Those who want to open a limited liability company in Australia have to know that this company type is the most popular business form selected for incorporation. It can be either private or public, with main differences lying in the number of shareholders and the fact that the private type issues its shares privately, as the name suggests.
Our team of lawyers in Australiais able to help investors choose the type of LLC that suits their business needs and at the same time understand the principles for taxation and management for these business forms. The LLC in Australia is a company type that is suitable for those who want to open a small or medium-sized company and, for those who are interested in the public limited company, it is important to find out that the legal entity can be listed on the Stock Exchange.
|Types of LLCs||
Private limited liability company and public limited company
Most suitable for
|The private LLC is suitable for small and medium sized companies, while the public LLC is designed for large businesses.|
Minimum number of shareholders
Maximum number of shareholders
Law regulating the procedure to open
a LLC in Australia
Institution in charge with the registration of
the LLC in Australia
|Australian Securities and Investments Commission|
The private LLC – minimum 2 directors (1 resident).
The public LLC – minimum 3 (2 must be residents).
|Corporate taxes||For 2022, the standard corporate tax is of 30%, and the reduced rate is of 25%.|
Minimum requirements in order to open a
LLC In Australia
• selecting a suitable trading name;
• preparing the company’s statutory documents;
• appointing directors;
• register with the tax authorities;
• have a registered address.
|Apply for an Australian Business Number (yes/no)||Yes|
|Foreign ownership rules||It is allowed to open a LLC in Australia with 100% foreign ownership (limitations can appear in certain business fields).|
|Who can register a LLC||Australian citizens or permanent residents or foreigners, who are individuals or other companies.|
|The Constitution or the Replaceable Rules|
|Documents to prepare for the incorporation||
• the application for registration;
• the statutory documents;
• the company’s unique trading name;
• written consent of the appointed directors.
|Audit requirements (yes/no)||No – for the private LLC; Yes – for the public LLC.|
Opening a LLC in Australia in 2022
A limited liability company is incorporated as per the Corporations Act and, when opening the company, investors can either incorporate a private company or a public company. There is no need to subscribe a minimum paid-up company for either business form, however, there are certain provisions: the public company has no maximum number of specified shareholders but the private one must have a maximum of 50 shareholders who are not employed in the company. For both LLCs, the minimum number of shareholders is one.
The application for registration is filed with the Australian Securities and Investments Commission. The team of experts at our Australian law firm can give you complete details about the steps of incorporation and can provide suitable legal services, as needed. Our lawyers in Australia can present the documents you should prepare when registering with this institution.
The legislation regulating the incorporation of a limited liability company in Australia has not been amended recently and this why, those who want to register this company type in 2022 are not required to accommodate with a newer version of the law, as all conditions are maintained; foreign businessmen, alike local investors who are not familiarized with the local law, can request advice on the steps they should take when becoming the shareholders of a limited liability company in 2022 from our team of Australian lawyers.
Requirements for a LLC in Australia
Our team of lawyers in Australia has prepared a short presentation on the main characteristics of the Australian LLC, with regards to its management and tax aspects. The list below contains some of the most important requirements for both the public and the private limited company in Australia:
- • shares – the private company can privately issue shares while the public company can offer its shares to the public if it operates as a listed company;
- • directors – the public company must have at least three company directors and two must be Australian residents, while the private company must have at least one director who is also a resident;
- • corporate meetings – annual meetings are to be organized, although there are no special requirements for the management of the company;
- • taxes – two corporate income tax rates are applicable, 30% and 27,5% for small companies, but since 2021, the reduced corporate tax is charged at a lower rate.
What are the main steps in registering a LLC in Australia?
Above, our Australian lawyers have presented the main characteristics of the LLC in Australia. In the following section, we will focus on the steps that investors have to follow in order to successfully register the Australian LLC. One of the first aspects investors have to decide, once they have selected the LLC type they need (the public or the private one) refers to reserving a suitable trading name.
In Australia, just like in other jurisdictions around the world, the trading name of a company that will operate on the market has to be unique at a national level. When deciding on a trading name, it is compulsory to verify if the respective name is not already active, or if it is registered as a trademark in Australia. For matters concerning intellectual property regulations, you can always address to our lawyers in Sydney, in the case in which you want to establish a business in this city.
Then, another compulsory step is to prepare that company’s statutory documents, through which the legal entity gains legal personality, being a separate entity than its founders. It is also necessary to appoint directors and to register with the local institutions for tax purposes, as per regulations of the law.
You must also have an official business address, the place where the company has its headquarters and develops its activities. This is a compulsory step for all companies registered here, not only for LLCs. Please mind that you can register a LLC in Australia through the services of a virtual office as well. The virtual office is a place for doing business, where you will have a business address and where you can receive your official business documents (from partners, clients and local authorities).
The LLC is suitable for most of the economic activities that can be developed in Australia, including for the import and export of goods and raw materials. With regards to its taxation, investors must know that the company is liable to all corporate taxes that are applied under the local tax law and that it benefits from the provisions of the treaties signed on the avoidance of double taxation.
The private limited liability company in Australia is not required to complete an audit. When drafting the statutory documents, you will have to add provisions with regards to the internal management rules of the company, its shareholding structure, the rights and the obligations of the parties involved in the company, such as the shareholders and the directors and this is why this procedure has to be done with the assistance of a law firm in Australia.
What are the tax considerations for an Australian LLC in 2022?
An important aspect for companies in Australia is the taxation system that is applicable to them. Companies that are considered corporate structures, such as the LLC, both private and public, will be taxed following the corporate tax system applicable in this country. Concerning this matter, we present the following:
- • in the case in which the company as an annual turnover above AUD$75,000, it is necessary to obtain an Australian Business Number (ABN);
- • if, in a financial year, the company has an income below a certain threshold, it will be taxed with a corporate tax rate of 27,5%, which represents a reduced corporate tax;
- • however, for the last year (2021), the lower tax rate was reduced to 26% and it will be further reduced in the next financial year (2022) to 25%, according to the Australian Taxation Office;
- • the standard corporate tax rate charged to companies in Australia is of 30%;
- • in the financial year of 2017-2018, the threshold for which the reduced corporate tax rate was applied was of AUD$25 million, but starting with the financial year of 2018-2019, the threshold was increased to AUD$50 million.
Please note that the financial year in Australia is different from the standard financial year that can be met across the world (from 1 January to 31 December). In Australia, the financial year begins of 1st July and ends of 30th June, but companies can opt to follow the standard financial period, from January to December.
Important things to know when setting up a LLC in Australia
So far, our team of lawyers in Australiahas presented the main aspects that you should be aware of during the registration of the company, the differences between the public and the private company, the tax requirements applicable to this company type and many more aspects that are important when registering this legal entity.
In the following section, our team has gathered additional information that should be of interest for investors, local and foreigners, who want to register this company type. We’ll start by saying that the Australian LLC will need to have an official business office, meaning a registered address where it can have its physical place of business and where it can receive official documents.
This is a part of the registration process and all LLCs in Australia must have an address and a place that can be used for business purposes. During the registration, all institutions involved in the procedure will require information and evidence regarding where the company will have its headquarters.
The official business address can be in an apartment, an office building or in another type of premises, depending on the needs of the business (regarding the necessary space) and the type of activity carried out. One can also build from ground-up an office where the company can have its official address.
Please mind that for the same purpose, investors can request the services of a virtual office, which represents the most cost efficient solution businessmen can benefit from. The virtual office provides basic services which are necessary for businesses and this can be the ideal solution for companies with few employees and which can develop their activities remotely or via the internet.
If you are interested in this service, we invite you to send an inquiry to our Australian law firm, where you can receive the necessary information and where our lawyers can help you select the service package that is most suitable to your business needs.
Through the LLC in Australia, foreign and local investors can develop basically any business activity that is regulated under the local legislation, with few limitations. This company type can be used for developing import-export operations as well, so it can be an ideal vehicle for those who work in this field of activity.
From a tax point of view, the LLC is liable to the payment of the local taxes, as discussed above, and it is necessary to know that this business form can also benefit from the provisions of the double tax treaties that were signed by Australia with its trading partners. Our lawyers in Sydney can offer tax consultancy services on the current double tax treaties available here and the latest amendments brought to any treaty for the avoidance of double taxation.
Another advantage of this business form is given by the fact that it can be founded by a single shareholder, as mentioned above, who can be a foreigner. The company does not require a resident shareholder, so it can be formed with 100% foreign ownership. The shareholder of the company can be represented by a natural person, a foreign individual interested in developing a business activity in Australia, or by a foreign company.
With regards to employment matters, the LLC in Australia can hire both local workforce (meaning, Australian nationals or residents) and foreign employees. Provided that the investors will want to bring in Australia foreign employees, then specific immigration procedures will have to be concluded and they can vary based on the nationality of the future foreign employee and other employment conditions.
They can refer to the type of work developed here (highly skilled or general work activities), the duration of the employment contract, the field in which the work activity is carried out and numerous others. Our team of lawyers in Australia can present in-depth information on the employment regulations available here and the types of work visas foreigners can apply for.
For foreign employees, as a general rule, it is required to apply for a work visa, which will then grant the right to a residence permit issued based on the ground of developing a work activity here. Our law firm can offer advice on the steps necessary to obtain a residence permit.
You can also rely on our lawyers if you need to apply for a visa as foreign businessman. The visa application must be initiated before arriving in Australia and please mind that this can be a lengthy process (it can last few months, depending on the visa type).
For more information about the tax law and related principles, you may reach out to one of our tax attorneys in Australia. Foreign companies that need to enter on the Australian market can also do so by opening a subsidiary (which may be incorporated as a LLC) or by opening a branch. For more detailed information about the formation of a LLC, please contact our law firm in Australia.