As an investor, you might be looking into setting up your own company in Australia. Setting up a company is a relatively more complex and costly process. Unlike other forms of business such as sole proprietorship and partnership, a company is considered to be a separate legal entity. This means that a company has similar rights to any individual. It can have debts, assets, liabilities, and bank accounts and it can also sue or get sued like any other person.

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This also means that there’s a lot more reporting and paperwork involved in setting up and running a company in Australia. In a company structure, all the assets and liabilities of a company are separate from that of the shareholders or the directors. The distinction between the shareholders and the directors comes from the fact that the former group is the actual owner of the company, and the latter are appointed or voted by the shareholders to run the company. Sometimes, the directors can also own a certain portion of the company shares, in which case they play both roles.

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Since the company’s assets and liabilities are separate, the director’s wealth can’t be used to pay off company debt in case something goes wrong. However, if the directors are found to violate their responsibilities, their assets may be used to pay off the company stakeholders.

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The company’s profit and loss statements are separately reported to the Australian Tax Office (ATO), which is subjected to the company tax rate. A company needs its Tax File Number (TFN) but one does not need to register the company for that as the ATO will create a TFN by default. However, it’s important to know that a company needs to have a public officer, and they also have to notify the ATO about that.

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A public officer is hired to ensure that the company is following all the tax laws and regulations, keeping detailed tabs on all the transactions and business operations. They also submit the company’s tax returns and in case of any issue regarding the company, the ATO contacts them.

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The company can employ staff, in which case the company needs to ensure that the staff are getting their minimum entitlement. The company is also required to set up and give superannuation to their employees.

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While setting up the company, it’s important to remember what kind of company is suitable for your business. There are two types of companies:

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• Proprietary Limited Company
• Public Company
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Both types of companies need to be registered with the Australian Securities & Investment Commission (ASIC). ASIC is a national corporate regulator that enforces laws to ensure the safeguarding of consumers, inventors and creditors.

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Proprietary limited companies are the most common type in Australia and are subject to certain restrictions.

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• They cannot raise any money from the general public. They need to have a minimum of 1 shareholder, and cannot have more than 50 non-employee shareholders.
• The company must have at least 1 director living in Australia, to help run the company.

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As an investor, if you want to be the sole shareholder and run the company by yourself, then this company structure allows you to do so. You can take the role of both the single shareholder and the director. The advantage of running a limited company is that in case the company goes into bankruptcy or incurs losses, as a shareholder your liability is only limited to the capital you have invested in this company, rather than having any of your assets seized to pay off the company debt.

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On the other hand, a public company can raise money from the public:

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• They don’t have any limit to the number of non-employee shareholders.
• To set up a public company, it needs a minimum of 1 shareholder, 1 secretary and 3 directors.
• Among the directors, at least 2 of the directors must be living in Australia.
• Similarly, the secretary should also be living in Australia.
• The company is also obligated to notify the ASIC in case of any changes to the officeholders, failure to do so might result in hefty penalties.

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To sum up, all the different registrations you need to undertake to set up your business are as follows:

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As a foreign investor, another important thing to note is what kind of visas are applicable for you so that you can legally set up and operate your business. Currently, business visas are provided under the Business Innovation and Investment Program (BIIP). There are four classes of BIIP:

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• Business Innovation Visa (188A)
• Business Investor Visa (188B)
• Significant Investor Visa (188C)
• Entrepreneur Visa (188E)

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Disclaimer: Kindly note that the information provided here does not constitute legal advice. This must solely be regarded as content that provides general immigration information and is not a substitute for professional legal advice that occurs between an immigration lawyer and a client.

Path Migration strongly recommends readers contact certified immigration lawyers for a holistic overview of the Australian immigration system and a detailed analysis of each case.