regulators adopt the ABS definition.
Starting a small business: A small business is created the same way company would be. First, you need to determine the business structure. Before you even get to that, you must know whether you are eligible to start a business. Anyone who is bankrupt cannot start, manage or operate a business during the period of that bankruptcy. Also, ASIC may ban or disqualify a person from running a company for as long as five years if such person has been involved in two or more companies that were liquidated within the preceding seven years and if a liquidator reported the inability of each of those companies to pay their debts to ASIC. Anyone who has also been convicted of specific offences such as fraud cannot manage any company for five years starting from the day of conviction, or if the person is imprisoned, from the day h/she was released. Managing a company when disqualified is considered a criminal offence. Once you are qualified, all you need is to register the name and choose a structure.
Running a small business: The requirements that exist for operating a company is also the same that applies to run a small business. Most times, there are federal laws as well as state and territory laws to comply with. You must ensure you understand these rules, regulations, and laws.
Protecting your business: Small businesses are more risk-averse, so you have to protect your business from unnecessary risks. You can do this by ensuring you deal only with companies that you trust and with proper monitoring. You should also review all credit contracts thoroughly, and most importantly, get business advice from financial professionals.
Closing a small business: Where your business is no longer in operations, you can cancel the business name and deregister the company. Doing this means no more annual fees or any charges from ASIC.