Company Formation
For a helpful list of company formation companies please click on the 'Company Formation in Australia' tab located above.
Company formation in Australia is fairly short with the following 2 stages:
- Complete and submit an Application for Registration as an Australian Company. Obtain a certificate of incorporation along with an Australian company number. This takes 1 day and costs approximately $400.
- Apply for an Australian Business Number online with the Tax Authority. This takes one day.
The major types of business ownership are:
Sole Trader
This business is owned by only one person. The company is permitted employ staff, but there is a single name to it. Sole traders include many tradesmen, artisans, freelancers, other professionals working for themselves, and also small retailers. The main benefits are:
- They are easy and relatively inexpensive to set up
- The ownerhas complete control
- The owner receives all profits
- Reports aren't required by outside parties unless applying for loans and tax returns
- Disadvantages are:
- It is hard for owner to take time off for holidays or illness
- It is comparatively harder to get financial help
Partnership
This is any business with between two and twenty members. It can be incorporated without any particular legal processes being followed. That said, it is usually erudite to have a written contract before starting activities. This can outline such things as division of profits and losses, exit strategy and holidays. Benefits are:
- Skills and resources of owners are readily available
- You can reduce tax liabilities within a family
- It is comparatively easy and inexpensive to set up
- Liability is shared between partners
- Disadvantages are:
- Conflict between partners, which is more common than you think
- Often, the company dissolves with death of a partner
Company
A company is a disparate entity to its owners and operates under its own name. The members of a company are shareholders and the company is managed by Directors.
There are two forms of company: public and private. A public company is usually traded on the stock market and the public is permitted to buy shares. A minimum of five shareholders is compulsory.
A private company is uncommonly listed on the stock market, and has limitations as to who can buy shares. Family companies are invariably private. The benefits are:
- Owners and company are disparate legal entities, so shareholders are not responsible for any debts and losses
- Companies have different tax rates to individuals
- Selling shares to the public can raise capital for setting up the company
- It takes between two to four weeks to set up a company
- You have the right to sell the company as an entity
- Changes in ownership can be made without having to set up a new business
A disadvantage is:
- Company law is intricate, shareholders may need to pay solicitors, accountants and managers to assist with any problems
Cooperative
Not dissimilar to a company, but formed by people with the common aim of working together. Profits made by cooperatives can be distributed between the members or used to improve the cooperative in some way. Cooperatives are covered by the Cooperatives Act and must be aware of the many rules and regulations of the Justice Department.
Registration Process
- Decide on your structure
- Choose a name
- Complete and submit application (see below)
- Get commemorative record of registration (optional)
- The application will ask you for the following:
- The proposed company name (if the company does not have a proposed company name, the name on registration will be its ACN)
- The class and type of company
- The registered office details
- The principal business office details
- Director and secretary details
- Share structure details
- Members' share details