Company Registration in Australia

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What is company registration in Australia?

While deciding on how to enter the Australian market or when establishing a business in Australia there are a number of important considerations for investors.

You need to choose between establishing a new company, registering as a foreign company or acquiring an existing company. A variety of business structures are available establishing a new business, each with their own regulatory and taxation aspects.

The Australian Government provides a lot of information online to allow the investors to make the most appropriate choices to the nature of their business.

What are the Types of Company Formation in Australia?

1. Sole Trader formation in Australia

A sole trader is a business structure in Australia, where a person is trading as an individual legally responsible for all aspects of the business. This includes that any debts and losses, which arises to business can't be shared with anyone and the trader is solely responsible for that. A sole trader is a very simple, and relatively less expensive business structure which can be chosen when starting a business in Australia. As a sole trader, you are the only owner and you control and manage the business.

A sole trader is simple to set up and operate, it gives the trader full control of his assets and business decisions.

There are fewer regulatory requirements for a sole trader and is a low-cost structure.

It Also allows the trader to use his individual Tax File Number (TFN) to file tax returns.

A sole trader has unlimited liability. If any liability arises which can't meet by the business, it will be paid off from personal assets of the business owner.

2. Limited Company formation in Australia

A company is a separate legal entity. It enjoys the same rights as a natural person and can incur debt, sue and be sued. The shareholders and directors of the company have a limited liability and they are not personally liable for any liability that arises to the company.

A company in Australia is comparatively complex business structure, with higher set-up and administrative costs.A company in Australia is required to be registered with the Australian Securities and Investments Commission (ASIC).

Business operations are controlled by the directors and owned by the shareholders of the company.

The company is required to file annual company tax return with the ATO

3. Partnership formation in Australia

A partnership is a business structure in which a number of people carry on a business together. There can be maximum 20 members in a partnership. There are two types of partnerships - general and limited. 

It is relatively easy and less expensive to set up.It requires a separate Tax File Number.

You can also apply for an Australian Business Number (ABN) for your partnership. However, it is not compulsory.

It is not a separate entity, business partners are personally liable for the debts of the business.

Business partners are personally liable to pay tax on the profits earned from the business.

Partnership tax return is required to be lodged with the Australian Taxation Office (ATO) each year.

If the annual income turnover of your partnership is $75,000 or more, it is required to be registered for GST.

4. Trust formation in Australia

A trust is an obligation imposed on a person known as a trustee, to hold property or assets for the benefit of others, known as beneficiaries.

A formal trust deed is required which outlines the function and operation of the trust.

The trustee is required to undertake formal yearly administrative tasks.

The trustee is legally responsible for the operations of the trust. A company can be a trustee of a trust, providing some asset protection.

How to register a company in Australia?

When registering a company in Australia you can choose a name to register the company.However, to have a name for a company in Australia is not compulsory. The Australian Company Number (ACN) given to the company can be its name. It is the unique number given to a company by ASIC when the company is incorporated. You can select to use the ACN as your company name when filing the complete application through ASIC and you will not be required to nominate a name.

If you choose to use a name for your company, the name must show the legal status of the company. A proprietary company is required to have the word 'Proprietary' or the abbreviation 'Pty' in its name. It is also required to show the liability of its members unless the liability of its member is unlimited

Only those names can be chosen which is not already registered to any other company or business.

What is Company formation Process in Australia?

To register a Proprietary(Pty Ltd) company, an application ASIC Form 201(Application for Registration as an Australian Company)complete in all respect is required to be submitted to Australian Securities and Investments Commission (ASIC) and pay the prescribed fee of AUD 457.

A person who is interested to be appointed as a director or secretary of the company he must give his consent in writing to his appointment. Likewise, each shareholder of the company is also required to give his consent to become a shareholder.

At least one director and one secretary (if secretaries are appointed) must ordinarily reside in Australia. There must be an address in Australia for the purpose of the registered office of the company.

Before you file the application for registration of the company, you must confirm the availability of the proposed company name. If there is no name specified in the application, the company will be referred by its Australian Company Number (ACN).

A certificate of incorporation is issued by ASIC upon incorporation, which is an evidence that the company has been incorporated on and from the date of issue.

Depending upon the business and location of the company, the company must comply with different taxation requirements:

  • If the annual turnover of the company is AUD$75,000 or more, it is required to register itself for GST by obtaining a digit Australian Business Number (ABN).
  • The application can be submitted electronically at the Business Entry Point of ABN, at www.abr.gov.au. The applicant will be provided with an ABN at the end of the application filing session if the application is filed successfully. A hard copy application can also be submitted to the ATO. The ABN will be mailed by the ATO within 28 days of receiving the application.
  • If the companies with annual turnover of AUD$75,000 or more fails to get an ABN this will result in GST being levied on all company sales since the required date of registration even if the sale price of any goods or services has not been grossed up to include the tax. Furthermore, the company may also be chargeable to penalties and interest for any overdue payments.
  • Corporate Tax @ 27.5 % if annual income is less than AUD$ 2 Million in an FY.

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