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Sunday, 19 October 2014

Resources for start-ups in Sydney

This was my answer to a Quora question about a USA-based entrepreneur setting up a local presence in Australia.

Sydney is definitely the right city if your company is a medtech or financial tech startup.  Melbourne does biotech better, but even then there are successful biotech companies in Sydney. Canberra would only be appropriate for a startup doing government or military technology. 

I'm not an immigration lawyer and it's not legal for anyone without approval from the department of immigration to give immigration advice. The right person to talk to is an immigration lawyer.


The equivalent of a USA LLC is a "Pty Ltd" company. These are registered with the Australian Securities and Investment Commission (ASIC) using form 201:http://www.asic.gov.au/asic/asic... or you get your accountant or lawyer to do it for you. There are also companies that process shelf companies and assign it to you; this is the quickest and least painful, but the most expensive (usually a couple of hundred dollars).

Your company needs to have at least one director appointed who is a resident. This can cause a chicken-and-egg problem for an entrepreneur coming to Australia as the first and only employee, because they won't be able to start the company to nominate them as an employee. The solution is to get someone already resident in Australia to be a director initially, and then once here and set-up to fill in the form with ASIC to replace your local contact director with yourself.

Australian businesses need to register for an Australian Business Number with the taxation office. https://abr.gov.au/for-business,... Most startups will be lodging a monthly report to the tax office to say how much was paid to employees that month, a quarterly report to the tax office on how much GST (goods and services tax) the company collected and paid, and an annual report to the tax office on the company profits. The tax office are not as onerous as the IRS and the people they employ generally nicer. They try to help startups to some extent. For example you get a window of time after the company starts where they won't penalise late tax paperwork. Also, if there is a some genuine reason for not being able to lodge your tax on time (e.g. a family emergency) you can request an extension. I haven't had to do it very often, but I've never had an extension request denied yet in 15 years.

I recommend using  http://www.saasu.com/ for managing the Australian entity's accounts as this does everything right for Australian business automatically. It has a report that tells you exactly what to put in what field for your monthly and quarterly reports. 

It is important to get proper tax advice on the company structure before doing anything in Australia that might give the company a value. For example, it's very tax-inefficient for the USA-based company to own the Australian entity. It might work out better if the USA-entity's owners can own the Australian entity directly.

There are government programs for helping start ups as well. The one that is really worthwhile is the R&D Tax Incentive which can give a better-than-100% tax deduction on research and development. http://www.business.gov.au/grant...

It is compulsory to have workers' compensation insurance if a company employs anyone (even the owner). It's not very expensive, and it's not hard to set up. I use an insurance company called QBE, but there are plenty of others: http://www.qbe.com.au/Workers-Co...

For other insurances I've generally directed budding entrepreneurs to a broker (for the last three generations my family have used these folks: http://www.jmdross.com.au/). 

All of the above is true for starting up a company of any kind in Australia. There are a couple of resources worth mentioning for start-ups:

  • http://sydstart.com is the main start-up event for startups in Sydney. Normally it happens twice a year, but in 2014 there was just one big event.
  • http://fishburners.org  is the largest tech co-working space in Australia. If you need a community to be among, this is probably a good place to start.
  • http://atp-innovations.com.au/ is one of Australia's (and one of the world's) leading incubators.

There are some down-sides to setting up a start-up in Australia:
  • There are problems with venture capital and angel investment in Australia. 99.8% of all start-ups never get any external investment. (That's even though 30+% of all start-ups describe themselves as high-tech startups).
  • It's very difficult to offer share schemes to employees as they get hit by the "geek tax" (people are trying to get it fixed).

That said, Sydney is one of the best places in the world to run a business. 


Here's a quote from the Atlantic:  http://www.theatlantic.com/business/archive/2011/05/the-worlds-26-best-cities-for-business-life-and-innovation/238436/#slide22

Sydney is the only city in the survey to finish in the top five in ease of doing business, livability, health and safety. More than sun and surf, it's consistently called the best place to start a business by international surveys. 

The only bad thing that they could come up with was the cost of public transport. (Which is true. You'll need to get an Opal cardhttp://www.opal.com.au/ and even then many people end up paying >$100 per month to get around.)

There are no problem getting hold of brilliant developers in Sydney. Ads are generally on Seek (http://www.seek.com.au/) . There is a reason that the world's major companies do large amounts of development here: Google Maps, Canon Research Labs, Cochlear, Atlassian, and many others. Start hiring: you'll quickly discover why.