Contents
Thinking about taking your business to the next stage, but finding yourself unsure about the difference between a company and a corporation in Australia? You’re not alone. With so many terms thrown around – company, corporation, Pty Ltd, ACN – it’s easy to feel uncertain about what these structures really mean or which is right for your business dreams.
Choosing the right legal structure is a crucial decision. It affects your personal risk, how you raise money, your tax obligations, and even your ability to attract co-founders or investors. Understanding the distinctions between a company and a corporation isn’t just about ticking the right boxes – it’s fundamental to starting (and growing) your venture with confidence.
In this guide, we’ll demystify the difference between company and corporation in Australia. We’ll break down key concepts, explain where the terms overlap (and where they don’t), and help you make an informed choice for your business’s future. If you’re hoping to set up a business, this is essential knowledge so you can move forward with clarity.
What’s the Difference Between a Company and a Corporation in Australia?
Let’s start by answering the big question: is a corporation the same as a company in Australia?
The short answer is, in Australian law, the terms “company” and “corporation” are used almost interchangeably – but there are some subtle differences in meaning and context. Here’s what you need to know.
What Is a Company?
In Australia, a company is a specific type of legal entity that’s created when you register under the Corporations Act 2001 (Cth) with the Australian Securities & Investments Commission (ASIC). A company is its own “legal person” – separate from you, as the owner or director, and able to own property, enter contracts, sue, and be sued in its own name.
- Limited liability: If your business is a company, your personal assets are generally protected from business debts or lawsuits, as long as you follow the law.
- Separate entity: The company exists independently of its owners (shareholders) and managers (directors).
- Types of Companies: The most common is the private company (Pty Ltd), which is suitable for small to medium businesses. There are also public companies (Ltd), not-for-profits, and more – each with its own rules.
If you want more detail on company setup, check out our guide to starting a small company.
What Is a Corporation?
The word corporation is broader and a little more technical. In legal terms, a corporation is any body or group that is incorporated (made into a separate legal entity by law). In Australia, almost all companies are corporations – but not all corporations are necessarily companies.
- A company is always a corporation, because it’s incorporated under the Corporations Act.
- Some other entities (like statutory bodies created by Acts of Parliament) may be corporations, but not companies as defined in the Corporations Act.
- In everyday business language, though, “corporation” and “company” usually mean the same thing – especially when talking about business registration, ACN, or “Pty Ltd”.
The Corporations Act 2001 is the main piece of legislation regulating both companies and other types of corporations in Australia.
Key Takeaway
If you’re a typical Aussie business owner, there’s no practical difference for your purposes: registering a company means creating a corporation under the law. Nearly all references to “corporation” in business, tax, or legal matters are talking about companies as defined in the Corporations Act.
That said, it’s smart to be aware that “company” is the term you’ll see on ASIC forms, government websites, and official documents in Australia.
Why Does It Matter? Choosing the Right Legal Structure for Your Business
So, should you set up a company, or is there another path? Choosing a business structure is one of the most important steps in turning your idea into a reality. Let’s look at your main options and where companies/corporations fit in.
Main Legal Structures in Australia
- Sole Trader: You run the business as an individual, using your own ABN. Easy and low-cost, but you’re personally liable for business debts.
- Partnership: Two or more people or entities run the business together. Simple, but partners share liability (unless it’s a limited partnership).
- Company (Corporation): As above, a distinct legal entity. Offers limited liability, more credibility with investors and customers, and easier options for selling or transferring ownership.
- Trust: Assets managed by a trustee for beneficiaries. Useful for asset protection and tax planning, but complex to set up and administer.
Most startups and growth-minded businesses choose to incorporate as a company at some point for these key advantages:
- Limited liability
- Easier to raise capital (sell shares, attract investors)
- Continues even if owners change
- More options for employee incentives (like share schemes)
- Perceived trust and professionalism (“Pty Ltd” after your business name shows you’re a registered company)
Want a step-by-step breakdown? See our guide to choosing between a partnership and a company.
How Do You Register a Company (Corporation) in Australia?
If you’ve decided that setting up a company is right for you, it’s important to understand the process. Registering a company (and becoming a corporation) in Australia is regulated by ASIC and involves a few clear steps.
Step 1: Plan Your Structure
Decide the type of company (most commonly a proprietary company, “Pty Ltd”). Consider:
- Who the shareholders are
- Who will be directors and the company secretary
- Share structure (number of shares, rights attached)
If you have co-founders, it’s wise to discuss and document your arrangements clearly at this stage, often in a Shareholders Agreement.
Step 2: Choose a Company Name
You can register any available name, subject to ASIC’s rules (such as not being identical to an existing registered name and not being misleading). You can also register under your ACN (Australian Company Number) and add a business name later.
For tips on selection and protection, see our guide to business name availability and registration.
Step 3: Prepare Essential Company Documents
- Company Constitution: The rules governing how your company operates. You can use the replaceable rules under the Corporations Act, or adopt your own constitution. Get yours professionally drafted for peace of mind.
- Shareholder/Founder Agreements: Not required by law, but strongly recommended to clarify roles, responsibilities, and dispute resolution amongst owners or key people.
Sprintlaw can assist with all documentation, tailored to your needs.
Step 4: Register with ASIC
Lodge your application with ASIC (either directly or through a legal provider) and pay the fee. You will receive:
- Your ABN (Australian Business Number), if you don’t already have one
- Your ACN (unique Company Number)
- A certificate of registration
After this, you are officially a company and legally a corporation under Australian law.
Are There Other Types of Corporations in Australia?
If you look at the Corporations Act, the word “corporation” covers a few more things than just your typical Pty Ltd or Ltd business. These include bodies corporate formed by statute (such as local councils), not-for-profit organisations, and Aboriginal and Torres Strait Islander corporations (which have their own separate rules).
However, for 99% of business owners, “company” and “corporation” are functionally the same. The registration process, the rules you follow, and the documents you’ll need all revolve around the idea of a company as the standard incorporated business vehicle.
If you want to dive deeper, see our overview of the difference between public and private companies.
What Laws and Obligations Does a Company Face?
When you register a company in Australia, you commit to a series of ongoing legal and compliance obligations:
- Annual statements (ASIC requires companies to confirm their details and pay a yearly fee)
- Financial recordkeeping (must keep accurate accounting records)
- Tax registrations (such as GST if you expect annual turnover above $75,000)
- Legal duties of directors and secretaries (must act in good faith, avoid conflicts of interest, and more)
- Updating ASIC about major changes (such as changes in ownership or officeholders)
- Compliance with the Corporations Act 2001 in all aspects
The aim here is to balance the trust society places in companies with certain levels of oversight and transparency.
To understand these obligations in plain English, our guide to the duties of company directors is a useful read.
Do I Need Any Other Legal Documents?
Setting up a company or corporation isn’t just about registering with ASIC – it’s about building a framework that supports growth, protects you from risk, and ensures smooth operations. Most companies will need more than just a constitution:
- Shareholders Agreement: Outlines how ownership, voting, share sales, and disputes are handled.
- Employment Contracts: If hiring staff, contracts clarify rights and responsibilities (and are a Fair Work requirement).
- Privacy Policy: If your company collects any personal data online or offline, you need a compliant Privacy Policy under Australian privacy law. Learn why and when you need a Privacy Policy.
- Terms and Conditions: If you offer services or sell products (including online), well-drafted terms and conditions set out your relationship with customers and help limit your liability.
- Non-Disclosure Agreement (NDA): When discussing confidential business information with employees, suppliers, or potential partners.
Not every business will need all of these from the beginning – but it’s far easier and safer to put them in place early with help from legal experts.
If you’re unsure which documents are relevant, our guide to legal documents for business gives a useful summary.
What Are the Key Benefits of Setting Up a Company?
Choosing a company/corporation structure isn’t right for everyone – but it does give you some strong advantages over operating as a sole trader or partnership. These include:
- Personal asset protection (liability is limited to company assets, not your own, except in cases like fraud or director breaches)
- Flexible ownership (easier to bring on investors or co-founders)
- Continuity (the company goes on if you leave or sell)
- Greater business credibility and trust
- Tax planning opportunities (some potential benefits vs. sole trader, but professional tax advice is recommended)
However, companies involve more regulatory “paperwork” and costs compared to sole traders or partnerships. For a full comparison, you can read our article on sole trader vs company.
Common Questions About Companies and Corporations in Australia
Is a Corporation Always a Company in Australia?
Yes – every company in Australia is a corporation. But the term “corporation” is slightly broader in law (it can include other incorporated bodies). For almost all practical business purposes, company = corporation = Pty Ltd or Ltd entity.
Is a Corporation the Same as a Company?
In Australia, yes in almost all business and legal situations. The main exception is when the law uses “corporation” to describe other unique statutory entities, which doesn’t affect standard private or public companies.
Can a Sole Trader or Partnership Be a Corporation?
No. Sole traders and partnerships are not separate legal persons – they are not corporations. They rely on the individuals behind them for all legal rights and obligations.
Do I Need a Lawyer to Register a Company?
You can use ASIC’s online forms, but getting the internal rules, constitution, and other agreements right from day one is critical to avoid disputes, misunderstandings, and compliance headaches. Consulting a business lawyer can ensure you start on strong legal footing.
Key Takeaways
- In Australia, a “company” is a specific type of corporation registered under the Corporations Act 2001; for business owners, company and corporation mean the same thing.
- Registering a company (Pty Ltd or Ltd) is a popular choice for businesses wanting limited liability, easier capital raising, and a strong foundation for growth.
- Your company must comply with ongoing legal and reporting requirements, including director duties and annual ASIC statements.
- Setting up a company requires critical legal documents – including a constitution and often a shareholders agreement, privacy policy, and terms and conditions.
- Choosing the right business structure is a key step; consider your business plan, growth goals, and risk appetite. When in doubt, seek legal guidance.
If you’d like a consultation on the difference between a company and a corporation, or help setting up the right structure for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
Meet some of our Business Set Up Lawyers
Get in touch now!
We'll get back to you within 1 business day.
Book in a free consultation with us to discuss your legal needs.