Set out below are the steps to successfully set up a company in Australia.
Incorporate the company with ASIC
After deciding that a company is the best entity through which to operate your business, follow these steps to get your company up and running.
- Choose a unique company name. You can check the availability of your desired name by using the Name Availability search on the ASIC website. You may find that your first choice is taken and may need to get a little more creative.
- Decide the rules for your company. Your company will need a set of rules by which to operate. You can choose either the ‘Replaceable Rules’ in the Corporations Act, or you can create your own customised set of rules in a written ‘Constitution’. Generally, we recommend using a Constitution as you will then have all the rules in one handy place. For more information about Constitutions, read this.
- Choose who will own your company. Your company will need at least one shareholder. This can be an individual or another company, and they can be based in or outside Australia. There is no requirement to have at least one Australian shareholder, i.e. the company can be wholly foreign-owned. The shareholder(s) need to contribute the company’s capital. There is no minimum capital requirement, so you can start with $1.
- Choose who will run your company. Your company will also need at least one director, and at least one director must be resident in Australia. The directors need to run the company, and will be subject to a number of ‘duties’ under the Corporations Act. If you are looking for someone to act as your Australian resident director, then see here for how we can help.
- Get everyone’s consent to be involved. The shareholder(s) will need to sign an ‘application’ for shares, and each director will need to sign a ‘consent’ to act. You will need these documents signed before the company is set up.
- Specify where your company will operate from. Your company will need a registered address (where notices are sent) and a principal place of business (where the company operates from). The registered address may be us or your accountant. The principal place of business is where the business operates (which may be your home if it is a passive investment company).
- Finally, you must register your company with ASIC. You will need to lodge a form and pay a registration fee to register your company with the Australian Securities and Investments Commission (ASIC). Once you register your company with ASIC, you will be provided with a unique Australian Company Number (ACN). You can use your ACN to then apply for an Australian Business Number (ABN). You generally only need an ABN if your company is trading or employing people.
Once you have completed these steps, your company has been registered and you will receive a Certificate of Registration. You must also ensure you comply with the ongoing obligation to keep the details of your company updated.
Register the company for an Australian Business Number (ABN)
Your ABN is a unique number which identifies your business when trading with other businesses and the government. Your ABN is also essential in your compliance with the various tax obligations you incur while operating your company and employing people.
If you do not apply for an ABN, your business partners will be required to withhold 47% of payments they make to you for tax purposes.
You may use your ABN in place of your ACN, but your ABN must be based on your ACN.
Applying for your Tax File Number
When applying for your ABN, you should also apply for a unique Tax File Number (TFN) for your company. This will assist you in your interactions with the Australia Taxation Office (ATO), as well as complying with your tax obligations.
Register for Goods and Services Tax (GST)
If you are trading, you may need to register for GST. Generally, GST registration is required if you are likely to have an annual turnover of $75,000 or more.
Register for Employee Related Taxes
If you intend to employ people, then you will need to register to withhold and remit tax on behalf of employees. This is known as the Pay As You Go System (PAYG).
You must withhold certain amounts from payments you make to employees, as well as payments to certain contractors and businesses that do not provide their ABN to you.
Register for workers’ compensation cover
Your obligations under a workers’ compensation insurance scheme will vary from state to state. In New South Wales, for example, employers who pay over $7,500 annually to their workers must have a workers’ compensation insurance policy and meet certain OH&S obligations.
Set up protection for your intellectual property
After you have established your company, and completed the above steps, you may wish to consider protecting your intellectual property, brand and goodwill. This can be achieved by registering:
- Patents. A patent is a form of legal protection that prevents others from making, using or trading in an invention for a limited period of time;
- Trademarks. A trademark is a legally protected symbol, word or series of words used by a company to represent its brand;
- Copyright. Copyright refers to the exclusive right of an author of creative work to replicate that work; and
- Designs. Designs refer to plans or specifications which are used to create a product or system which is unique or distinct in some way.
What to do next?
For more information about how companies work, we strongly recommend you read this.