Setting up a company may be the first step people think of when coming across starting up a business. Although that is not always the case, there are other structures also available for running a business like mentioned in our previous post “comparison-on-business-structures-in-Australia”. Thus a company is still the most common form that people operate their business under.
Here are the 7 steps on forming a company and get ready to operate.
A company is a separate legal entity that is apart from the individuals who run it. You must register a company with the Australian Securities and Investments Commission (ASIC) and operate a business across Australia without having to register in each state and territories.
Assuming you have decided a company as your business structure, the steps to set up a company are set out below.
1. Choose a Company or Business Name
In choosing a company name you should consider the following:
- You do not have to have a company name if you wish. If you do not use a company name, you can use the company’s Australian company number (ACN) as the company name such as 123 456 789 Pty Ltd;
- In Australia, most companies’ names end with proprietary limited or Pty Ltd companies.
- You can only choose a name that is available (not been occupied by another company or business name yet). Here, you can search in ASIC and reserve the name prior to registering a company;
2. Choose the State/Territory To Register Your Company In
A company can be registered in any state or territory of Australia. You must set up a company in one of the states or territories. You may also be required to register for GST. Once you are registered, you will receive a certificate of registration.
3. Choose the Principal Place of Business and Registered Office
A company must nominate a principal place of business and registered office.
If the registered office is not at premises occupied by the company then the occupier’s consent must first be obtained.
4. Prepare Your Company’s Rules or Constitution
Before you start a company you must decide what rules will apply to govern the company. This can generally be:
- the replaceable rules from the Corporations Act, which means that the company does not require its own written constitution; or
- a constitution; or
- a combination of the two.
However, if the company is a sole director or member proprietary company, you do not need a constitution.
5. Decide Your Shareholders and Officers
You must decide who will be the members (shareholders) and officers (directors and secretary) of the company. A company’s directors are the people who make decisions in the company. You must have at least one director ordinarily resident (live) in Australia and each director must be at least 18 years of age.
You must obtain written consent from each person who has agreed to act as a director of the company and who has agreed to become a shareholder of the company.
6. Allocate Your Company Shares
After you have chosen your shareholders you must allocate how many shares will they each own and what class of shares will they own. Ordinary shares are the most common. There is also another class of shares, which may have different rights on voting on company affairs and receiving dividends.
7. Complete the Relevant Paperwork
After you have made all the decisions in steps 1 to 6 above and obtained the relevant consents then you can register the company with fillup relevant application forms with AISC or through BOA & Co. as registered ASIC agent so we can make the process much easier for you.
Do you need professional assistance to set up your own company? Call BOA & Co. accountants in Chatswood on 02 9904 7886 and our specialists will be pleased to assist you.