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Starting a business? Decided to set up a Company for your new business venture?
Companies are the most commonly used business structure in Australia. The key benefit of company structure is asset protection that is offered by the limited liability feature available to companies. Let’s know more about setting up a company in Australia.
1. Choosing A Company Name
A company name is required as a first step. The name should resonate with the services or products you plan to offer. The company name should not be similar to a name already registered by another company. Having a name similar to another registered company may potentially have legal implications.
2. Appointment of Directors and Shareholders
A Pty Ltd corporation must have at least one Australian resident as a director, at least 18 years of age, must not be insolvent and not barred by ASIC or any other government body from corporate management. The decision about the company’s stockholders comes next. They can be individuals or other companies, both Australian and foreign.
3. Registeration with ASIC
Company must be registered with ASIC. An application form must be submitted to ASIC to set up a company. While registering, you have to fill in details like the company name, director(s) details, shareholder(s) details, and also the company’s registered office address.
4. Company Constitution
This step though is optional, not mandatory, but it is advisable to have a company constitution in place. This document has a set of rules and regulations about the company’s internal management and also has the rights and responsibilities of the shareholders. If you decide against having a constitution, the Corporations Act of 2001’s applicable rules will apply to the business by default.
5. Obtaining an Australian Business Number (ABN), Tax File Number (TFN) and applying for other registrations
As you are done with company registration, the next step is to apply for Australian Business Number (ABN), Tax File Number (TFN) and other registrations such as GST, PAYG Withholding etc. ABN is a unique 11-digit number that identifies your company taxation and other business purposes. The ABN number is very handy while invoicing, claiming goods and services tax (GST) credits, and complying with tax obligations.
6. Goods and Services Tax (GST), Pay as you go withholding (PAYG)
This is another important step while setting up a Pty Ltd company in Australia. Registering for GST is mandatory when you anticipate your annual business revenue to exceed $75,000. GST is charged at 10% of the price of goods and services sold or consumed in Australia. If you are also planning to hire staff, then PAYG withholding is also required to report salaries and tax withheld on each Business Activity Statement (BAS).
7. Opening Business Bank Account
Separating your personal and business finances is always recommended to avoid stress at tax time. It is advisable that you to open a dedicated business account to be used for receiving business income and paying business related expenses. Through this, you can manage your company’s finances, track expenses, and fulfil your tax obligations.
Summary
Setting up a company requires expert advice, knowledge, careful planning, and adherence to legal requirements. You must also know your future plans before deciding to set up a company as this may not be the best structure to suit your needs. Speak to an Accountant to discuss best structure to suit your needs.
Contact Expert Tax for assistance with your business structuring needs.
