VICBusiness ManagementSyllabus dot point

Area of Study 1: Legal requirements and financial considerations

Legal requirements when establishing a business - business name registration, Australian Business Number (ABN), business structure choice, taxation registration (GST, PAYG), industry-specific licences and permits, planning and zoning, intellectual property protection

A focused answer to the VCE Business Management Unit 2 dot point on legal requirements when establishing a business. ABN, business-name registration, business structure choice, taxation (GST, PAYG), industry licences, planning and zoning, intellectual property protection, with the practical sequence and worked examples.

Generated by Claude OpusReviewed by Better Tuition Academy9 min answerUpdated 2026-05-20

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What this dot point is asking

VCAA wants you to know the legal requirements an entrepreneur must satisfy when establishing a business in Australia, the regulators involved, and the practical sequence. Section A questions on Unit 2 commonly test the identification of legal requirements; Section B case studies often require you to advise a scenario business on what must be done before trading.

The answer

The practical sequence

When an Australian entrepreneur establishes a business, the typical legal sequence is:

Choose the business structure.
Apply for an Australian Business Number (ABN).
Register the business name (if not trading under the owner's legal name).
Register for taxation - GST if turnover will exceed $75,000; PAYG withholding if employing staff.
Obtain industry-specific licences and permits.
Secure planning and zoning approval from the local council.
Consider intellectual property protection.

Choose the business structure

Four main structures in Australia.

Sole trader. One owner-operator; unlimited personal liability; profit taxed at the owner's marginal rate.
Partnership. Two or more partners (usually capped at 20); shared decisions, profits and unlimited liability.
Company (Pty Ltd or Public Ltd). Separately incorporated legal entity with limited liability for shareholders; base-rate corporate tax (25 percent for entities under $50 million turnover; 30 percent otherwise); ASIC compliance obligations.
Trust. A trustee holds assets for beneficiaries; commonly used for family businesses and asset protection; complex to set up; flexible income distribution.

The choice has long-term tax, liability and capital-raising consequences. Changing structure later is possible but costly.

Apply for an Australian Business Number (ABN)

The ABN is an 11-digit identifier issued by the ATO via the Australian Business Register (abr.gov.au). Required for invoicing, GST registration, and many B2B transactions. Without an ABN, payers must withhold tax (commonly 47 percent) under the no-ABN withholding rule.

Application is free.

Register the business name

If trading under a name other than the owner's legal name, register through ASIC. Cost is $44 for one year or$ 102 for three years (FY24-25 rates). Registration grants the right to trade under the name but does not provide trademark protection.

Trading under an unregistered business name is an offence under the Business Names Registration Act 2011.

Register for taxation

Goods and Services Tax (GST): Mandatory if turnover is or will exceed $75,000 per year ($ 150,000 for not-for-profits). Once registered, charge 10 percent GST on most sales, lodge Business Activity Statements (BAS) quarterly or monthly, and claim input tax credits on business-related GST paid. Voluntary GST registration is allowed for smaller businesses.
Pay-As-You-Go Withholding (PAYG): Mandatory if employing staff or paying directors. The business withholds tax from each pay run and remits it to the ATO.
Superannuation Guarantee: Mandatory employer super contributions on top of wages (11.5 percent in FY25, rising to 12 percent from FY26 per the legislated schedule). Paid to the employee's chosen super fund quarterly.
Other: Payroll tax (state-based, kicks in above a threshold - $900,000 in Victoria for FY24), Fringe Benefits Tax, Land Tax, stamp duties.

Industry-specific licences and permits

Most regulated industries require an additional licence beyond the general business registrations.

Food service. Food Act 1984 (Vic) registration through the local council.
Liquor sales. Liquor licence from Liquor Control Victoria.
Building trades. Registered Building Practitioner with the VBA.
Transport. Heavy Vehicle National Law accreditation; rideshare driver accreditation.
Financial services. Australian Financial Services Licence (AFSL) from ASIC.
Health and personal services. AHPRA registration for regulated health professions.

Operating without a required licence attracts significant penalties and can expose the business to civil claims.

Planning and zoning

Local councils administer planning and zoning under the relevant state Planning and Environment Act. Common requirements:

Use of premises consistent with the zoning (commercial, industrial, residential mixed-use).
Building permits for fit-outs, signage, or changes of use.
Health permits for food businesses.
Parking, traffic, noise and waste-management requirements.

Trading in breach of planning rules can lead to enforcement orders and forced closure.

Intellectual property protection

Four main forms of IP protection in Australia. IP Australia (the federal IP office) administers most.

Trademark registration. Protects brand names, logos, slogans. Registered nationally for 10 years (renewable). The Aesop wordmark and the Bunnings green colour scheme are registered trademarks.
Patents. Protect inventions for 20 years (standard) or 8 years (innovation patents, being phased out). Cochlear holds extensive patents on cochlear implant technology.
Design registration. Protects the visual appearance of a product for up to 10 years.
Copyright. Automatic on creation; protects original works (text, images, code, music) for the author's life plus 70 years.

IP protection is voluntary but typically a good investment for any business with valuable brand, technology or design assets.

Worked Australian example

A new Melbourne hospitality business. Imagine the founders of a cafe being set up in Carlton in 2025. The legal-establishment steps:

Business structure. Choose a Pty Ltd company for limited liability and base-rate corporate tax (25 percent).
ABN. Apply through ABR, free.
Business name. Register the cafe name with ASIC ($44).
GST registration. Mandatory once turnover exceeds $75,000 (a busy Carlton cafe will cross this in the first quarter).
PAYG withholding. Required from the first staff hire.
Industry licences. Food Act registration with the City of Melbourne. Possibly a liquor licence (Liquor Control Victoria) for evening trade.
Planning and zoning. Confirm Commercial 1 zone use; obtain a fit-out permit if doing any construction; obtain footpath-trading permits for outdoor seating.
IP protection. Register the cafe name as a trademark (around $250 per class).

Total establishment-legal cost: roughly $1,500-3,000 depending on liquor licence and trademark scope. Ongoing compliance (BAS, PAYG, super, payroll tax, ASIC) requires monthly attention - most small Australian businesses use an accountant for this.

Worked example

"Advise an entrepreneur opening a Melbourne food-truck business of the major legal requirements before trading. (6 marks)"

Sequence.

Business structure. Recommend Pty Ltd for limited liability and the ability to add a co-owner later as the business grows.
ABN. Apply through the ABR. Required for invoicing and GST.
Business name. Register with ASIC ( $44 for one year,$ 102 for three).
GST registration. Food-truck turnover commonly exceeds $75,000 within months; register from the start.
PAYG withholding. Required as soon as the entrepreneur hires staff (food preparation, service).
Food business registration. Register under the Food Act 1984 (Vic) with the local council where the truck is based. Most food trucks are streatrader-registered (the Victorian online system).
Mobile food vendor permits. Each council where the truck operates may require a permit (City of Melbourne, City of Yarra, City of Stonnington each have their own).
Vehicle and driver registration. Vehicle registration with VicRoads; driver licence appropriate to the vehicle weight.
Insurance (legal-adjacent). Public liability ($10-20 million), workers compensation (compulsory for employees), motor vehicle insurance.
IP protection (optional). Trademark the food-truck name and logo.

The entrepreneur should engage an accountant and consider an industry-specialist legal advisor before opening. The cost of getting registrations wrong (forced closure by a council, ATO penalties for non-registration) significantly exceeds the cost of doing it correctly upfront.

Past exam questions, worked

Real questions from past VCAA papers on this dot point, with our answer explainer.

2024 VCAA5 marksIdentify and explain three legal requirements an entrepreneur must satisfy when establishing a small business in Victoria.

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A 5-mark answer needs three distinct requirements, what each entails, and the consequence of non-compliance.

1. Apply for an Australian Business Number (ABN). An 11-digit ATO identifier. Required for invoicing, GST registration and most business transactions. Without an ABN, payers must withhold tax (typically 47 percent) under the no-ABN withholding rule. Free application through the Australian Business Register.

2. Register the business name (if trading under a name other than the owner's legal name). ASIC administered; around $44 per year or$ 102 per three years. Registration grants the right to trade under the name but is not a trademark (a separate IP step). Trading under an unregistered name is an offence under the Business Names Registration Act 2011.

3. Register for GST if turnover is or will exceed $75,000 per year. ATO administered. Once registered, charge 10 percent GST on most sales, lodge BAS quarterly or monthly, and claim input tax credits on business-related GST paid. Failing to register when required attracts penalties.

Other valid requirements: choose a business structure; register for PAYG withholding if employing staff; obtain industry licences (liquor, food, building, transport); secure planning and zoning approvals; consider IP protection (trademark, design, patent, copyright).

Markers reward three distinct requirements with the regulator named (ATO, ASIC, local council, IP Australia), what each requires, and the consequence of non-compliance.

2022 VCAA4 marksExplain the importance of choosing the right business structure when establishing a business.

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A 4-mark answer needs the structures, the choice criteria, and the consequences.

The four main structures in Australia. Sole trader, partnership, company (Pty Ltd or Public Ltd), and trust. Each has different tax, liability, regulatory cost and capacity-to-raise-capital consequences.

The choice criteria.

Liability protection: a company protects the owner's personal assets from business debts (limited liability); a sole trader or partnership does not (unlimited personal liability).

Tax treatment: a sole trader pays personal income tax on business profit (at marginal rates up to 47 percent); a small company pays the base-rate corporate tax (currently 25 percent for businesses under $50 million turnover); a discretionary trust allows income to be distributed flexibly to beneficiaries.

Regulatory cost: a sole trader has minimal ongoing compliance; a company has ASIC annual reviews, corporate-records obligations, and (for large proprietary or public companies) audited accounts.

Capacity to raise capital: a company can issue shares to outside investors; a sole trader cannot raise equity except by becoming a partnership or incorporating.

Consequences of getting it wrong. A wrong structure can create unnecessary tax cost, leave the owner exposed to personal liability, or constrain growth. Changing structure later is possible but costly (transferring assets, re-registering with regulators, reissuing contracts).

Worked example. A solo software contractor billing $80,000 a year may rationally start as a sole trader (simple, low cost). The same person scaling to a team of five would typically incorporate (limited liability, ability to raise capital, base-rate company tax on retained profit).

Markers reward (1) the four structures named, (2) the choice criteria (liability, tax, cost, capital), (3) a worked example showing the choice in practice.