Guide to open a company in Australia
Companies that want to do business in Australia may make the decision to set up a company here in order to expand their business and have local involvement with their staff.
Australia’s labor market is focused and driven and having a separate legal entity may provide you with greater flexibility and control over your business and workforce.
Streamline your entity setup
Australia company setup
There are several pathways to establish a separate business presence in Australia. Information that you should know about these various options and economic, tax and regulatory requirements are discussed below.
Limited liability company
The limited liability company option can be completed in Australia with a single shareholder. This option is sometimes referred to as a “private proprietary company.” A director and resident director are required. This option is the most popular one in the country and is commonly used by foreign investors who plan to perform trading business activities or provide various types of services in Australia.
There is no minimum paid-up capital requirement to establish a limited liability company in Australia. LLCs in Australia must prepare annual financial statements. If they have annual sales in excess of AUD of $76,000, the must register and report GST if their annual sales.
A proprietary, or subsidiary, company can be formed by incorporating a new company or acquiring an existing company. These companies cannot have more than 50 shareholders who are not employees. There is no limit on the percentage of foreign ownership to form this type of entity. The business must have a registered office in Australia and a postal address on its own is not sufficient to meet this requirement. Additionally, an Australian resident must serve as a director and the company must have a secretary.
There is no minimum share capital requirement to form this type of entity as long as an investment is made. The liability of shareholders is equal to the unpaid amount of their shares. This type of business is responsible for reporting their accounts for the subsidiary to the Australian Securities and Investments Commission. The parent company’s financial reports need not be shared.
Limited liability partnership
When two or more professionals want to go into partnership together, they may incorporate a limited liability partnership in Australia. This framework is often used if the business will provide legal and accounting services to clients in Australia. One of the partners must be residing in Australia.
Under this arrangement, the partners are personally liable for the activities of the partnership and for the contribution that they make to form the partnership. The corporate tax does not typically apply to this type of business. Instead, the income is deemed to the partners and is taxed as personal business income. The partnership is subject to GST and employer registrations.
Australian public limited company
An Australian public limited company, or unlisted public company, is formed after appointing a minimum of three directors, at least two of whom must be residents of Australia. They must meet similar requirements as those of a proprietary company. This type of entity is required if the company will be listed on the Australian Stock Exchange. Financial statements from an Australian public limited company must get audited.
Australian trading trust
Some businesses use a unit trust company to create a separate legal entity in Australia. This is an alternative to a trading company. To form this type of entity, the trustee must register the trust with the Australian Companies Registrar and the local tax authority. After it obtains a tax file number and Australian business number, the company can begin conducting business activity. A resident must serve as a trustee if all the other trustees reside in another country. Alternatively, a public officer can be appointed. The corporate income tax does not apply to this type of entity. Beneficiaries are taxes individually.
A branch office may be the easiest entity to form if a business only wishes to manage the company overseas and does not want to incorporate a company in Australia. There is no limit on foreign ownership of branch offices. The company must register the branch office as a foreign company under the Corporations Act. It can hold property in the name of its secretary or another officer.
To establish this type of entity, a local agent must be appointed to accept legal notices on behalf of the foreign company. There must also be a registered address in Australia. The branch is required to submit financial statements to the Australian Companies Registrar. Additionally, financial accounts for the local branch office must be reported to the Australian Securities and Investments Commission. The parent company’s financial reports must also be provided.
A representative office is sometimes used when a business has not yet expanded to Australia and wants to conduct market research to see how its product or service will be received by the local market. Representative offices are only permitted to conduct limited, non-commercial activities in Australia, such as completing promotional activities.
At least one director or officer is necessary to establish a representative office. He or she must be a resident of Australia. Other directors or officers need not be residents.
Your partner in employment solutions
Horizons can help you set up your company in Australia quickly, efficiently and compliantly. Our specialists can explain the requirements of each type of entity as well as the advantages and disadvantages of using that particular business structure. This in-depth understanding will help you make an informed decision about the type of business entity to establish in Australia.
Horizons also offers additional employment solutions, including recruitment and PEO services. Our business services for Australia allow you to outsource the responsibilities associated with being a direct employer of a staff. Our innovative solution allows you to delegate administrative functions to our talented team of experts while you maintain day-to-day control over your staff. This solution allows you to work within a defined budget, scale your business up or down as the market requires and insulate you from liabilities associated with employment. Because Australia’s labor laws are so complex, using a PEO allows you to delegate the responsibility of compliance to a local, trusted team of experts.