Starting a company in Australia offers numerous opportunities for growth and success in a stable and vibrant economy. This step-by-step guide will walk you through the essential stages of setting up company in Australia, ensuring you understand the legal obligations, requirements and processes involved.
1. Decide on the Business Structure
The first step in setting up a company in Australia is choosing the right business structure. The most common business structures are:
- Sole Trader: A single individual runs the business.
- Partnership: Two or more people run the business together.
- Company: A separate legal entity registered with the Australian Securities and Investments Commission (ASIC).
- Trust: A trustee manages the business for the benefit of beneficiaries.
For this guide, we will focus on setting up a company, specifically a proprietary limited company (Pty Ltd), which is the most common type for small to medium-sized businesses in Australia.
2. Choose a Company Name
Selecting a company name is a crucial step. The name must be unique and not similar to existing company names. To check the availability of your desired name, use the ASIC Connect tool on the ASIC website.
Tips for Choosing a Company Name
- Ensure the name is easy to remember and reflects your business.
- Avoid names that are too similar to competitors to prevent confusion.
- Check for any trademarks on IP Australia’s website to avoid legal issues.
3. Register the Company Name
Once you have chosen a unique name, you need to register it. This can be done through ASIC’s online portal. If you plan to trade under a different name, you must also register a business name with the Australian Business Register (ABR).
4. Decide on the Company Structure and Roles
Directors and Secretaries
A proprietary limited company must have at least one director who resides in Australia. You may also choose to appoint a company secretary, though it is not mandatory. Company officers, including directors and secretaries, have specific obligations and requirements under the Corpor
Shareholders
Decide who the shareholders will be and how many shares each will hold. Shareholders can be individuals or entities, and they are the owners of the company.
5. Register for an Australian Business Number (ABN)
An ABN is a unique 11-digit identifier issued by the Australian Business Register (ABR) that allows your company to operate legally in Australia. You can apply for an ABN online through the Australian Business Register website.
6. Register the Company with ASIC
To officially form your company, you must register it with ASIC. An Australian Company Number (ACN) will be automatically assigned upon registration. This involves completing the ASIC Form 201 (Application for Registration as an Australian Company) and paying the registration fee. The registration process must comply with the Corporations Act.
Information Required for Registration
- Proposed company name.
- Registered office address: This must be a physical location in Australia.
- Principal place of business: The primary location where business activities will take place.
- Director and secretary details: Full names, dates of birth, places of birth, and residential addresses.
- Proposed company director: Details of the proposed company director must be provided.
- Shareholder details: Names, addresses, and the number of shares held.
7. Obtain Relevant Licenses and Permits
Depending on your business activities, you may need specific licenses or permits to operate legally. The Australian Business Licence and Information Service (ABLIS) can help you identify which licenses and permits are required for your business.
8. Register for Goods and Services Tax (GST)
If your company’s annual turnover is expected to exceed $75,000, you must register for GST. GST registration is done through the Australian Taxation Office (ATO) and can be completed online.
9. Set Up a Business Bank Account
Open a separate business bank account to keep your company’s finances distinct from your personal finances. This will simplify accounting and tax reporting.
The business bank account should be used for all transactions where the company conducts business.
10. Understand Your Tax Obligations
As a company in Australia, you will have various tax obligations, including:
As a separate legal entity, the company can conduct business throughout Australia.
- Company Tax: Companies are subject to a flat tax rate on their profits.
- Pay As You Go (PAYG) Withholding: If you have employees, you must withhold tax from their wages and remit it to the ATO.
- Fringe Benefits Tax (FBT): This applies to any benefits provided to employees in addition to their wages.
Being its own legal entity offers benefits such as corporate tax rates and limited liability.
11. Set Up Record-Keeping and Accounting Systems
Implement a reliable accounting system to keep track of your financial transactions, including income, expenses, and taxes. This can be done using accounting software like Xero, MYOB, or QuickBooks, which are popular in Australia.
12. Comply with Ongoing Reporting and Regulatory Requirements
After setting up your company, you must comply with ongoing reporting and regulatory requirements, including:
- Annual Review: ASIC requires an annual review fee to ensure your company details are up to date.
- Financial Reporting: Depending on your company size, you may need to lodge annual financial reports with ASIC.
- Tax Returns: Lodge annual tax returns with the ATO.
13. Protect Your Intellectual Property
Consider registering trademarks, patents, or copyrights to protect your company’s intellectual property. This can be done through IP Australia.
14. Get Insurance
Protect your business with appropriate insurance, such as public liability, professional indemnity, and workers’ compensation insurance. This will safeguard your company against unforeseen risks and liabilities.
15. Hire Employees
If you plan to hire employees, ensure you understand your obligations as an employer. This includes:
- Fair Work: Comply with Fair Work Australia regulations regarding employee rights and working conditions.
- Superannuation: Pay superannuation contributions for your employees.
- Payroll Tax: Depending on your payroll size, you may need to register for payroll tax.
16. Develop a Business Plan
A comprehensive business plan is essential for guiding your company’s growth and securing financing. Your plan should include:
- Executive Summary: An overview of your business and its objectives.
- Market Analysis: Research on your industry, market, and competitors.
- Marketing Strategy: How you plan to attract and retain customers.
- Operational Plan: Details of your business operations, including location, equipment, and staffing.
- Financial Plan: Projections for revenue, expenses, and profitability.
17. Market Your Business
Effective marketing is key to attracting customers and growing your business. Consider the following strategies:
- Online Presence: Create a professional website and engage with customers on social media.
- Search Engine Optimisation (SEO): Improve your website’s visibility on search engines.
- Content Marketing: Share valuable content to attract and retain customers.
- Networking: Build relationships with other businesses and potential customers.
18. Seek Professional Advice
Setting up a company involves various legal and financial complexities. It’s advisable to seek professional advice from accountants, lawyers, or business advisors to ensure you comply with all regulations and make informed decisions.
Conclusion
Setting up a company in Australia involves several crucial steps, from choosing a business structure to registering with ASIC and understanding your tax obligations. By following this step-by-step guide, you can navigate the process smoothly and establish a solid foundation for your business.
For personalised assistance and professional advice, consider reaching out to Grey Space Advisory. Our team of experts is dedicated to helping you achieve your business goals and ensure compliance with all regulatory requirements. Contact us today to learn more about our comprehensive business setup services.
Frequently Asked Questions
What is the cost of registering a company in Australia?
The cost of registering a company with ASIC is approximately $506 (as of 2024). Additional costs may include business name registration and professional fees if you seek legal or accounting assistance.
How long does it take to register a company in Australia?
The registration process with ASIC is typically quick and can be completed online within a few hours. However, gathering the necessary information and documentation may take longer.
Do I need an Australian Business Number (ABN) to operate a company?
Yes, an ABN is required for all companies operating in Australia. It is used for tax and business purposes and can be obtained online from the Australian Business Register.
What is the difference between a proprietary limited company (Pty Ltd) and a public company?
A proprietary limited company (Pty Ltd) is privately owned and restricted to a maximum of 50 non-employee shareholders. A public company can have an unlimited number of shareholders and is allowed to raise capital from the public through the issuance of shares.
Do I need to register for GST if my company’s turnover is below $75,000?
No, you are not required to register for GST if your annual turnover is below $75,000. However, you may choose to register voluntarily if you wish to claim GST credits on your business purchases.
Can a foreigner start a company in Australia?
Yes, foreigners can start a company in Australia. At least one director of the company must reside in Australia. Additional requirements may apply depending on the business structure and activities.
What are my obligations as an employer in Australia?
As an employer, you must comply with Fair Work Australia regulations, pay superannuation contributions, withhold PAYG tax from employee wages, and meet workplace health and safety standards. You may also need to register for payroll tax depending on your payroll size.
How do I protect my company’s intellectual property?
To protect your intellectual property, you can register trademarks, patents, and copyrights through IP Australia. This will safeguard your brand, inventions, and creative works from unauthorised use.
What insurance do I need for my business?
The type of insurance you need depends on your business activities. Common types of business insurance include public liability, professional indemnity, workers’ compensation, and property insurance. Consult with an insurance broker to determine the best coverage for your business.
When should I seek professional advice?
It is advisable to seek professional advice when setting up your company, especially if you are unfamiliar with legal and tax requirements. Professional advisors can help ensure compliance, provide valuable insights, and assist with complex issues such as structuring, accounting, and tax planning.
