Every day, many Australians choose to go into business for themselves. But just how does one go about setting up his or her own business? Company formation involves numerous steps including: business structure, name registration, officeholder consents, company registration and much more. Here are some basics to forming a company.
Is a Company Structure Right for You?
Various types of business structures exist within Australia, and forming a company does not suit everyoneâ€™s needs. Itâ€™s important that you understand company structures and your legal responsibilities when setting up a company and acting as an officeholder in Australia. Seeking sound legal advice is important when setting up your Australian-based company.
A proprietary company is the most common type of company structure in Australia. Other company structure types include not-for-profit, or charitable, companies, superannuation trustee companies and home unit companies.
Decide on a Company Name
A company name must show its legal status. For example, a proprietary company is required to have â€œPtyâ€ at the end of the name. The name you choose must be available and canâ€™t have been previously registered by anyone else. There are certain restrictions on what you can name your company. These restrictions are designed to disallow a person from naming their company with any misleading title that could make people believe you are a university, trust, building society, or associated with the government or Royal Family without prior consent. A company name cannot suggest anything offensive or illegal.
If youâ€™re looking to establish a company in the future, but want to ensure your name will be available, you can always reserve the name in advance. A name can be reserved for two months. You can also apply for an extension on this.
Identify How Your Company Will Operate
Companies operate under replaceable rules, their own constitution or a mixture of both. If you choose to operate your company under replaceable rules, you can use these for internal company governance instead of having a company with its own written constitution. When forming a company you also need to consider how the shares will be structured.
Understand Your Legal Obligations
As an officeholder, you can be a director or a secretary of the company. It is very important that you know what your legal obligations are as an officeholder. As an officeholder, you are held ultimately responsible for the company complying with the obligations set out by the Corporations Act.
Getting Required Consents
In order to actually register the company, you must have written consent from all directors, secretaries and members. If your company is going to use a solicitor or accountant as its registered office address, then this needs to be in writing.
Proprietary companies are required to have at least one director. However, they donâ€™t need a secretary. Any director, and secretary if applicable, must ordinarily be living in Australia. Directors and secretaries must be at least 18 years of age. Any company registered in Australia must have at least one member.
Register Your Company
Finally, youâ€™re ready to actually register your company. You may like to register your company directly through the Australian Securities and Investments Commission (ASIC) or you can use a company who specialises in setting up Australian companies. There is a form that must be filled out as well as a fee due to be paid.
Once the form has been lodged and the fee paid to ASIC, your company will receive an Australian Company Number (ACN) as well as a Certificate of Registration. Once registered your company must display its registered name prominently to the public. Some people also like to apply for an Australian Business Number (ABN).
After your company is registered with ASIC, you may wish to get a commemorative record of registration. This is optional and is simply an attractive record of your company registration that you can have framed and displayed in your office.
When you form a company with ASIC it is registered throughout every State of Australia, enabling you to conduct business right across the country.
Janine Deeks works for a company who specialises in forming companies, particularly proprietary companies, in Australia.