Company is a separate legal entity which offers limited liability to shareholders. A private (proprietary) company will be address as XXX Pty Ltd and a public company will be address as XXX Ltd.
Advantages of a company include that:
• liability for shareholders is limited
• shareholders’ ownership can be transferred to other party
• majority of the companies will have its tax rate decreased to 25%
• company can retain profit after paying income tax and can pay out retained profit later on as needed and franking credit can be passed on to the shareholders
• company has perpetuity and can trade anywhere in Australia
• company can employ directors and shareholders
• company can separate ownership from management team if needed
Disadvantages of a company include that:
• the company can be expensive to establish, maintain and wind up
• the reporting requirements can be complex
• if directors fail to meet their legal obligations, they may be held personally liable for the company’s debts
Step one – ASIC registration
You will need to provide:
• Company name & state of registration
• Registered and business address
• Number of shares issued, class of shares, cost per share, total amount paid and unpaid, whether the shares are being beneficiary hold or not
• Shareholders’ name, date of birth, address, contact details, place of birth and number of shares issued to the shareholder
• Directors’ and secretaries’: name, date of birth, address, contact details and place of birth
Under section 201A of the Act:
• A proprietary company must have at least 1 director, and that director must ordinarily reside in Australia.
• A public company must have at least 3 directors, with 2 directors ordinarily residing in Australia.
• A proprietary company does not have to have a sectary, but a public company has to have one
Step two – ATO registration
Once the company is established, you can register its ABN, TFN, GST & PAYG withholding by applying to the Australian Business Register.
Other Important issues
If a director or a shareholder happens to be a nonresident, extra information needs to be provided to the ATO, such as notarized ID and passport copy.
In some cases, you might need to seek FIRB’s approval to admit nonresident shareholders.
When a shareholder transfers its shares, market value rule will apply. The transferor might be subject to capital gains tax. The transfer could attract stamp duty where underlying asset is real property.
Contact us on email@example.com or 03 95338980 if you would like to know more about company and how it may works for you.
The Audit Shield insurance policy is not compulsory although we highly recommend that all of our clients take up the insurance. Consolid8 receives a portion of the premium and we hold the policy on your behalf. The policy covers one financial year and we will contact you prior to arrange renewal in advance of the relevant expiry date. The Audit Shield Insurance is not automatic and you must opt in to receive the cover.