It is important to have a company when starting up a business. Learn about the advantages of having one in Australia!
Australia is part of the Oceania region. It is the sixth-largest continent globally, with a wide geographical area. More than seven states provide diverse and extensive facilities for company registered in Australia.
In Australia, Registering a company is quite simple. A company can be formed in Australia in about a week. In Australia, registering a company is overseen by a separate authority. It is critical to meet the company’s requirements for appointing key executives in Australia. An applicant must hire an Australian resident director. These tasks would include company management.
There are various metropolitan hubs, including Sydney, Melbourne, Perth, and Canberra. To register a company in Australia, the applicant will need a ACN (Australian Company Number), a TFN (Tax File Number), and an Australian Business Number (ABN). It is the largest country in Oceania, making it a good place for an entrepreneur to start a business. Australia has free trade agreements with other countries, allowing it to conduct uninterrupted trade. Aside from that, Australia has DTAAs with several other countries. An investor would not be taxed twice. Any money earned in Australia can be repatriated to the home country.
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The Australian government has a foreign investment liberalisation scheme. As a result, an investor should go through the company registration process in Australia.
Suppose you are starting a new business or looking to expand your current one. In that case, you may want to consider forming a corporation. Although forming a corporation may appear to be a major step, there are numerous advantages to doing business through a corporation.
In this article, we’ll go over the advantages of registering your company and how it can help your business grow.
Eligibility Criteria for Company Registration in Australia
Directors and Shareholders:
A minimum number of directors and shareholders are required for an applicant for company registration in Australia. This would
be determined by the requirements of the specific entity type. Some businesses require a minimum of three directors. The company must have at least one shareholder.
Residency Requirements:
At least two of the directors must be Australian citizens. The company secretary must also be an Australian resident.
Age Requirements:
The Australian company’s directors, shareholders, and key management executives must all be over the age of 18. Individuals must obtain written permission to operate the company in Australia.
FIRB Approval:
If a Non-Australian acquires shares in Australia, FIRB approval is required under Australia’s foreign investment regime.
What Advantages Come With Having an Australian Company?
1. You will limit your personal liability: You are responsible for all aspects of your business, including debts and losses, as a sole trader or partnership. Besides that, you will be personally liable if you sell a defective product or make an error. Running a business in this manner can be risky because it puts your personal assets at risk. On the other hand, a company is a separate legal entity that allows you to protect your personal assets from your business activities easily. Debts that attach to the company will not attach to you, allowing you to focus on growing your business.
2. You will minimise your tax liability: You will likely pay less tax under a company structure, depending on how much revenue your business generates. The current corporate and small business tax rate in Australia is lower than the highest individual tax rate. As a sole proprietor, you are taxed as an individual, and the profits from your business are included in your personal income. Moreover, your company will be eligible for various tax breaks for advertising, training and education, and repairs and maintenance.
3. You can avoid conflict with your founders: Registering a company can be highly beneficial if you disagree with your co-founder. When you register your company, the owners’ amount of control is determined by the number of shares. The owners will understand that their investment in the company is not contingent on any pre-registration verbal or written promises. In a disagreement, share allocation will also determine the most decision-making power. Likewise, businesses can allow you to separate ownership and management of the company. You could, for instance, have several shareholders but appoint managers who do not own the company. This enables the company to be run by experts solely concerned with making a profit for the shareholders.
4. Legitimacy and brand awareness: Consider the most influential brands in the world today: Google, Nike, and Facebook. All of these are legal entities. A company structure is required for a business to be as likely to succeed and vast as possible. Registering your business improves its reputation and perception. A company is its own entity that operates independently of you. You will also be held accountable to ASIC and will use an Australian Company Number (ACN). It is also essential to become a registered company for any future dealings with third parties, as many businesses will only hire or engage with registered companies. This implies that your company’s name will appear on your business contracts rather than your own.
5. You can raise significant capital: As a company, you will have an easier time attracting investors and raising funds for your venture. Registering your company allows you to borrow and incur debt. Still, it also enables you to sell shares and raise equity capital. If you had another type of business structure, you would have to pay taxes on your income tax statement, even if the money remained in the business. Raising funds may be necessary for the development and expansion of your business. Investors prefer to invest in a registered company over a sole trader or partnership because they know there is a formal structure to accept their investment.
Conclusion
Establishing a company has been one of the best ways to expand your business and ensure its success. You will be free of liability, Yet lower tax rates will allow you to focus on growing your business into the profitable venture you desire. If you’re unsure which business structure is best for you, a business lawyer can help you figure it out. Contact Vakilsearch and let us assist you.
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