There are many ways to start a small business. For those that want an immediate start this will often involve purchasing an existing business. Those people that have a skill or a vision of what they want their enterprise to be are those that take a lot longer to develop. In many cases full-time employment continues while the business is being worked on part-time.

Q. I am currently working full-time in the construction industry and wish to start a business on the side after hours. With this side job I will be doing some contract work through my own employer, in a part of the business they don't understand and are happy for me to do, and with other clients. This will be only part-time to begin with. Should I do the contracting under a business name? Would I be able to separate my employment income from the contracting work at tax time?

A. Whether you operate your business under your own name or have a business name is a matter of personal preference. If you want to develop your business as a separate entity, and want to establish a recognisable trading name, you will need to at least register a business name. Business names before May 2012 were only valid in the state they were registered but now there is a national registration through ASIC.

Depending on how your contracting business develops you may want to consider forming a company with the trading name you want to use. This would give your trading name Australia-wide coverage and you would also have the benefit of a limited liability company. This means your personal assets are protected in the event of a legal claim against your business.

Whether you operate under your own name, business name, or a company, you will need to register for an Australian Business Number (ABN). If you're operating the business yourself the ABN would be attached to your tax file number. If you operate through a company it would need to have its own tax file number.

You may also need to consider registering for GST, depending on your estimated turnover. If the turnover in a financial year is expected to exceed $75,000 you must register for GST.

From an income tax point of view your employment income and business income will be kept separate. You will receive a PAYG summary from your employer for your employment income and you will need to keep a record of your business income.

At this early stage of your business life it makes sense to get into some good record keeping habits. To make it easier to keep a track of your business income and expenses, it is best if you open a separate business bank account. All of the business income would be deposited into, and all of the business expenses paid out of, this account.

There are many other income tax and other regulatory matters that you should consider. Before proceeding much further you should seek professional advice.