How to set up your drop shipping business Australia

Australian population exceeds 25 million, which makes this market really tempting for online entrepreneurs. Let’s look closer at drop shipping in Australia and find out the kind of opportunities this country opens up for online store owners.

Australia is a perfect place for ecommerce. You can easily cope with five online stores that earn you enough money to lead a lifestyle you’d like to. There are various kinds of business models that you can create to make this business a success.

That’s the beauty of this business model. You shouldn’t invest much money to start this business. There is no need in buying products in advance and having any inventory to store them.

All the necessities are a laptop and special software.

Thus, you’re not tied down to a certain place. You can run your ecommerce business and enjoy doing whatever you like to your heart’s content.

Setting up a drop shipping business isn't as easy as it seems. There are various legal requirements and other considerations that you need to keep in mind before setting up your business.

If you want to know more about the process of setting up a drop shipping business in Australia, then read on!

Get a logo

A logo is an important visual representation of your business and should be designed in a way that will stand out from the competition. A great logo can help you build your brand, establish credibility, attract customers and increase revenue.
It should be simple enough to remember, but also unique so you don't get confused for someone else's brand. It can be used on your website, social media pages, business cards and more.
Even better, you can trademark your website domain and logo through our website!

This will restrict any competition from using your name and logo for similar kind of products and services. Given the saturation of the dropshipping market, a trademark is something that should be seriously considered to get ahead amongst your competition.

Before submitting an application, there are some simple questions to answer first (when conducting an analysis prior to application, these questions are answered as part of the analysis).

First, what type of trademark are you applying for?
For example, a text or a logo? Each has to be a separate application.  These are the most common types, but there are various specialised and niche types of trademarks, which can be found on the IP Australia website.

Next, what class/classes your trademark should be registered for?
There are 45 different classes, encompassing a wide range of goods and services.

• To help you decide what goods or services to list think about the exact nature of your business and ask yourself the following:
• Where do you derive your business income?
• What is the nature of your business?
• What are you known for by your customers/clients?
• What products or services does your business provide?

IP Australia provides a Trade Mark Assist service that can help further determine what classes are best for your trademark.

To lodge an application through Company123, this form has to be filled out.

Once payment is made, Company 123 as IP agents proceed to lodge the same day, and the Notice of Filing is given by IP Australia within 1 business day.

Register your domain name

You can register your domain name for up to 10 years. You can also pay monthly or yearly depending on your preference. It's important to note that some domain providers will charge you extra if you want to transfer the domain from another provider.

Domain registration prices vary depending on the provider and type of domain, so make sure you do your research before choosing one! Company123 provides domain registration.

Set up a business bank account

The next step is to set up a business bank account. If you are starting out as a sole trader and don’t have any employees, it is best to open an ABN ‘sole trader’ account with an Australian bank or financial institution. You can also do this by registering with an online service provider like MYOB or Xero who will help manage your bookkeeping, but these services are more expensive than opening a full-fledged business account.

Once you have decided which type of account you want to open, go through the usual process: provide your business name and ABN (Australian Business Number), along with other information needed for setting up an account such as contact details and proof of identity documents (if applicable).

You can obtain an ABN as a sole trader through our website. It’s a quick and easy form that will get your ABN to you within 5 minutes.

If you’re thinking of registering an ABN for your company, you can do that as well through our website.

Write a business plan

A business plan is a document that describes your business. It should include:

• Your business plan. This will describe how you’re going to build and run your company, including what products or services you'll offer, how much money you need to start up and grow, who will be part of the team and how any profits will be distributed.
• Financial forecasts. You must make sure that the financial projections are realistic and achievable, otherwise this can lead to failure later down the track. Remember that there's no such thing as ‘pie in the sky’ when it comes to running a successful online store; if people don't buy something in enough numbers then there won't be any profit at all! So make sure that whatever figures are included in this section reflect reality rather than fantasy - otherwise they'll come back around to bite later on down the line when things start falling apart just because they weren't realistic enough!

You can purchase a business plan through our Company123 website. This service provides you with all the necessary components and strategy in creating your own business and our experts will help you with that initial set up process.

Business Names – What you need to know

When do I need a Business name?

If you would like to operate and trade under a name which is different to the name of the legal entity.

For example, Jacob Mowing services PTY LTD for a company or Jacob Smith as a sole trader, you require a business name.

If instead you would want to operate simply as Jacob Mowing services, you need to have that name registered.

What is a legal name and how is it different from a Business name?

While a business name is mainly used to conduct a business. The legal name of an entity is the name that appears on all official documents and legal papers. If you have a private company, the legal name typically will have PTY LTD (or any variation of ‘proprietary limited’). If you have registered as a sole trader your full name that was registered with the ABN will be the name of the legal entity.

How many business names can I have?

You can have multiple business names under a single Australian Business Number (ABN). Having multiple business names can help customers and clients find, identify, and connect with your business.

Be clear about your legal structures and requirements

As a business owner, you need to understand the difference between an ABN, ACN and company rate. These are all legal structures that will affect your tax obligations. A GST (Goods and Services Tax) ABN is required if you’re selling online or in-store and can be obtained from the Australian Taxation Office (ATO). An ACN (Australian Company Number) is needed by any business that wants to open an account with a financial institution so they can accept credit cards or electronic transfers of funds—this includes PayPal accounts as well as bank accounts.

The company rate allows businesses with only one owner who isn't multiple companies under one name to file their taxes based on an estimated percentage of revenue instead of actual sales figures; this might be useful for drop shippers if they don't want their competitors knowing how much business they're doing! Finally there's sole traders and partnerships—these are types of businesses where two or more people work together but don't form their own separate entity like corporations do (so there's no "company" at all!).

Discuss with an accountant to get tax and GST advice

It is essential to discuss with an accountant before setting up a drop shipping business.

As an accountant, your experience and expertise will be beneficial in ensuring that you have the best possible setup for your business. An accountant can help you with:

• Your GST return
• Your tax return
• Financial statements
• Business plan and cash flow

Book a tax and legal consultation with us today to help you through these difficult questions. Our tax expert is a chartered accountant with over 20 years of local and international tax experience and our legal expert is a professional lawyer of over 30 years of experience in commercial law.

What exactly is dropshipping though?

Drop shipping is a supply chain management business model in which the retailer does not keep goods in stock, but instead transfers the customer's order and money to another company that ships the goods directly to the consumer. The term drop shipping comes from an analogy to how a product "drops" from one warehouse to another.

Great, isn’t it?

What taxes you need to pay in Australia
If you’re an online store owner in Australia, you must follow the law and pay taxes to avoid legal problems.

Every Australian business faces two major types of taxation.

The first one is income tax – a certain percentage of your income you must pay to the government.

There is a progressive tax system in Australia. That means, the more you earn – the more you pay.

You’ve got five tax brackets like rungs on the ladder. Each bracket has its tax rate. And as your income exceeds a certain amount and moves to the next rung, the tax rate you pay for this extra income increases.

So, if you earn $18,200 or less, your tax rate is 0% and you pay nothing in taxes. But, if your income is from $18,201 to $37,000, you must pay 19c for each dollar over $18,200 (your tax rate increases to 19%). However, you still pay 0% for the first $18,200.

It works the same way for the next tax brackets. The tax rate on your income from $37,001 to $90,000 is 32,5%; 37% on $90,001 to $180,000; and 45% on the income over $180,000.

Company Tax

While personal income can be taxed up to 45%, companies in Australia pay a flat tax rate of 25%.

What are the requirements for company registration in Australia?
Step 1: fill in a company registration form at Company123
Step 2: receive all company documents within minutes, sign and file
Step 3: Recieve ABN, TFN and GST registration (if necessary) and begin operations
Benefits of Registering a Company?

In Australia, the most common types of company are:
    'Proprietary Limited' companies (cannot raise money from the general public through share issues)
    'Public' Companies (usually formed to raise or borrow public money by listing the company's shares for trading on a stock exchange)

All companies are governed by the Australian Securities and Investments Commission (ASIC), which administers the Corporations Act 2001 (Commonwealth) and other legislation. Public companies must also comply with the rules of the Australian Stock Exchange.

Advantages of a company include that:

• Liability for shareholders is limited. As a general rule company carries legal and commercial risk as a separate legal entity which is seperate entity to the shareholders / directors that control the company.
• It's easy to transfer ownership by selling shares to another party. Simple transfer forms can be completed to transfer the company shares to a new shareholder.
• Shareholders (often family members) can be employed by the company with flexible income tax rules on distribution of income. Enjoy the use of tax credits company pays which may be passed on to shareholders (i.e no double taxation on company profits in the hands of shareholders in most cases)
• The company can trade anywhere in Australia. A Private company can also trade in Overseas jurisdictions. Please consult your tax professional for additional tax advise.
• Taxation rates can be more favourable then personal individual tax rates. Private companies currently enjoy a flat 27.5% tax rate where annual turn over of a company is less than $50m.
• Enjoy access to Research & Development and Export Development Grant concessions which are generally available only to PTY LTD companies (not sole traders).

Disadvantages of a company include that:

• The company can cost more to establish, maintain and wind up then a sole trader business
• The reporting requirements can be more complex, however the general advantages of a company often outweigh the additional compliance fees associated in running a company
• Your financial affairs of the company are governed by ASIC and information about directors and shareholders can be viewed by public.
• if directors fail to meet their legal obligations, they may be held personally liable for the company's debts including profits distributed to shareholders are taxable. However tax credit that company pays may be available to the shareholders.

Setting a private company is east. Visit www.company123.com.au website where you will find useful links and information to register a company in under 5 minutes. Company123 offers simple all inclusive solution whether you a business owner setting up a business or you run an accountancy or legal practice and set up companies for Clients. Our support line is open 24/7 if you have any questions and we are always here to help and assist you with any of your questions.

What information is needed to register a company online?

For online registration, you will need to provide the following information:

For Directors & Secretaries: Full name, full residential address as well as the date and place of birth of each person

For Shareholders: Full name, address and number of shares for each shareholder of the company.

General Information: The address of the registered office and principal place of business.

You must get written consent from the people that will fill these roles:

• Director (must be over 18)
• Secretary (must be over 18)
• Member (every company must have at least one member).

The second type of taxes you face in Australia is sales taxes or GST (Goods and Service Tax). You include this tax in your products’ prices to collect and pass them to the government.

Luckily, Australian tax system is not so complicated as it’s in the USA or Canada. So you don’t have to scratch your head calculating the amount of GST you need to charge. It doesn’t vary depending on the state and stands at 10% regardless of the city your Australian customers are from.

Moreover, you can put off dealing with your sales taxes and focus on growing your dropshipping business. Australian entrepreneurs don’t have to register for GST and collect it until their revenue reaches $75,000 in 12 months.

To find more comprehensive information on Australian tax regulations, you should visit the Australian Taxation Office’s website.

Dropshipping to Australia

Many online entrepreneurs want to learn about importing products to Australia before they start selling them to Australian customers.

Well, let’s take a look at the issue.

The first thing you need to know is that all goods purchased online with a value of $1,000 or less are considered as low value products. And according to Australian border laws, purchasing such products is duty-free.

However, if Australian consumers bring your online store $75,000 or more, you must charge GST even for the low value products you sell. No matter whether you’re an Australian resident or a foreigner, you need to register for GST in Australia and collect it.

You can visit the Australian Tax Office’s website and learn who is obliged to charge GST in detail.

Yet…

Those who choose to dropship with AliExpress are in for a treat! This online marketplace takes care of collecting GST for Australian government and dealing with all the necessary documents.

For example, if you’re a US citizen dropshipping goods to Australia from AliExpress, you don’t need to worry about paying GST at all. AliExpress will take care of that and your Australian clients will get their purchases safe and sound.

Dropshipping to other countries

If you run your online store from Australia, it doesn’t mean that you’re limited to Australian market.

Actually, going global can be more beneficial for your dropshipping business. There is plenty of promising markets to target around the globe such as the USA, Europe, Canada, India, etc.

Aside from that, you don’t need to keep tabs on your GST turnover while selling your products to other countries. Since your sales take place outside of Australia, there is no need to worry about charging this type of taxes.

For instance, you can focus on the US customers, who are allowed to purchase tax-free up to $800 (USD) while shopping online. This way, you can be sure that your US clients won’t face any additional taxes or custom duties when receiving their packages. Thus, they will stay pleased and your dropshipping business will thrive.

However, some countries like Canada has a very low import limit for online purchases. So, if you target such countries, you should let your customers know that there could be some extra fees they need to pay when their packages arrive.

If you’re thinking of starting your dropshipping business, Australia is perfectly fit for that. As you can see, this country has great prospects both for local and foreign entrepreneurs. So, you can launch your online store and seize your share of Australian market.

We hope this article has given you the answers to the most burning questions about dropshipping in Australia. If you still have something to ask, please leave your comments in the section below. We’ll try to clear it up for you!