Starting a new business: your legal and compliance checklist
The first few months of a start-up is usually a blur: product, customers, pricing, hiring (maybe), and a growing list of “we’ll fix that later” admin jobs. As a business owner or sole trader, it can feel overwhelming at times and like you’re wearing five hats at once.
To ensure success, it’s important to build the right team of advisors to support you along the way – family, friends, a good bookkeeper, accountant, lawyer, and a mentor (someone who has done it before). Together – this team becomes your personal advisory board.
Before you start, get clear on what you’re building and how you’ll operate. The Australian Government Guide to Starting a Business is an excellent online resource to help you work through the all the steps to start your business.
This business start-up checklist is general guidance (not legal advice) covering the key legal and compliance steps and how to prioritise them.
Set the foundations (business structure + registrations)
The first steps of your start-up journey involve laying a solid legal foundation. It’s important to get your business structure and legal compliance sorted early, because it can become expensive and difficult to fix later (not to mention distracting from growing your business).
1. Choosing Your Business Structure
Choosing the right structure is crucial for your start-up's success. Whether you're considering a sole trader, partnership, or company structure, your decision impacts taxes, liability, and more. Typical options for ‘for-profit’ businesses include:
Sole trader: the simplest, giving you complete control, but it carries personal liability. Also, your business income is taxed as personal income at your marginal rate. Operating as a sole trader is the quickest and easiest way to get started.
Partnership: offers two or more business partners an alternative way to own and operate the business rather than through a company structure. Control and liability are shared by all partners. Partnerships can become complex.
Company: while more work to set up, it is usually the preferred structure if you’re scaling, bringing in co-founders, raising capital, or taking on strategic commercial risk. A company structure offers personal liability protection and taxation advantages, especially when used together with other strategies for managing your personal and family’s wealth.
Depending on the nature of your business, other options include a trust, a social enterprise, a not-for-profit, or an association.
Choosing your business structure requires careful consideration of your personal and family circumstances, your proposed business, and your personal and business goals. It’s best to get both legal and accounting advice tailored to your specific situation before choosing your business structure.
2. Register an Australian Business Number (ABN)
An ABN is essential as it identifies your business to the government. You will need your ABN for noting on things like invoices, supplier onboarding, platform payments, consumer disclosure, etc. For more information on how to apply for an ABN, visit the Australian Business Register (ABR).
3. Decide whether (and when) to register for GST
If your projected business revenue is likely to be $75,000 or more, you generally need to register for GST. If your revenue is likely to be less than $75,000, registration is voluntary. For more information on how to register for GST, visit the Australian Business Register.
For a start-up with unproven or inconsistent income, particularly in the early weeks and months, it can be strategic to hold off on GST registration. It’s one less compliance task to manage and less risk potentially impacting your cash-flow. A helpful place to start is the ATO’s guidance on registering for GST.
Once registered, you need to display your ABN on invoices and official documents, collect, and remit GST to the ATO. Establishing a process to ensure your GST compliance will avoid penalties and keep your business running smoothly.
4. If you are setting up a company, register with ASIC
Registering with ASIC is a must if you choose a company structure. There are several steps that you must do before registering a company and after to ensure legal compliance.
Before registering your company:
Choose a company name or use the company’s Australian Company Number (ACN) instead. If you choose a name, ensure you follow the rules.
Choose a business name you want to conduct business under a different name than your company name (this is not the same as a ‘trading name’). Ensure you follow the rules for your business name.
Apply for a Director Identification number. All company directors must apply for a director ID before a company is registered.
Consider your company’s registered address. This information will be publicly available. If you are a sole trader or small business working from home, you may want to find a coworking space that offers a virtual office service to nominate as your registered office address, to keep your personal information confidential.
Once these pre-registration steps are completed, you are ready to register your company.
Once registered, you will need to display your company name and ACN (or ABN and business name if associated to your ACN) on certain company documents. Also, you will have ongoing compliance obligations, including company director’s duties and ASIC reporting requirements.
HOT TIP: you can use the Australian Government’s Business Registration Service to apply for multiple registrations at once. This can save you a lot of time and frustration.
Securing Agreements and Contracts
With your structure in place, it's time to secure your business through vital agreements and contracts. These will protect your interests and clarify expectations with partners and employees.
5. Founders/Shareholders Agreement
One of the biggest mistakes for start-ups with multiple co-founders is delaying the creation of a founders/shareholders agreement and simply relying on goodwill or ‘a general understanding’.
A solid founders/shareholders agreement usually covers:
equity split and what it’s actually tied to (roles, responsibilities, time, investment)
how decisions will be made and what happens in a deadlock
what happens if someone leaves early (i.e., including vesting schedules and buy-back options to protect against unexpected exits)
confidentiality and IP protection
how disputes will be resolved.
This document helps to ensure everyone is on the same page. It’s less about “preparing for a fight” and more about preventing ambiguity, which is typically what causes disputes among founders.
6. IP Assignment and Trade Mark Protection
Protecting your intellectual property is non-negotiable. If you’re using contractors, developers, designers, or even friends “helping out”, you need to ensure any IP created is assigned to the business, and not sitting with an individual.
Similarly, you want to think about protecting your brand through a trade mark strategy. Trade marks are one of the most cost-effective ways to protect your brand identity in Australia — your name, logo, and taglines (when used as badges of origin). A helpful place to start to learn more is IP Australia’s trade marks website.
7. Contractor vs Employee: get it right early
This is an easy area to stumble, especially when you’re just starting and trying to figure it all out.
Misclassifying workers can create tax, superannuation, and workplace law issues. Before hiring your first contractor or employee, you will want to ensure you have a proper employment contract in place. This isn’t just paperwork – Fair Work Australia has strict compliance obligations on disclosure and ensuring staff are paid correctly – get it wrong, your business and some individuals may incur significant financial penalties.
For more information, start with business.gov.au’s plain-English comparison of an employee verses contractor distinction. The article includes links to the Fair Work Ombudsman and ATO for additional related information.
Establishing Compliance and Protection
After setting solid legal foundations, your focus is on compliance and protection. This safeguards your business from unexpected setbacks and ensures smooth operations.
8. Privacy Policy and data breach readiness
Understand whether the Privacy Act 1988 (Cth) applies to your business, as it will determine the scope and detail required of your compliance efforts. The Privacy Act generally applies to businesses with an annual turnover of $3 million or more, although some businesses must comply regardless of their turnover (e.g., certain health service providers, credit reporting-related entities, and businesses that trade in personal information).
9. Important reforms coming 1 July 2026: AML/CTF Regime
From 1 July 2026, new anti-money laundering (AML) and counter-terrorism financing (CTF) reforms may require some business to comply with the Privacy Act when they might not otherwise meet the annual turnover threshold.
From 1 July 2026, if your business provides a “designated service” under the AML/CTF regime, you become a “reporting entity” and subject to the Privacy Act. Your handling of customer identification information needs to be managed carefully alongside privacy obligations and best practice.
The AML/CTF regime applies to “tranche 2 sector” regulated professions and businesses, where they provide the regulated services. These include:
real estate professionals (e.g., real estate agents, buyer’s agents and property developers)
lawyers
conveyancers
accountants
trust and company service providers
dealers in precious stones, metals and products.
For more information on the AML/CTF reforms, visit the AUSTRAC website.
10. Privacy policy and website terms and conditions
A well-crafted privacy policy informs users about what personal information you collect, how you use it, and who you share it with. It’s not just regulatory—it’s a trust builder with your audience.
Alongside that, it’s valuable to include website terms and conditions that set clear rules for your website use and helps to protect you from avoidable liability. Create these documents thoughtfully so they reflect your actual operations, systems, and legal obligations—not a generic template you found online (and certainly don’t go to a competitor’s website and simply copy and paste their T&Cs).
11. Data breach readiness
If your business is covered by the Privacy Act, the Notifiable Data Breaches (NDB) scheme may apply, meaning you may need to assess and notify affected individuals and the regulator for eligible data breaches, and that process should be part of your breach response plan.
Data breaches can cripple a start-up. Even if the NDB doesn’t apply to your business, it’s recommended that you implement a data security plan to safeguard information (especially if you’re a virtual business or using any cloud-based systems in your operations). Regularly review and update security measures. In case of a breach, have a response plan ready to minimise damage and comply with legal requirements. This proactive approach protects your reputation and builds client trust – and these days, it’s the bare minimum that clients expect.
12. Insurance and Risk Management
Insurance isn’t glamorous, but it’s part of building a business that can shield you from unforeseen events. Depending on what you do, consider:
public/commercial general liability (for third-party injuries and property damage)
professional indemnity
cyber risk
directors & officers (if you’re a company and scaling).
A commercial insurance broker can help tailor a product that is fit-for-purpose and aligned to your business and its risks; the legal work is making sure your contracts and risk settings align with your insurance policies (i.e., what you’re actually covered for).
Alongside your insurance policies, develop risk management strategies to identify, assess, and mitigate potential risks. Regularly review these strategies, ensuring they evolve with your business.
Final comments
Setting up a legal foundation is not just about compliance; it's about empowering your business for success. By addressing the basics in the checklist above, you're not only protecting your new venture, but you’re also laying the groundwork for sustainable growth. Keep pushing forward, and remember: the more prepared you are, the smoother your entrepreneurial journey will be.
Looking for some additional resources? Check these helpful guides:
Remember – you got this!
Need extra support? Latitude Legal can help
Latitude Business + Commercial can provide you with legal advice for your start-up, support you with registrations and filings, and ongoing compliance. We will also work collaboratively with your accountant and other professional advisors to provide you with holistic professional advice for you and your business (in fact, we recommend it!).
General information only, not legal advice.