Before you set up a new company it’s important to know that there are many ways to structure a business. Each carries with it different rights and obligations of which you should be aware before choosing the structure for your business.
One type of business structure is a company. A company is a legal entity that is separate from the individuals who run it. You must register a company with the Australian Securities and Investments Commission (ASIC) and enables those behind the company to operate their business throughout Australia without needing to register in each Australian states and territory. You will also need to register an Australian Business Number (also known as an ABN). This company registration process can be done online.
Assuming you have chosen a company as your business structure, the steps to set up a company are set out below.
1. Will You Set Up a Company Yourself or Use a Service Provider?
You can complete the company registration process yourself using ASIC Form 201, which is available on the ASIC website, and by paying the applicable ASIC company fee. Alternatively, you can register a company using a service provider that has software that deals directly with ASIC and pay the relevant ASIC fees. You can deal with the service provider online or using hard copy forms, but in either case you pay a fee to the service provider in addition to the ASIC company fee.
2. Choose a Company or Business Name
In choosing a company name you should consider the following:
you must choose a company name. If you do not use a company name, you can use the company’s Australian company number (ACN) as the company name;
- your company name must show the company’s legal status. For example, in Australia most companies are proprietary limited or pty ltd companies. These are companies where the legal responsibility of the company’s members is limited to the amount unpaid on shares in the company;
- you can only choose a name that is available. Here, you can search and reserve the name prior to registering a company;
- there are limitations on what words and phrases can be used in a company name.
3. Choose Your Company’s Rules
Before you start a company you must decide what rules will apply to govern the company. This can generally be:
- the replaceable rules from the Corporations Act, which means that the company does not require its own written constitution; or
- a constitution; or
- a combination of the two.
However, if the company is a sole director or member proprietary company, you do not need a constitution.
4. Choose Your Shareholders and Directors
You must decide who will be the shareholders (also known as members) and directors of the company. A company’s directors are the people who control the company. You must have at least one director ordinarily resident in Australia and each director must be at least 18 years of age.
You must obtain a written consent from each person who has agreed to act as a director of the company and who has agreed to become a shareholder of the company.
5. Choose Your Share Structure
After you have chosen your shareholders you must decide how many shares will they each own and what class of shares will they own. Ordinary shares are the most common.
6. Choose the State/Territory To Register Your Company In
A company can be registered in any state or territory of Australia. You must set up a company in one of the states or territories. You may also be required to register for GST. Once you are registered, you will receive a certificate of registration.
7. Choose the Principal Place of Business and Registered Office
A company must nominate a principal place of business and registered office. If the registered office is not at premises occupied by the company then the occupier’s consent must first be obtained.
8. Complete the Relevant Paperwork or Online Form
After you have made all the decisions in steps 1 to 7 above and obtained the relevant consents then you can register the company (see step 1).
What are the legal requirements of setting up a company in Australia?
If you wish to set up a company in Australia, you will need to make decisions about its corporate structure and register the company with ASIC. The legal requirements will depend on how you structure the company.
How do I determine the best structure of my company?
When determining the structure of your company, you will need to consider which structure will be the most practical for your business growth plans. If you are looking to bring on shareholders or directors, a company structure may be the best option compared to a sole trader.
How do I register my company with ASIC?
You can register your company with ASIC on their website or use a company registration provider. LegalVision’s business lawyers can assist you with this process.
How can I get help in drafting legal documents to set up my business?
When setting up your company, it is best to have an experienced business lawyer draft all the documents you will need.
What should I consider when choosing a company name?
When choosing a company name, you will need to make sure that it is not already registered by another business
Setting up a company requires some planning and know-how, but it’s not that difficult. Make sure you follow this checklist! If you need to register a company in Australia, contact with us.