Investors who plan on starting a business have a few options to choose from, as there are several types of companies in Australia. Each business structure has a set of advantages that should be taken into consideration. The attorneys at our law firm in Australia can help you choose the appropriate business structure, according to the planned size of the future business and the need to expand it in the future.
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Types of business structures in Australia
Each company type that is available for registration in this country is designed to fit various business needs. They have different requirements regarding their capital, number of investors, obligations, tax reporting, etc. The main forms of business entities available in Australia are as follows:
- the sole proprietorship – a simple business form where the founder is the sole owner and is also liable for the debts and obligations of the company;
- the limited liability company – this can take the form of a public or a private corporation and there are several differences between them that can be explained by our attorneys in Australia;
- the partnership – a collaboration between individuals who wish to run a business together;
- the branch – used by foreign corporations that want to expand to the Australian market (the structure is dependent on the company abroad).
| Quick Facts | |
|---|---|
| Types of legal entities in Australia |
There are several types of companies in Australia, as follows: – sole trader; – partnership; – limited company; – trust; – joint venture; – cooperative. |
|
The characteristics of the LLC |
The LLC in Australia is known as a proprietary limited company (Pty. Ltd.). It can be formed by 1 shareholder and maximum 50, who have limited liability against the debts of the company. The structure is a separate legal entity than the founders. |
|
The characteristics of the stock company |
The joint stock company is similar with the LLC, in the sense that investors also enjoy limited liability. However, this company type can sell its shares publicly, including on the Australian Stock Exchange. |
| The characteristics of the partnership |
It is set up by at least 2 partners. The liability of the partners is established based on the type of patnership they will set up. Currently, there are 3 types – general, limited and the incorporated limited partnership. |
| The characteristics of the sole trader |
It defines a structure that is set up by a natural person, with the purpose of carrying out a business activity in his/her own name. The taxation is made based on the personal income taxation principles. |
| The characteristics of the branch |
The branch is defined as a subdivision of a parent company located abroad. The branch is incorporated in Australia, but there isn’t any legal distiction between the branch and the parent company (which bears all the responsibility for the branch’s operations). |
| Legislation regulating company incorporation in Australia |
Corporations Act 2001. |
| Corporate taxes |
The types of companies in Australia can be taxed at different rates. For instance, corporate entities such as the Pty. Ltd. will be charged with a corporate income tax of 25% or 30%. The sole trader is charged with the personal income tax, ranging from 16% to 45%, depending on the income. Companies are also liable to the payment of the VAT (known as GST in Australia), imposed at a rate of 10%. |
| Foreign ownership rules |
Foreigners are allowed to own 100% of the shares of the companies they will set up in Australia. |
| Double tax treaties signed by Australia | 47 |
| Main company registration steps |
– choose a trade name and reserve it; – draw the statutory documents (replaceable rules or/and the constitution); – appoint directors and obtain a director’s identification number; – obtain a registered address; – open a bank account; – apply for tax numbers. |
| Corporate tax number required (yes/no) |
Yes |
| Resident director/shareholder requirements |
At least 1 director must have his/her residency in Australia. |
| Can investors modify the legal entity of a Australian company? |
Yes, it is possible to change various types of companies in Australia into other business forms. |
| Ways in which our team can assist investors |
Our team can prepare the documentation and assist in any of the registration steps mentioned above. We can assist in business immigration and can offer post-incorporation services (tax compliance, accounting, employment taxes, employment contracts, business agreements and partnerships, etc.). |
The limited company is widely used when opening a business in Australia. The requirements for public and private companies are different and include conditions for the number of members, the Board of Directors and others. Our lawyers in Australia can give you specific information.
What to take into consideration when choosing the business structure
Our team of Australian lawyers can help you with legal counseling regarding the Corporations Act and the various requirements included therein for the chosen type of company.
When selecting the business form, investors need to take into consideration the manner in which the business will grow over time. While it is possible to change the business structure, it is always helpful to have a broader perspective on the future evolution of the company. The choice made by entrepreneurs will have an impact on the types of special licenses, the amount of taxes as well as personal liability.
Basic rules to abide by when opening an Australian business
When opening a company in Australia, the basic registration procedures will be conducted through the Australian Securities & Investment Commission (ASIC), which also enforces the applicable legislation on company incorporation. In the list below, our lawyers in Australia present you few highlights of the registration process:
- the registration of any company type starts by reserving a company name with ASIC – this can be done by completing the Form 410;
- in Australia, a company name can contain the letters of the alphabet (from A to Z), numbers from 0 to 9, and a variety of special characters, such as “&”, “-“, “#”, “@” and others;
- the limited liability company (also known as proprietary company), can be incorporated by maximum 50 shareholders who mustn’t be employed in the company, regardless if the company is a public or a private one;
- when appointing directors or secretaries, both persons must have an age above 18 years old and must comply with residency requirements (they vary based on the selected company type in Australia);
- investors must also pay registration fees, as per the rules of the Corporation (Fees) Act 2001 and Corporations (Review Fees) Act 2003.
The registration fees are established on the capital of the company – for company types in Australia that do not need to be incorporated with a share capital the registration fee is established at $474, while those with a share capital need to pay a fee of $576. Our Australian lawyers can present other fees that may apply during the incorporation of a business.
The duration of the incorporation process in Australia
The duration of the registration of a company type can vary based on the selected legal entity. However, the ASIC registration procedure can be completed in a timely manner – the application for registration takes around 15 minutes (the procedure is done online).
Overall, the registration of a company type investors selected can be completed in a matter of 2 business days, once the application has been submitted, along with all the documentation required. Investors can address our law firm in Australia for legal representation throughout the ASIC registration formalities.
If you want to start a business in certain Australian cities, such as Sydney, you can rely on our team of lawyers in Sydney. Contact our Australian law firm for a complete list of the services we provide to local and foreign investors interested in company formation.