Running your business as a company can offer many legal and tax benefits. When setting up a company for your business, you are creating a proprietary limited company (Pty Ltd).
A Pty Ltd is a private company with at least one shareholder and a limited number of shares. One of the benefits of a company is that the liability of the shareholders is limited to the number of shares they hold. For this reason, it’s one of the most popular company structures in Australia and ideal for small business owners.
When forming your company, you need to consider the following:
- Who will be the company directors
- Who will be the company shareholders
- The name of the company
The minimum requirement is to have at least one director and one shareholder and this can be the same person. To form a company, at least one of the directors must live in Australia and the company must have a physical address for the registered office; a post office box is not allowed for this purpose. Prior bankruptcy and certain criminal convictions can restrict director eligibility.
ASIC approves all company names and provides naming guidelines to fast-track approval. Company names containing foreign words or made up names often require manual approval from ASIC and can take longer to process.
On the company application form, the following information needs to be provided:
- Full name, residential address, date and place of birth for all directors
- Full name, residential address and number of shares for each shareholder
- Address of registered office
- Principal place of business
How you structure your business and company determine specific tax and legal implications. It’s a decision that shouldn’t be taken lightly and without professional advice. We recommend speaking to The Tax Factor first to discuss your situation prior to forming a company. We can explore several options and recommend the best approach for you.
Start the process today, call The Tax Factor on 1800 829 322 or complete our online form.