Leslie Massey
Starting a business in Australia can be an exciting venture, promising access to a robust economy, a skilled workforce, and a supportive business environment. There are, however, a number of steps to follow to ensure you meet legal requirements and set up your business for success. Firstly, you must decide on the type of company you want to start, as this will determine the rights and obligations of the business. You must then register your company with the Australian Securities and Investments Commission (ASIC) and obtain an Australian Company Number (ACN). You will also need to obtain an Australian Business Number (ABN) if your business expects to earn more than $75,000 per year. Once you have chosen a business name and structure, you can begin the process of hiring staff and finding customers.
| Characteristics | Values |
|---|---|
| Company structure | There are different ways to structure a business, each with its own set of rights and obligations. |
| Company type | Pty Ltd (Proprietary Limited) is the most common type, suitable for small to medium-sized businesses with a maximum of 50 non-employee shareholders. |
| Company name | Must be unique and not identical to any existing company or registered business name. Certain terms are restricted unless approved by the government. |
| Registration | Must be registered with the Australian Securities and Investments Commission (ASIC) and may require an Australian Business Number (ABN). |
| Registration fee | As of 1 July 2023, the fee is $576, subject to change each financial year. |
| Shareholders and directors | Must decide who will be shareholders and directors. An Australian private company must have at least one director residing in Australia, and each director must be at least 18 years old. |
| State or territory | Can be set up in any state or territory, but can only be registered in one, impacting government grant eligibility. |
| Business bank account | Required for partnerships or companies, and recommended for sole traders. |
| Business visa | Required for foreigners wishing to start or manage a business in Australia. |
| Superannuation | Regulated by the Australian Tax Office and offer various investment options. |
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What You'll Learn
Choosing a business structure
Choosing the right business structure is a crucial step in starting a company in Australia. There are several factors to consider when choosing a business structure, as each type carries different rights, obligations, legal, financial, and record-keeping responsibilities. Here are some common business structures to consider:
- Company: A company is a separate legal entity from its owners (shareholders) and the individuals who run it. It has the same rights as a natural person, including owning property, entering into contracts, incurring debts, suing, and being sued. A company must be registered with the Australian Securities and Investments Commission (ASIC) and will be issued an Australian Company Number (ACN). If operating through a company, an Australian Business Number (ABN) is also required. The company must have at least one director ordinarily residing in Australia, and each director must be at least 18 years old and provide written consent. Shareholders (members) must be decided, along with the number and class of shares issued to each.
- Sole Trader: A sole trader is an individual operating a business alone and is not considered a separate legal entity. Sole traders are not required to open a separate business bank account, but it is recommended. They can apply for an ABN through the Australian Business Registry (ABR) or services like Cleardocs.
- Partnership: A partnership is formed when two or more people agree to run a business together. While not a separate legal entity, partnerships may have some additional legal and financial considerations compared to sole traders. Partnerships are required to open a separate business bank account and can apply for an ABN.
- Indigenous Corporation: Under the Corporations Aboriginal and Torres Strait Islander Act 2006, Aboriginal and Torres Strait Islander groups can form Indigenous corporations. These corporations can register with the Office of the Registrar of Indigenous Corporations (ORIC).
It is important to carefully consider the unique needs and characteristics of your business before deciding on a business structure. Seeking professional advice can help ensure you choose the most suitable structure and fulfil all necessary legal requirements.
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Registering your company
Choose the Right Business Structure
Before registering, it is crucial to understand the different types of business structures available in Australia. Each structure carries different legal, financial, and record-keeping responsibilities. Common structures include sole traders, partnerships, and companies. A company is a separate legal entity from its owners (shareholders) and has the same rights as a natural person. It can enter into contracts, own property, incur debts, sue, and be sued.
Select the Type of Company
When registering your company in Australia, you need to identify the type of company you want to establish. The most common type is a Pty Ltd (Proprietary Limited) company, suitable for small to medium-sized businesses with a maximum of 50 non-employee shareholders. Alternatively, you can choose a Ltd (Limited) company, which is a public company with no restrictions on shareholders.
Choose a Company Name
Selecting a company name is an important step, and there are strict guidelines to follow. Ensure your chosen name is unique and not identical or similar to any existing company or registered business name. Certain terms, such as "royal," "bank," "incorporated," and "trust," are restricted unless approved by the government minister. Your company name must also indicate its liability and legal status, such as "Ltd" or "Pty Ltd." You can reserve a name if you're not ready to register it, but remember that registering a company name does not protect your intellectual property or brand.
Identify Shareholders and Directors
Decide on the shareholders (also known as members) and directors of your company. Directors are individuals who control the day-to-day operations of the company and must be at least 18 years old. Obtain written consent from each director and ensure at least one director ordinarily resides in Australia. Determine the number and class of shares issued to each shareholder, as this will define their rights and restrictions.
Register with Australian Securities and Investments Commission (ASIC)
Register your company with the Australian Securities and Investments Commission (ASIC), the regulatory body for Australian companies. You can complete the registration process online or, in some cases, using a paper form. ASIC will provide you with an Australian Company Number (ACN), a unique 9-digit identifier for your company.
Obtain Necessary Licenses and Registrations
Depending on your business activities and industry, you may need to obtain specific licenses and registrations. Register for an Australian Business Number (ABN) if your business is expected to earn more than $75,000 per year. Additionally, consider registering for Goods and Services Tax (GST) if applicable.
Open a Business Bank Account
Open a dedicated business bank account to separate your business and personal finances. This will help with budgeting, tax compliance, and financial planning. You will need a registered business name, a primary business address, and identification for all owners and partners to open the account.
Comply with Visa Requirements
If you are from overseas and plan to live in Australia to manage your business, ensure you have the appropriate business visa. Australia offers different types of business innovation visas, which may require sponsorship or nomination from a government agency or Austrade.
By following these steps and seeking professional advice when needed, you can effectively register your company in Australia and lay the foundation for a successful business venture.
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Understanding legal requirements
Understanding the legal requirements is a crucial step in starting a company in Australia. Here are the key points to consider:
Business Structure
Firstly, it's important to understand the different business structures available in Australia. A company is a separate legal entity from the individuals who run it, with its own rights and obligations. Other common structures include sole traders and partnerships. Each structure carries different legal, financial, and record-keeping responsibilities, so choosing the right one for your business is essential.
Registration and Regulatory Bodies
If you choose to structure your business as a company, you must register it with the Australian Securities and Investments Commission (ASIC). ASIC regulates Australian companies, financial markets, and financial services organisations, and enforces the provisions of the Corporations Act, which governs Australian companies.
Additionally, you will need to obtain an Australian Company Number (ACN) from ASIC. The ACN is a unique 9-digit number that identifies your company. You will also need to decide on a company name, ensuring it complies with ASIC guidelines and is distinct from existing company and business names.
Shareholders and Directors
Understanding the roles and responsibilities of shareholders and directors is vital. Shareholders own shares in the company, and the class of shares they hold determines their rights and restrictions. Directors, on the other hand, are the individuals who control the day-to-day operations of the company and must be at least 18 years of age. An Australian private company must have at least one director ordinarily residing in Australia, and written consent must be obtained from each director.
Compliance and Taxation
Complying with taxation requirements is essential. Depending on your expected earnings, you may need to register for Goods and Services Tax (GST) and obtain an Australian Business Number (ABN) from the Australian Business Register. The ABN is a unique 11-digit number that identifies your business to the government.
Business Bank Account
Opening a dedicated business bank account is recommended to keep your business and personal finances separate. This will help with budgeting, tax compliance, and financial planning.
Visas
If you are from overseas and plan to move to Australia to start or manage a business, you will need the appropriate business visa. Business innovation visas, for example, require sponsorship and nomination from a state or territory government agency.
By understanding and adhering to these legal requirements, you can ensure your company is set up correctly and complies with Australian laws and regulations.
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Selecting a company name
Firstly, it is crucial to ensure that your chosen company name is unique and does not already exist. You can conduct a search on the ASIC Register of Companies, the business names register, and IP Australia's Australian Trade Mark Search to confirm that your desired name is not identical or similar to that of an existing company or registered trademark. This step is essential to avoid potential legal issues and protect your brand.
Secondly, certain character restrictions apply when choosing a company name. Specific terms, such as "royal," "bank," "incorporated," and "trust," are restricted unless approved by the government minister. Additionally, the company name must indicate its liability and legal status, such as using "Ltd" or "Pty Ltd." For example, your company name could be "My Business Pty Ltd."
You also have the option to reserve a name if you are not ready to register it immediately. This can be done through the Australian Securities and Investments Commission (ASIC). It is worth noting that registering your company name does not provide automatic protection for your Intellectual Property (IP) or brand, and you may need to take additional steps to secure your IP rights.
When deciding on a company name, it is advisable to seek guidance from ASIC, as they provide valuable advice on choosing company names and ensuring compliance with legal requirements.
Finally, consider the marketing and branding aspects of your company name. Choose a name that aligns with your company's values, products, or services and is memorable and appealing to your target audience. A well-chosen company name can enhance your marketing efforts and help build trust with your customers.
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Opening a business bank account
When setting up a company in Australia, one of the first things to consider is the business structure. Each type of business structure carries different rights and obligations. For example, a company is a separate legal entity from the individuals who run it, whereas a partnership is a legal relationship between two or more people or organisations intending to make a profit. Once you have decided on the business structure, you can proceed with the company registration process.
Having a dedicated business bank account is essential for keeping track of your business finances. It is required for partnerships or companies, but even if you are a sole trader, it is still recommended to have a separate account for your business. This will enable you to make and receive payments and apply for financing.
To open a business bank account in Australia, you will typically need to provide the following documents and information:
- Registered business name and primary business address
- Type of industry or business
- Identification for all owners, partners, directors, and beneficial owners
- Confirmation of shareholders and their share classes
The specific requirements may vary depending on the bank and your business type, so it is recommended to consult with a small business specialist at your chosen bank to ensure you have all the necessary documents.
Additionally, consider using a mobile app or online banking platform that caters to businesses, as these often provide useful features such as batch payments, integration with accounting software, and the ability to pay employees and suppliers worldwide in different currencies.
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Frequently asked questions
You must be financially and emotionally ready for the challenges of starting a business. You need business skills, a solid idea, funding, resilience, and discipline. You must also decide on the company's structure, name, and location.
You must register your company with the Australian Securities and Investments Commission (ASIC) and obtain an Australian Company Number (ACN). If you operate under a different business name, you must also register it separately. You will also need to register for an Australian Business Number (ABN).
Your chosen company name must be unique and not similar or identical to any existing company or registered business name. You can check ASIC's name availability search and the business names register to confirm this. You can also apply to reserve a name for up to 2 months for a fee.
You must decide on the shareholders (members) and directors of the company. An Australian private company must have at least one director residing in Australia, and each director must be at least 18 years old. You must obtain written consent from each director and determine the number and class of shares they will own.
As of 1 July 2023, the registration fee for a company is $576. This fee is subject to change each financial year based on the consumer price index. There may also be additional costs, such as reserving a company name or hiring a professional service provider for registration.
