Types of Companies in Australia

There are several types of companies in Australia, some of which are more suitable for individuals starting their own businesses, and some, more suitable for companies investing here. In general, businessmen opt to open a company in Australia as a proprietary limited company, which is the equivalent of the traditional limited liability company.

Our team of specialists in company formation in Australia can present the characteristics of each business form, so that investors can make an informed decision on the company that is more adequate with their business plans. Of course, our team can also assist through the entire registration procedure.

What are the main types of companies in Australia?

According to the legislation in Australia, investors, both local and foreign, can set up the following legal entities:

1. sole trader;
2. partnership;
3. proprietary limited company;
4. public limited company;
5. trust;
6. branch office.

These options provide different benefits and obligations and the decision to select one instead of the other should be based on the available capital, the estimated size of the business, the type of liability investors want to assume, and many others.

Opening a sole trader in Australia

For instance, in a sole trader, there can only be 1 founder, who is a natural person carrying out a business activity in his or her own name.

From a legal point of view, there isn’t any distinction between the company and the owner, thus the taxation of the business respects the personal taxation principles. This also implies that, in the case in which the company has debts, the owner is fully liable for them.

Even if the company and the owner are basically the same entity, the owner has the responsibility to apply for an Australian Business Number (ABN) and register for GST, but only if the company reaches a turnover of over $75,000 in a financial year.

Opening a private/public limited company in Australia

The most common way to start the process of company formation in Australia is by registering a private limited company (or proprietary limited company) or by opting for the public limited company. Both entities have similar traits and some of them are presented in the list below:

• they are both governed by the Australia Corporations Act 2001;
• the private company can be incorporated by minimum 1 shareholder and up to 50 shareholders while for the public one, the law does not impose a maximum number of shareholders;
• the private company must appoint at least 1 director, while the public company must have 3 directors, out of which 2 must have their residency in Australia;
• in both cases, registration for GST (the equivalent of the value added tax) is mandatory when the company reaches the same threshold mentioned above ($75,000).

Please mind that businessmen can skip the incorporation process if they opt to purchase a shelf company in Australia incorporated as a limited company. However, this does not mean that they will not have to abide by various registration formalities (such as changing the name of the owner, the objects of activity, appointing new directors, etc.).

The shelf company simply represents a more direct way to set up a company in Australia, as the company is already incorporated and benefits from the basic characteristics a legal entity should have. Our consultants in company incorporation in Australia can offer legal representation during the purchase process.

Our team can provide information on the other types of companies in Australia that have been mentioned here. For their registration requirements, fees and post-incorporation obligations (reporting, accounting, permits, etc.), we invite you to contact our team of consultants, who can offer the necessary support.