If you’re an up and rising entrepreneur looking to start your own business, but have no idea where to start, then this article is for you.
To start, you have to understand what company structures there are, and see which one best applies to you.
Companies in Australia acts as a separate legal entity from its owners. This means that companies have the same legal rights as a person would, such as being able to incur debts, have its legal responsibilities and can be taken to court. As the owner of your company, you are the director for the company’s management and operations. On the other hand, as a shareholder, you are only financially tied to the business.
There are 2 main types of companies you can choose- Private and Public companies.
Private companies are mainly proprietary companies, such as having an owner or have a trade name. Public companies can be classified as NFP (not-for-profit) or charitable organisation, registrable Australian body, or special purpose company. Learn more about business structure here.
Regardless of the type of company that you operate in, your company must be registered with ASIC (Australian Securities and Investment Commision), and you must complete the following 5 steps in order to complete your registration.
1. Choose a name for yourself
Your company name is an integral part of your business. Not only does originality and creativity matters when choosing a name for you company, the name should also reflect the company’s legal status, ensure that it does not breach ASIC’s naming conventions and has not been taken by another financial body in Australia.
If you’re a privately owned company, then your company name should include “Pty Ltd” to show the status of your company as a proprietary company. You should also take care in not naming your company with words such as ‘Bank’, ‘Trust’, ‘Royal’, ‘Incorporated’ without proper government approval, as these breach ASIC’s naming conventions for companies. However, you are allowed to trade under a different business name after you have registered your company’s name. For example, ABC Party Pty Ltd can trade and sign under as ‘ABC Party’ for their business.
2. Choose your company rules (constitutions or replaceable rules from Corporations Act)
There are two types of company rules- Replaceable Rules and Constitutions.
Replaceable rules are a basic set of rules, from the Corporations Act, which guides you on how you can manage your own company. These rules are a guideline for all Australian company which they have to follow.
On the other hand, Constitutions are a set of rules that you form for your company, but also has to be based on and according to the Corporations Act, and has to be kept in company records. With Constitutions, you can tailor your company rules based on the needs of your company, while you only need to follow the rules if you choose Replaceable Rules.
3. Officeholders/ Crucial members of the company
All companies will have to have an appointed secretary, director, and shareholders, which forms the members of the company. Each of your nominated member will have to sign a written consent to show they accept and understand the obligations of their position, which holds them accountable to the company and their compliance to the Corporations Act.
Some examples of common obligations for companies are ensuring that company details are up-to-date, maintaining company records and details on register, pay their lodgement fees and annual fees as required.
4. Share structure
Share allocation to shareholders is also crucial to the company. How many shares per shareholder, what class of shares they will be issued, these are some questions that you will have to think through. Normally, companies will offer ordinary shares to the members of the company, but they must not disclose any information to them.
5. Nominate a principal place of business
Companies will require to have a primary place of conducting business in the form of a registered office. If your registered office does not belong to your company, for example if your registered office is your accountant’s office, you are required to get a written consent from them to use their address for your company.
– Registering with ASIC
Register via the Australian Government Business Registration Service
One you have done the above 5 processes, you can begin lodging your application to register with ASIC via 3 following ways.
- the Australian Government Business Registration Service.
- Use private service provider through your accountant or solicitor
- Lodge a paper form directly with ASIC
Once you’ve completed your registration form, given out all required information, signed and paid for the lodgement fees, you will receive an Australian Company Number (ACN).
- After you have registered
Once ASIC has approved on your registration, they will send you a certificate of registration and a corporate key. The corporate key is a unique number that represents your company, and you are required to create an account online and make sure the details of your company are accurate.
As the owner of a registered Australian company, you have to make sure that your company’s name is on display when conducting business and is open to the public. You also required to show the ABN and ACN of the company on all documents that are published by the company.
Should you have any questions about setting up your own business, call BOA & Co. accountants in Chatswood on 02 9904 7886 and our specialists will be pleased to assist you.