ABN...ACN...easy as 1 2 3?
All I want to do is bake cakes, make them pretty and see the smiles on people's faces when they receive them...that's my kind of happiness. Making money to allow me to do it is also part of this (who am I kidding?!). This is why I've had to kick my baking urges to the kerb and start researching about the structure of my business. After reading more pages of words than a romantic novel, I finally decided on how my business will operate for the time being. It was quite simple for me to decide on what I wanted, as I am the only person that I have to deal with (sometimes a lot harder than you would think). As I am only starting out and have no intentions of hiring any employees in the immediate future, I decided I would follow the path of a sole trader. The extra expense of setting up a company to start my baking business, just doesn't feel necessary at this point in time. This is something that I will probably re-evaluate in 12 months time or when the business takes off.
I know a few of my friends have tried to talk me out of this due to the concerns they have if a major issue arises down the track. Such as being personally liable (as a sole trader) if I am sued for whatever reason. However, if I am a director of the company, the liability is directed toward the company, rather than my personal assets. I guess it's kinda like safe guarding yourself. I totally understand their point of view and will definitely keep their advice in mind, but being only a small start up, I don't even know if my business will be able to break even, let alone be successful.
As i have decided to become a sole trader, there was no need for me to apply for an Australian Company Number (ACN). Instead I applied for an Australian Business Number (ABN). My understanding of an ABN is that it's an 11 digit number that identifies your business to the outside world. With this number you are able to apply for GST and a business name among other things. ABNs are free and only takes a few minutes, however you can only apply for one if you meet their criteria. Only apply for an ABN, when you are ready. I got a follow up call from the government department just to check why I applied for an ABN and what I plan to do as part of my business.
You can apply for one from the following website: http://www.abr.gov.au
There is no real moral to this story, but I just urge you to talk to as many people that run their own businesses that are willing to share, and do the research for yourself before making any big decisions. I don't believe the right answer will be right forever, it'll just be right for right now!
