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Open Limited Liability Company in Australia

Open Limited Liability Company in Australia

The limited liability company is a legal entity that can be found in Australia as well, as this business form is prescribed by the commercial legislation of almost all countries. The limited liability company in Australia is seen, from a legal point of view, as a separate entity from its founders, with separate assets and debts

The limited liability company in Australia can also be referred to as a private proprietary company. An aspect that should be clarified from the beginning is that this company type does not require a minimum share capital and this can be an advantage when calculating the start-up costs necessary for investing here. If you need further information on the advantages that can be offered by a limited liability companyour team of specialists in company formation in Australia remains at your disposal; you can also address to us if you want to know how to open a bank account in Australia

The characteristics of a limited liability company in Australia in 2024 

Foreign investors who want to open a company in Australia operating as a limited liability company must know that they can easily set up this legal entity, as there aren’t any restrictions applicable to foreign businessmen. However, when registering the limited liability company in Australia, investors should know the following: 

  • the company needs at least 1 shareholder for its incorporation;
  • this company type accepts a maximum of 50 shareholders;
  • it is necessary to appoint 1 director and 1 resident director;
  • the directors must meet the minimum age requirement, which is of at least 18 years old;
  • according to the Business Section of the Australian Government, which is coordinated by the Department of Industry, Science, Energy and Resources, the application for registration can be completed in 15 minutes;
  • if all the documents are correctly completed and submitted with the local institutions, the limited liability company in Australia can be incorporated in minimum 2 days and maximum 5 days. 
 Quick Facts  
 Types of LLCs  Australia does not have a limited liability company (LLC), but it offers its equivalent, in the form of the Proprietary Limited Company (Pty Ltd), which has similar traits with the LLC.  The Pty Ltd is the sole type of LLC. 

 Most suitable for 

 Investors can open a limited liability company in Australia if they want to start a small and medium-sized enterprise.

The LLC can be used for most of the economic activities and it represents the most popular company type chosen for incorporation. 

 Minimum number of shareholders 

 1 shareholder

 Maximum number of shareholders (if applicable)   50 shareholders 
 Law regulating the procedure to open an LLC 

 The Corporations Act 

 Institution in charge with the registration of the LLC 

 The Australian Securities & Investments Commission (ASIC)

 Director requirements 

 1 resident director with an age of minimum 18 years old.

The director must apply for a director identification number. 

 Corporate taxes 

 – corporate tax (30% – standard rate, 27.5% – reduced rate);

– capital gains tax;the payroll tax (it varies from one state to another, from 4% to 6.85%);

– 10% – the Goods and Services Tax (GST – the equivalent of the VAT);

– withholding taxes on interest, royalties and dividends (it varies from 0% to 30%, depending on the country of residence of the recipient party). 

 Minimum requirements to open an LLC  

 In order to open a limited liability company in Australia, the following steps are necessary:

– reserve a company name with ASIC;

– obtain an Australian Company Number (ACN) and an Australian Business Number (ABN);

– draft and sign the company’s bylaws;

– obtain a Tax File Number (TFN) and register for GST;

– open a corporate bank account;

– find a suitable address for the headquarters of the company. 

 Apply for a business number (yes/no)  Yes
 Foreign ownership rules 

 Foreigners can set up a business here without having to partner up with an Australian citizen/resident. 

 Who can register an LLC 

 Foreign individuals and companies, foreigners who have their residency in Australia and Australian citizens. 

 Statutory documents of an LLC 

 Investors can open a limited liability company in Australia by signing the replaceable rules and/or the constitution. 

 Documents to prepare for the incorporation 

 – shareholders details;

– the identity documents of the shareholders and directors;

– if the shareholders are other companies, then it is necessary to present the incorporation documents of said companies, certificates of registration, recent tax reports, etc.;

– registration forms;

– certified translations, if necessary.  

 Audit requirements (yes/no)   Yes (but only when certain thresholds on revenues, assets and employees are met).  

When opening this business form, investors have to be aware of the fact that they have the legal obligation of preparing financial statements during each year of financial activity. More than this, the company may also need to be registered for the Goods and Services Tax (GST) in the case in which the company’s sales reach a value of more than AU $75,000. Extensive details on how to register for tax purposes can be offered by our team of consultants in company incorporation in Australia.  

The advantages of company formation in Australia for a limited liability company are not limited to the aspects that we presented above; investors can benefit from additional rights that are prescribed by the national legislation, which provide the possibility of a flexible business environment. Some of the highlights that can be an interest for an investor opening a limited liability company are the following: 

  • the investor can rent the office premises for the company prior to completing all the steps for company formation in Australia;
  • the local or foreign businessman has the right of developing a business activity through a limited liability company by renting the services of a virtual office;
  • the legal entity can be used for carrying business operations on the Australian territory;
  • the company can enter commercial contracts with local clients and it can also issue invoices to local clients;
  • through this business form, the investor is allowed to import in Australia raw materials;
  • the company can also enter export operations from Australia

In Australia, the immigration law provides the right to foreigners to relocate here for employment purposes, which can be done based on a temporary employment contract or a long-term employment contract (employees can work part-time or full-time). When opening a limited liability company in Australia, investors are allowed to hire foreign workforce. In case you need immigration assistance in another country, such as Portugal, we can put you in contact with our local partners – Immigrate-Portugal.com.

In almost all the situations prescribed by the immigration law (few exemptions do apply), foreigners will need to obtain a work permit, which is issued when the formalities for a work visa are completed following the applicable immigration procedures. Businessmen who want to hire foreign workforce should know that these formalities can be completed in a period of approximately six months, but this can vary depending on the work visa applicable to a foreigner; for more details on how to employ foreign workforce, we invite you to address to our specialists in company incorporation in Australia

The procedure for company formation in Australia has not been modified in 2024, thus, foreigners who are familiarized with the local incorporation requirements do not have to update their knowledge; however, investors who are new on the Australian market and who want to start a business in 2024, will need to learn plenty rules and regulations and here, our team of consultants can be of help for those who want to register a limited liability company, as well as for those who are interested in other company types. In case you need assistance for developing your company’s website, we recommend our partners – Clientpedia.com.

What licenses are necessary to open a LLC in Australia in 2024? 

When determining the types of licenses that can be required for an Australian business, the investors should first take into consideration the company type under which they will develop their business operations, the types of activities that will be carried out here, as well as the location of the business. 

Australia has a variety of licenses, and they can slightly vary from one state to another; the industry in which the company activates is also of importance, while the local laws can also influence the overall types of licenses one has to obtain during the process of company formation in Australia

If you are not sure what are the licenses that you must apply for, our consultants remain at your disposal. It is important to know that the Australian authorities have created an online platform that should ease the process of finding out the required licenses or permits necessary for a business, as any interested party can use the Australian Business License and Information Service

Still, if you do not know how to use the platform or you need qualified advice, in the process of opening a company in Australiaour consultants can advise on the entire set of documents you must obtain, including the licenses and permits for your business. 

For instance, if you will open a LLC in Australia that operates in the catering industry as a delivery service, which is now very popular, following the rules, regulations and restrictions of the Covid-19 pandemic, you will require different types of licenses compared to a catering unit that sells coffee and tea. 

If you are interested in starting a business in another country, such as Malta or the Netherlands, we can put you in touch with our local partners.

What are the registration costs for a company in Australia? 

Please be aware that the process of company formation in Australia does imply the payment of various fees; additional costs can appear from registering an office and other similar aspects. As we presented earlier, a local company, including the limited liability company, has to be registered with the Australian Securities and Investment Commission

The registration itself has specific fees, which are prescribed by the Corporations (Fees) Act 2001 and Corporations (Review Fees) Act 2003. The fees are updated each year, on 1st of July, in accordance with the modifications deriving from the consumer index prices. As of 1st of July 2020, those who wanted to set up a company in Australia had to pay the following fees: 

  • if the company is registered under the Section 118 and if the company has a share capital, the fee is of $506;
  • if the company does not have a share capital, then the fee will be of $417;
  • if the company is registered under the section 601 BD, there are 2 fees – of $417 and of $506;
  • the registration of a foreign company in Australia is charged with a fee of $ 506;
  • the change of any type of information related to a legal entity is charged with a fee of $9. 

However, under the latest modifications (as mentioned above, the fees are adjusted on a yearly basis following the consumer index prices), the fees for 2024 have been slightly changed.

Those who will set up a business in 2024 will need to follow the latest prices adjustments, which was done in July 2023. Please mind that the fees can further change in 2024, more exactly, starting with July 2024, when the authorities will be able to modify (if required) the current prices.

At the moment, those who will register a company as per the rules of the Section 118 are required to pay a registration fee of $576 for a company with a share capital, $474 for a company without a share capital, for a company registered under the 601 BD, the fees will be either $474, either $576.

Changing company information in 2023 was charged with the same fee mentioned above, of $9, but those who will modify company data in 2024, at least up until 1 July 2024, when the new fees adjustments can be made according to the law, will need to pay a fee of $10. There is the possibility of maintaining the same fee after this date, but this will be decided based on the Consumer Price Index (CPI) established for 2024.

The fees have gradually increased in the last years for company registration in Australia, but this trend can be observed in other countries as well.

What are the main taxes for a limited liability company in Australia? 

A limited liability company in Australia represents an entity that is liable to taxation, as the main purpose for which is set up is to obtain an income from the sale of various goods or services. One of the main taxes applicable to this company type is the corporate income tax, which is charged at the standard rate of 30%.  

A lower rate of 27.5% was available for companies which are included in the base rate entity or in the small business entity categories, but this rate has been lowered for the same class of businesses to 25%. The characteristics which provide the possibility of a legal entity to be included in one of the two categories are given by the annual income and the percentage of the passive income obtained by the respective companies; an extensive presentation on these aspects can be offered by our specialists in company formation in Australia

Companies in Australia are also liable to the payment of the capital gains tax, which is applied to the disposal of assets of legal entities. This tax can also be charged to foreign companies, but only to the assets they purchase and use in Australia. It must be observed that the tax can also be imposed to small businesses, but only in certain conditions. 

The video below offers a short presentation on the limited liability company in Australia

A limited liability company is liable to the payment of the Goods and Services Tax, which represents a national consumer tax applied to almost all the goods and services sold on the Australian market; this tax represents an equivalent of the value added tax that is applied in most of the world’s jurisdictions. 

As a company developing a commercial activity here, it is also necessary to pay the payroll tax, charged on the activities developed by the company’s employees. Businesses can also be liable to the payment of the land tax or the fringe benefits tax. 

What are the basic steps for company incorporation in Australia? 

Regardless of the company type that is selected for incorporation in this country, the company’s founder has to follow a set of steps when registering with the local authorities. One of the basic aspects necessary when registering a limited liability company in Australia is to select a company name that meets the provisions of the law. 

A suitable name has to be unique at a national level. In Australia, it is accepted to include various characters in the company’s name, besides letters (numbers are accepted, such as are the following signs: “&”, “-“, “:”, “,” and others). The trading name must also reflect the legal entity under which the company operates. Thus, in the case of a limited liability company in Australia, investors will have to add at the end of the company name the abbreviation “Ltd.”, used for this company type. 

The reservation of a company name in 2024 costs $59, for companies that have registered under the Section 152(1). The same fee is charged when requesting for an extension of the reservation of the company name, as per the rules of the Section 152(2).

Those who want to set up a company in Australia must also take the necessary measures in order to obtain a company number, which is compulsory for all legal entities operating here. The number is obtained from the Australian Securities and Investments Commission. The Australian Company Number (ACN) has to appear on all official company documents. 

Another important step that provides legal personality to a limited liability company in Australia is drafting and signing the company’s bylaws. The statutory documents must include specific provisions that specify the manner in which the company can function, what the basic objects of activity are, it states its registered office, the rights and the obligations of the shareholders and numerous relevant matters; you can request assistance on the applicable regulations from our specialists in company formation in Australia.  

After the company’s documents are signed and after the company has obtained an identification number and registered with the necessary institutions, the company’s representatives have to open a corporate bank account and this procedure can be completed at commercial banks operating in Australia

The time frame for company incorporation in Australia is two days, while in the neighboring country New Zealand, it takes up to a week for setting up a company.

What are the bylaws of an Australian limited liability company?

As said above, the bylaws of an Australian limited liability company (LLC) represent the founding document, through which a company gains legal personality and it is recognized on the Australian territory, as well as in the relation with other jurisdictions. Depending on the company type selected during the process of company registration in Australia, there are different bylaws. 

However, for those who want to open a LLC in Australia, the bylaws will always be represented by the memorandum and the articles of association, who are currently known as the constitution of the company. This is given by the fact that the commercial law in Australia was modified in 1998, changing a set of provisions that referred to the bylaws of companies. 

In this particular case, it is important to know that all companies that were incorporated in Australia before July 1998 are still governed by the articles of association and the memorandum, and these two documents are still recognized as official founding papers for LLCs that were incorporated before the new law and that are still operating today.

For LLCs that were registered after July 1998, the founding document is represented by the constitution, but companies are not limited only to this document, as they have the option to set up a governing system following the rules of the Corporations Act 2001, which prescribes the right to use the replaceable rules. Currently, investors who want to open a LLC in Australia can even use a combination of the company’s constitution and the replaceable rules. 

The replaceable rules refer to a set of rules which can be incorporated in the constitution of a company or they can be replaced by rules established by the company’s founders, of course, in the limit of the law. This provides a more flexible approach regarding the constitution of the company, its management and other basic matters that are regulated by the bylaws of a legal entity. 

Currently, the Australian institutions prescribe a set of 39 rules that can be replaced by the company’s founders. These rules apply to limited liability companies, but it must be observed that they can’t be used for LLCs where there is a single shareholder, who is also the director of the company. In the list below, our team of consultants in company registration in Australia has prepared a short presentation on the main aspects governed by the replaceable rules: 

  • the powers of company’s directors, the voting rights and the completion of various transactions;
  • the rights of a managing director, when can a company appoint a director and other matters regarding the appointment of directors;
  • when can a director resign and when can company’s members be removed from the company;
  • when can directors’ meeting be organized and when the directors can review the company’s books of accounts;
  • the meeting of members, the votes of the members, the issuance of shares and numerous others.  

Investors interested to open a LLC in Australia are invited to request additional information on this subject from our team, who can help you draw the constitution of the company and introduce replaceable rules in accordance to the need of your business. Our consultants can offer further advice on the 39 replaceable rules currently applied here. 

In this case, the banks have the right of requesting a wide range of company documents, as per the regulations of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. We invite you to contact our team of consultants, who can easily help you open a company in Australia

Foreign investors who want to open a company in Australia have many options besides the LLC. They can operate as self-employed investors, they can open a branch office or they can incorporate a holding company.

Each of them have certain conditions to comply. Of course, each one of them is suitable for particular activities and this can also take into consideration the size of the business.

Investors who are willing to set up a company in Australia can have various business opportunities in specific sectors. For instance, the Australian Trade and Investment Commission mentions that investors can have certain advantages in various fields.

This can refer to digital technologies, health, energy, defence, agribusinesses, infrastructure, space industry or manufacturing.

When investing here, one also has the possibility to start a business through a shelf company in Australia. The shelf company can be incorporated as an LLC.

The shelf company designates a legal entity that has been incorporated for the purpose of being sold, and it also never developed any business operations. It is advantageous for those who want to avoid the incorporation procedure.