Company in Australia

Registration procedures must comply with local regulations based on chosen legal entity. Australia offers various legal forms of incorporation, enabling founders to select structures aligned to their specific situation and goals.

Below, we briefly explore the basics when establishing a company in Australia, including the main requirements for registration and an overview of common legal entities and their benefits.

Key benefits of an Australian company registration

• Stable economic and political environment
• Range of legal structures to select from
• Ability to open an Australian bank account remotely
• Streamlined registration process

Taxation

Australia offers a preferential small businesses tax rate along with flexibility around nil reporting obligations when relevant. Understanding current tax rates and reporting criteria enables businesses to ensure accurate compliance and optimize their overall tax liability.

Current company tax obligations can be summarized as:

• Standard companies: 30%
• SMBs (<$2M turnover): 28.5%

It should be noted that entities with no in-country business activities can submit nil corporate tax returns.

General registration requirements

Registration occurs via the nation's Business Register. While each legal entity has unique incorporation prerequisites, some universal conditions apply:

• ASIC (main regulator) governed
• Corporations Act compliant
• Registered under the ABR
• Business activity aligned to legal entity

With required documents prepared in advance, registration can finalize within days. Paid-up share capital is mandated, however, no minimum thresholds exist.

For foreign entrepreneurs, several legal structures are convenient that can be incorporated remotely in Australia. The following explores their key traits and relative advantages in further detail.

Incorporation in Australia: pros and features

A Pty Ltd in Australia significantly mitigates business risks by establishing an independent legal entity, separate from the founders and members. Liability is restricted to the paid-up share capital. An entrepreneur can register as both the sole director and sole shareholder to operate autonomously under the company name.

Alternatively, registering a public company in Australia enables raising capital publicly by floating shares on the stock exchange.

As the company is a distinct legal person, changes in ownership and participants do not impact continuity. An Australian incorporated company can trade countrywide and leverage free trade agreements and double tax treaties with many nations globally.

Key benefits:

• Limited liability status
• Separate legal entity
• Ownership fluidity
• National and international trade eligibility

When registering an LLC in Australia, company income, including capital gains and dividends, is taxed at 30% in Australia. Tax returns are due by 30th June, as the financial year commences on 1st July. Registering a proprietary limited (Pty Ltd) company can take several weeks to finalize documentation, name selection and reservation, and ultimately formal registration.

The founder must propose an original company name that does not violate third party intellectual property rights. Once registered, the company is assigned a unique 9-digit identification number, which alongside the name, must appear on all corporate documents. At least 2 AUD of paid-up share capital is mandated for registration.

Registering as a sole trader in Australia suits individuals seeking a low-risk, small-scale business with minimal capital outlay. As there is no legal separation between the individual and the business, decision-making and operations are straightforward, however personal liability for all aspects applies.

Employees can be engaged, necessitating superannuation contributions, insurance and other obligations. A sole trader entity can transition into other structures as warranted over time.

Termination is more straightforward than with a company model. Income is taxed personally rather than at a flat corporate rate, with personal taxation increasing progressively from 19% to 45% alongside income growth.

Turnover above $75K requires GST registration. An ABN can be obtained to transact smoothly with suppliers and customers. With an ABN, 46.5% withholding tax on customer payments is avoided.

A sole trader model offers a simple pathway for individual entrepreneurs to commence operations while keeping overheads low. As business growth and risks increase, transitioning to alternative structures may become prudent.

Prior to incorporation, a partnership agreement is required, defining:

• Roles and responsibilities
• Liability distribution
• Authority of partners

Profits and losses must have an established distribution ratio. Limited partnerships enable limiting liability for certain 'silent' partners based on their capital commitment.

Unlike a company structure, partnership income is taxed personally for each partner rather than centrally.

A trust in Australia offers an alternative structure whereby trustees manage assets to generate profit for defined beneficiaries per the provisions of a trust deed. The trustee, either an individual or company, holds legal accountability to beneficiaries.

Key benefits over standard business registration include greater privacy given the absence of public reporting requirements. Trust income is subject to personal taxation similar to a partnership model.

Central documents include the trust deed delineating:

• Responsibilities and powers of trustee
• Administration protocols
• Beneficiary rights

The entity registers for taxation purposes under its own TFN and handles tax filings comparable to a standard business. If annual turnover exceeds $75K (or $150K for non-profits), GST registration is also required.

Both partnerships and trusts enable alternative registration approaches in Australia for certain business situations, with relative tax and compliance advantages over a traditional company model.

As you can see, each framework has its relative merits around ownership, liability, taxation arrangements and applicable compliance obligations. Navigating regulatory duties as well as selecting an optimal incorporation model enables new ventures to balance risk management and commercial flexibility when formalizing Australian operations.