Posted by Minna Boyle on 8 November 2018
What Is A Company?
A company is a separate legal entity from the owners – it has the same rights as a natural person and can incur debt, sue and be sued. Setting up a company is often the best way to structure your business. It gives the owners limited liability, meaning they are normally not personally liable for company debts. Embarking on a new business venture is an exciting time, but it always involves a level of risk – registering a company can provide founders with an added layer of personal protection when achieving their business goals.
When Should I Do It?
Setting up a company can be done right from the start of your business journey. Think of it like the foundations of a house – do it properly from the beginning and it saves you a lot of complications later on.
That said, registering a company is more expensive to set up than other business structures, such as a sole trader, and has more regulatory requirements. If you need to get off the ground quickly, a sole trader structure may be easier – but we normally recommend registering a company as the business becomes more established. Aside from the liability protection, a company set up is also a less messy option where multiple people are going into business together.
How Do I Do It?
It is possible to DIY company registration in Australia, but this can be a daunting process if you’ve never done it before! At Sprintlaw, we have a team of experienced lawyers who can help you through the process and assist with any other legal issues that may arise on the way.
Company Registration Example 1: Investment
Alex has started a mobile app to coordinate dry hire arrangements. The app has good potential but Alex needs to raise some capital to develop the software and launch the product. Rather than take out a loan, Alex decides to register a company so that the company can issues shares to investors to help fund building the app.
Company Registration Example 2: Assets
Brodie and Simon decide to start a tractor dry hire company, using Alex’s great mobile app to co-ordinate the hire arrangements. They want to buy 3 tractors to hire out. At first, they plan on forming a partnership. When they go to buy the tractors, they realise that sharing the ownership of 3 tractors between 2 people would be awkward. Instead, Brodie and Simon register a Pty Ltd company where they are each 50% shareholders. They then used the company to buy and own the 3 vehicles.
Things You Need:
- SHAREHOLDERS AND DIRECTORS – The shareholders own the company and the directors control it. It is possible to be a sole director and shareholder if you’re starting a company by yourself. If there is more than one shareholder, you
will need a shareholders agreement – Sprintlaw can help you sort that out too!
- ABN – You will need an Australian Business Number (ABN) if you’re carrying on any business. This is an 11-digit ID you use to register for GST, PAYG, business name and more.
- ACN – You will need to register your company with ASIC, the Australian corporate regulator. This will give you an Australian Company Number (ACN), a unique 9-digit ID given to all companies by ASIC.
Need Help With Setting Up Your Company?
Registering a company can seem like a daunting process, as it’s hard to know if you’ve included everything you need. It’s a good idea to invest in a lawyer to assist you with this process, as it’s a one-off cost that can save you from other issues in the long run.
At Sprintlaw, we have a team of experienced lawyers can assist you with setting up your company. Get in contact with one of our consultants for a no-obligation chat on how we can help you register your company and help with any other legal issues your business may have.