The advantages and disadvantages of registering a firm in Australia

1. Costs for registration

From May 28th 2012, registration of business names in Australia is conducted nationally, with the government fee being $39 for a one-year registration period, and $92 for a three-year registration period.

Also, the registration of an Australian company is an Australian-wide “thing” and generally costs from $650 to $750 through a’shelf business provider’ or a ‘company registration agent’, and about $1200 or $1500 with an accountant.

There is no doubt that the registration of the business name is less expensive than registering a business. However it is true that the registration of the name of a company or company will eliminate having to create an official company name (on the assumption that the complete and precise business name, including the ‘name ending’ e.g. “Pty Limited” is always in use).

2. Costs for ongoing expenses

Name registrations for businesses must be renewed regularly, once their three-year or one-year registration period ends, the fee for renewal being $39 for an additional one year registration or $92 for a three-year registration.

Contrary to this, a (‘standard private) company is required to pay an annual ASIC Annual review cost of $230 (as as of July 1, 2012).

Furthermore, and speaking generally, businesses typically also have additional ongoing costs including additional accounting charges that are related to maintaining a properly maintained accounting system for company accounts.

3. Limited liability

The main (and long-standing, traditional and historic) advantage of incorporating a firm is that it has the benefit of having a limited responsibility. It is (and generalized) that a business can be obligated to make payments to creditors to the value of its capital and assets, as well as any funds that are not paid in respect of its stock (usually not a lot since the majority of companies issue shares that are fully paid when they are issued with a minimal amount like $1.00). Additionally, the company is a legal entity, or a ‘person’. In particular, a company is separate from its owners (its members/shareholders) and the persons who run it (its directors).

If we take a more general view and assuming that the directors have behaved in a fair and honest manner (and specifically, have not allowed the business to take on debts in a time they were aware that the company was not able to pay its debts in the time when they were due) and also assuming the owners or directors of the business have not or otherwise provided personal guarantees for the company’s obligations or debts that means their personal wealth of the directors as well as the shareholders or owners of the company aren’t at risk of (and consequently secured by) any creditors that the company has.

4. “Impression” created on people outside

Most of the time (rightly or incorrectly) strangers are more enthralled by the incorporation of a name for a business (ending with, for instance “Pty Limited”) as opposed to a simple corporate name that is registered. First of all, those who are well-informed’ are aware that it is more expensive to create a company than simply registering the business name. Therefore, a higher perception of ‘authority’ may be a result of having an Australian business.

5. Tax

Individuals (including when they trade under a simple company name registered with the government) are taxed at standard marginal tax rates with the highest tax rate (as as of 1 July 2013.) being 47 percent (including the 2 percent Medicare tax). Contrary to this, Australian companies are taxed at a flat corporate tax of percent (as as of July 1, 2013). However, this doesn’t mean that businesses will pay less tax. Why? Because personal tax rate is based on an uni-directional scale and contain the tax free threshold for initial income. However, businesses are taxed starting from the first dollar of income and have no threshold for tax-free profits. However, businesses could (or might do not) deductions that they can avail that individual taxpayers do not. Additionally, it is possible to be a little bit of trap for companies regarding taxes on capital gains. Why? because companies have to pay taxes on their capital gains, whereas people and trusts receive 50 percent from their gains without tax. Additionally, there are new tax rules for “personal service companies” that could, for instance, cause a business to not being allowed to get a tax deduction on wages paid to an “associated employee (e.g. the spouse of the sole director or shareholder). But all of this depends on you and you should seek advice from an accountant an additional analysis of this.


6. “Own” property, and to ‘deal in an firm

In a variety of circumstances, it is beneficial for individuals to own properties in, or trade with their company’s name their company , rather than their personal name. Furthermore, Australian company law now allows for a “one-person company’, that is, a business that is owned by one person as the sole owner (shareholder) as well as a director. In saying this however, one must always remember that a company is an entity separate from its owners & directors – it must not simply be treated as an ‘alter-ego’ of its owner(s)/director(s).

7. Attracting capital investment

Businesses may find it easier to get capital investment, or even investments, as opposed to a partnership. Why? because (passive) investors are certain that they won’t be legally obligated to provide additional funds to the business (i.e. beyond what they already paid, or have already agreed to pay for their shares) in the event the company is facing financial trouble (see the section titled ‘Limited Liability’). If, however, such passive investors made a contribution of equity funds to a company which is operated in partnership, and then become the’silent partner’ in the company, then they will be accountable to, and even liable for the obligations of the partnership. This is especially relevant should the business or partnership is in financial trouble.

8. Transfer of ownership and control

For companies that are limited to shares, it is the existence of the shares facilitates an eventual sale of the business (either completely or in parts). Why? because the shares of the company can be traded (either the entire amount or just some). Share capital can also aid in the introduction new owners (either through existing shareholders moving the entire or a portion or all of their shares over to the new owners or by the company issuing shares to shareholders who are new).

A 澳洲注册公司 structure permits any desired changes to the day-to-day management of the business and its business operations (i.e. through the resignation of all or a portion of the directors in the company and the appointment of replacements or other directors).

9. Perpetual succession

A company’s existence is perpetual (unless it is wound up) regardless of the death or retirement of its directors, managers and owners/shareholders.

10. Sometimes you simply ‘need’ a company

Example 1: You’re an individual contractor (e.g. one of the Australia Post courier) operating as an unincorporated sole trader with an agreement with a fixed-term term. The contract is due to expire and then will be renewed. It is possible that your employer changes its policy so that they will not renew your contract when you are an incorporated person’.

2. You decide to give your job as an employee to start a business on your own. You decide that the new company will be run as franchisee (for instance, as mortgage broker or the owner of a restaurant or pizza restaurant within a chain of enterprises). But you might find that the franchisor won’t permit you to buy franchises if you first create a company, and later purchase and/or manage the business under its name. corporation.