On this page
- Setting up an incorporated legal structure
- Setting up an unincorporated organisation
- Other issues to consider when setting up an organisation
The process of formally establishing your not-for-profit organisation can seem overwhelming. We have broken the process of establishing your not-for-profit organisation into manageable steps.
Before setting up a not-for-profit organisation, your group must:
- agree that the group will operate on a not-for-profit basis, and
- decide whether the group should incorporate
A not-for-profit organisation is an organisation that operates for its purpose and not for the profit or gain (either direct or indirect) of its individual members. For more information, see our resources on what not-for-profit means.
For more information on incorporation and whether your group should consider incorporating, go to our resources on the incorporated decision.
When setting up an organisation (whether you incorporate or not), you will need to consider things such as:
- whether to get an Australian Business Number, tax file number, business name registration and insurance, as well as
- charity registration and tax concessions
If your group has decided to incorporate and has chosen the structure it wishes to use, the next step is to set up the organisation, following processes required by legislation (that is, acts of parliament and regulations).
Setting up an incorporated legal structure
If your group has decided to incorporate, the group must:
- decide which incorporated legal structure will suit the group's aims and activities best, and
- hold a meeting to get members’ approval to incorporate
Choosing an appropriate structure is important. If you use a legal structure that is not right for your group’s aims and activities, your group may run into legal difficulties when it tries to carry out its activities. Changing structure can be costly and time consuming.
Once your group has decided which incorporated structure to use, the next step is to set up the separate legal body (which will be registered with the relevant government body). This is incorporation.
The incorporation process is different for each type of legal structure.
Setting up an unincorporated organisation
If your group has decided not to incorporate as a separate body, it may operate as an unincorporated association.
An unincorporated association is a group of people that have come together to further a common interest or purpose without forming any separate legally-recognised structure. They have not gone through an incorporation process so the unincorporated group doesn’t have its own legal identity and it will not have the word ‘Incorporated’, ‘Inc.’, ‘Limited’, or ‘Ltd’ after its name.
Whether an unincorporated group should incorporate (or not) is an important consideration that should be reviewed from time to time, especially if the size or nature of the group’s activities changes (for example, the group decides that it wants to employ a paid staff member or enter into binding contractual arrangements).
While it may seem easier (and less costly) for your organisation to remain unincorporated, there are important benefits that flow from incorporation.
Other issues to consider when setting up an organisation
When setting up your organisation, other issues to consider include:
- getting an Australian Business Number (ABN)
- getting a tax file number (TFN)
- registering a business name
- getting insurance
- what tax concessions are available, and
- how your organisation will work with others (including recruitment of employees and volunteers)
Australian Business Number
An Australian Business Number (ABN) is a unique number which identifies your organisation to the Australian Taxation Office (ATO) and other government departments and agencies.
A not-for-profit organisation is only required to have an ABN if it has a goods and services tax (GST) turnover of $150,000 or more (in which case it’s required to register for GST, and must have an ABN to do this).
However, even if your organisation is not required to register for GST, it can be helpful to have an ABN.
Organisations often register for an ABN so they can:
- apply for endorsement as a deductible gift recipient (DGR), or an income tax exempt charity (or both)
- claim GST credits (by voluntarily registering for GST)
- register an Australian domain name
- avoid pay as you go (PAYG) tax on payments they receive
- apply to register a business name (see below)
- interact with government departments, agencies and authorities (for example, with the ATO about fringe benefits tax), and
- deal with businesses more easily (especially for ordering and invoicing purposes)
More information on ABNs, including who may apply, is set out on the Australian Business Register’s website. You can make an application for an ABN online on the Australian Business Register website.
You can check whether an organisation has an ABN by searching the Australian Business Register. You will also be able to see details of any tax concessions that the organisation receives.
Tax file number
A tax file number (TFN) is a unique number the Australian Tax Office (ATO) gives to individuals and businesses to help manage tax and other government services.
Your not-for-profit organisation will need a TFN if it is required to lodge an income tax return.
It can also be useful to have a TFN for your not-for-profit if you:
- lodge an application for refund of franking credits for your charity or deductible gift recipient, or
- contact the Australian government to ask about your organisation’s income tax affairs
Your organisation can get a TFN:
- by applying for a TFN at the same time they apply for an ABN (see above), or
- if your organisation already has an ABN and later decides you need a TFN – by applying online on the Australian Business Register.
Business name registration
A business name, also known as a trading name, is the name under which a person, or other legal entity, trades.
Your organisation will need to register a business name if:
- you operate a company (Pty Ltd) and want to trade under a name that is different to your company name, or
- you conduct business under a name other than your own
- Joe Kerrigan trading as Joe Kerrigan does not need to register a business name
- Joe Kerrigan Pty Ltd trading as Joe Kerrigan Pty Ltd does not need to register a business name, but
- Joe Kerrigan Pty Ltd trading as Kerrigan Towing Services must register Kerrigan Towing Services as a business name
If you intend to operate a business in Australia using a name that is not your organisation's name, you will need to register the business name on the national register administered by the Australian Securities and Investments Commission (ASIC) and pay a fee.
Registration is national. This means businesses that operate in more than one state or territory don’t need to register in each state or territory separately.
If your group is incorporated and you conduct activities under your organisation's registered name, you don’t need to register a separate business name.
However, if you still want to apply for a separate business name, you must be 'carrying on a business' within the meaning of the Business Names Registration Act 2011 (Cth).
A 'business' is an activity, or series of activities, which is done:
- in the form of a profession, a trade, employment, a vocation or a calling
- in the form of an adventure or concern in the nature of trade, or
- on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property
If your organisation wants to register a business name, you will need an ABN.
Before registering a business name, you should check:
- whether the name is identical, or nearly identical to, an already registered company or business name. (If it is, you will need to choose a different business name)
- whether the name is identical to or nearly identical to a current trade mark by searching IP Australia’s trade mark database. (If it is, you will need to choose a different business name), and
- whether any domain names you’d like to register are available
Registering a business name doesn’t give you ownership over that name and doesn’t automatically stop other traders using that name. It does, however, prevent someone else from registering that name as a business name. If you want to use the business name exclusively for your goods or services, you should conduct appropriate intellectual property searches to confirm whether it’s available. If the name is available, you should consider taking steps to protect intellectual property rights in the name. This may involve registering the name as a trade mark. See our resources on intellectual property for more information. You may need legal advice on this issue.
It’s important for a new organisation to assess its risks and consider whether getting insurance is a good idea (or even a requirement).
Charitable status and tax concessions
Some organisations are eligible to apply for charitable status. They may also be eligible for a range of tax concessions that can provide significant savings.
There are benefits that come with charitable status and endorsement for tax concessions, but there are also extra administrative and reporting obligations.
Working with others
Your organisation may want to work with other organisations. There are many ways to work with other organisations – some of these have particular laws that apply.
Your organisation may plan to recruit employees or may need volunteers to help your organisation.
The content on this webpage was last updated in March 2022 and is not legal advice. See full disclaimer and copyright notice.