Damon Mcknight
Registering a company in Australia as a foreigner or non-resident is possible, but there are specific requirements and conditions that must be met. Australia has a stable economy and a transparent legal system, making it an attractive location for international expansion. To register a company in Australia, individuals must be at least 18 years old, not be under any legal disability, and meet residency requirements. Foreigners can start a business in Australia by partnering with an Australian resident or registering as a foreign company. The process involves registering with ASIC, obtaining an ABN and ACN, opening a business bank account, and complying with tax regulations. Proprietary limited (Pty Ltd) companies are a popular choice, offering limited liability protection and credibility when interacting with Australian entities. The registration process typically involves completing a form, which can take around 10 minutes, and the company can start trading within a few minutes of registration.
| Characteristics | Values |
|---|---|
| Registration Body | Australian Securities and Investments Commission (ASIC) |
| Registration Requirements | Be at least 18 years old, not be under any legal disability, be an Australian resident, hold Australian citizenship or permanent residency, obtain a Director’s Identification Number (DIN) |
| Registration Options | Register as a foreign company, set up a separate Australian entity, establish a representative office |
| Registration Steps | Confirm company name, appoint a director and secretary (if applicable), complete registration through the Business Registration Service |
| Additional Registrations | Australian Business Number (ABN), Tax File Number (TFN), Pay as You Go (PAYG) Withholding, Goods and Services Tax (GST) |
| Business Structure | Sole trader, partnership, trust, company |
| Compliance | Corporate Tax, Fringe Benefits Tax (FBT), Payroll Tax |
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What You'll Learn
Register with ASIC
Foreign companies must register with the Australian Securities and Investments Commission (ASIC) to conduct business in Australia. ASIC will provide registered foreign companies with an Australian Registered Body Number (ARBN).
To register with ASIC, foreign companies must complete Form 402: Application for Registration as a Foreign Company. This form must be accompanied by four documents:
- A certified copy of the entity's current certificate of incorporation or registration. This certificate must be issued by a governing authority like ASIC and must be from the same country or place where the entity was incorporated or registered.
- A certified copy of the entity's constitution, including all amendments up to the date of application.
- A memorandum of appointment of the local agent or power of attorney in favour of the local agent.
- A memorandum stating the powers of certain directors, which must be signed by an officeholder with an original signature.
The memorandum or power of attorney must be executed by, or on behalf of, the entity, and it must include the name, address, and appointment date of the local agent. If the application lists directors who are Australian residents and members of a local board of directors, a memorandum outlining their powers must be lodged.
Additionally, foreign companies must verify the availability of their intended company name and reserve it for use in Australia.
It is important to note that corporations sole, exempt public authorities, and unincorporated bodies formed outside Australia are not considered foreign companies if they cannot own property or take legal action under the laws of their country of establishment. If a foreign company chooses to incorporate an Australian subsidiary, it does not need to register as a foreign company.
ASIC also provides online services and portals for various functions, such as applying for a credit licence, auditor registration, and submitting annual statements.
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Appoint an Australian resident director
To register a company in Australia from another country, one of the key requirements is to appoint an Australian resident director. This individual must ordinarily reside in Australia, and their tax residency, citizenship, or right of residence, domicile, and home address will all be considered.
The resident director can be a foreign tax resident, but the company must also appoint a resident director who lives in Australia. This is a legal requirement and is necessary to register a company with the Australian Securities and Investments Commission (ASIC).
The resident director must also apply for and hold a valid 'Director Identification Number' (Director ID). This is a unique identifier that the director will keep forever, helping to prevent the use of false identities.
If you are unable to fulfil the role of an Australian resident director yourself, you can partner with a local business consultant or use a service that provides resident directors, such as Acclime Australia. These individuals will manage your compliance, legislative, and regulatory requirements.
It is important to note that the Australian resident director must provide written and signed consent before being appointed, and they can request a review of their status if they are listed as an officeholder without their consent.
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Open a business bank account
Once your company is incorporated, you will need to open a business bank account with a bank licensed to operate in Australia. This account will be used for financial management and will be essential for your company's financial transactions.
To open a business bank account in Australia, you will need to provide specific information and documents to the bank. Here are the general steps you can follow:
- Choose a bank: Select a bank that is licensed to operate in Australia and offers business banking services. Compare the fees, features, and requirements of different banks to find one that suits your needs.
- Gather required documents: The exact documents may vary depending on the bank, but typically, you will need your company's registration documents, such as the Certificate of Registration, and identification documents for the authorized signatories. These could include passports, driver's licenses, or other accepted forms of ID.
- Complete the application: Contact your chosen bank and request the necessary forms or apply online through their website or online banking platform. Provide all the required information accurately and completely.
- Provide additional information: Depending on your company's structure and requirements, the bank may request additional information or documentation. For example, they may ask for proof of address, business plans, financial projections, or details of the company's directors and shareholders.
- Sign any necessary forms: The bank will provide you with the necessary forms to sign and complete the process. These may include signature cards, account terms and conditions, and any other relevant documentation.
- Fund the account: Once your business bank account is approved and set up, you will need to deposit funds into the account to activate it. You can transfer funds from another account, make an initial deposit, or arrange for incoming payments to utilize this account.
It is important to carefully review the requirements and processes of your chosen bank, as they may differ slightly from the above steps. Additionally, consider consulting with a financial advisor or accountant to ensure you choose the right business bank account for your company's specific needs.
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Register for taxes
Registering for taxes is a crucial step in setting up a company in Australia. Here are the key considerations and requirements:
- Australian Business Number (ABN) and Tax File Number (TFN): Obtaining an ABN is essential for trading with various government departments and agencies in Australia. It is a unique 11-digit identification number. By having an ABN, your business can avoid payers withholding 46.5% tax from your payments. You must display your ABN on your invoices. You can apply for a TFN at the same time as your ABN application.
- Goods and Services Tax (GST): Registration for GST is mandatory if your company's annual revenue exceeds AUD 75,000. This tax applies to the supply of most goods and services in Australia.
- Pay as You Go (PAYG) Withholding: If you intend to employ staff, you must register for PAYG. This tax is deducted from employee wages and paid to the Australian Taxation Office (ATO).
- Fringe Benefits Tax (FBT): FBT applies to non-cash benefits provided to employees, such as car allowances or loan benefits.
- Payroll Tax: Payroll tax varies based on state thresholds. If your employee wages exceed the relevant state threshold, you must register for payroll tax.
- Company Tax: The company tax rate is 25% for small businesses and 30% for larger enterprises.
- Representative Office Registration: If you are a foreign company and wish to establish a representative office in Australia to explore the market without engaging in income-generating activities, you are exempt from ASIC registration. However, if you plan to employ staff, you must register with the ATO.
- Compliance and Consultancy: It is crucial to understand local regulations and compliance obligations. Consultancy services can assist in navigating the tax landscape and ensuring your company meets all relevant tax requirements.
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Choose a business structure
When registering a company in Australia, you must choose a business structure. This is an important decision that will impact your tax obligations, personal liability, and the complexity of the registration process. Here are the most common business structures available in Australia:
Sole Trader
A sole trader is an individual who owns and operates a business alone. This is the simplest business structure, as there is no legal distinction between the owner and the business. Sole traders are not required to register with the Australian Securities and Investments Commission (ASIC) and can start operating with minimal setup. However, sole traders have unlimited personal liability, meaning their personal assets are at risk if the business incurs debts or faces legal action.
Partnership
A partnership is a business structure where two or more individuals join to run a business together. Partnerships offer some advantages, such as shared expertise, resources, and decision-making. Like sole traders, partnerships do not need to register with ASIC. However, partnerships also carry unlimited personal liability for all partners.
Trust
A trust is a more complex structure where a trustee operates a business for the benefit of beneficiaries. Trusts can offer certain tax benefits and asset protection, but they require careful setup and ongoing administration. Trusts do not need to register with ASIC, but they must comply with specific legal and tax obligations.
Company
A company is a separate legal entity that is owned by shareholders and managed by directors. This structure offers limited liability protection, meaning shareholders' personal assets are generally protected from business debts and liabilities. Companies must be registered with ASIC and have a unique nine-digit Australian Company Number (ACN). This structure provides greater credibility and facilitates raising capital by offering shares.
Proprietary Limited Company (Pty Ltd)
A Pty Ltd company is a type of private company that operates separately from its owners and does not offer shares to the general public. This structure limits the personal liability of its owners and can attract investors with share offerings. Pty Ltd companies must meet specific requirements, such as having at least one director and, in some cases, a secretary who are Australian residents.
When choosing a business structure, consider factors such as the size and nature of your business, your growth plans, the level of control desired, tax implications, and the protection of personal assets. It is recommended to seek professional advice to ensure you select the most suitable structure for your specific circumstances.
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Frequently asked questions
To register a company in Australia as a foreigner, you must meet the following requirements:
- Be at least 18 years old.
- Not be under any legal disability (e.g., bankruptcy or criminal restrictions).
- Hold Australian citizenship or permanent residency.
- Obtain a Director’s Identification Number (DIN) from ASIC.
Additionally, the company must have at least one Australian resident director. Non-residents can start a business through a partnership with an Australian resident.
Here are the steps to register a company in Australia as a foreigner:
- Check the availability of your desired company name and reserve it.
- Register with ASIC (Australian Securities and Investments Commission) and obtain an Australian Company Number (ACN).
- Apply for an Australian Business Number (ABN) and a Tax File Number (TFN).
- Open a dedicated business bank account with a bank licensed to operate in Australia.
- Register for taxes, including Goods and Services Tax (GST) if your revenue exceeds $75,000 annually.
- Obtain any required licenses and permits for your industry.
Registering a company in Australia as a foreigner can provide the following benefits:
- Greater credibility with Australian clients and government entities compared to operating as a foreign company.
- Access to a stable economy, a transparent legal system, and a straightforward regulatory environment.
- Ability to establish a separate Australian entity to manage local operations.
- Improved tax outcomes, grant opportunities, and incentives.
- Clear ownership structure, limiting personal liability and minimising future conflicts.
