Incorporating a company is an exciting experience and a crucial process for both young entrepreneurs and seasoned businessmen alike. Furthermore, creating a separate entity with limited liability comes with all sorts of financial advantages.
However, incorporating is markedly more complex than registering a sole trader or a business partnership. There are numerous legal obligations to comply with.
Let’s take a closer look at the nitty gritty in this guide to incorporating a business in Australia.
Where to Register Your Company
The Australian Securities and Investment Commission (ASIC) manage the incorporation process from start to finish.
Determining Your Company Type
The type of company you wish to incorporate, whether it’s a private (proprietary)/public or limited/unlimited, determines the documents that you’ll need to gather for the incorporation process. The company’s classification can also have an effect, which is determined by liability, size, and place of listing.
Regardless of your company type, you’ll need to submit the following details:
- Class of shares each member receives
- The dollar amount each share will pay
- If shares are eligible for full payment on registration
- If shares are beneficially owned
- Details of guarantee (if applicable)
Internal Governance Structure
Proprietary companies with a single shareholder/director don’t need to create and submit an Internal Governance Structure.
However, all other companies do. Ensure you include the details on the following processes:
- Appointing and removing directors
- Transferring shares
- Meeting procedures
Either mandate these details by drafting a company constitution or use the Replaceable Rules in Business Act. It’s also possible to use both.
Director and Secretary Consent
Obtaining the written consent of the company directors and the secretary is a legal obligation when incorporating a new company.
It isn’t necessary to submit this information to ASIC, although it must be held on file.
Choosing a Business Name
Most new company directors choose a new name for their corporation and register it through ASIC. However, it is possible just to use the Australian Company Number provided by ASIC instead.
Deciding On A Place of Business
You’ll need to register your business at an address you have full control over (a rented office, a home, etc.). You also need to register your primary place of business, which can be at the same place or at a different location.
Drafting a Shareholders Agreement
If your company has more than one shareholder, then you’re legally obligated to draft a Shareholders Agreement. These documents outline the roles and responsibilities of each member in detail and must be included in the incorporation application.
Registering Your Company
To register a company, complete Form 201 on the ASIC website and pay the applicable fee. If ASIC decides to approve your application, they’ll send a hardcopy of the official certificate by post to your registered business address.
You’re required to display the certificate in a visible location in your primary place of business.
New companies need to be registered for all the relevant taxation systems, which at the very least include an Australian Business Number (ABN), a Tax File Number (TFN), and a bank account in the company name. Some companies may need to register for the Goods and Services Tax (GST), while others may need Pay As You Go Withholding (PAYG).
Once you’ve incorporated, there are a number of things you need to do to comply with Australian law. Consider the following:
- Maintain and update a minute book that records any resolutions made during high-level meetings
- Public companies must appoint an auditor within one month of incorporation
- All companies must appoint a public officer to comply with tax obligations within three months of incorporation
- Maintain records of debenture holders, options holders, and members.
As you can see, there are many steps involved in incorporating and maintaining a company in Australia. However, in many cases, the potential for business expansion is well worth the hassle and expense.