NEW BUSINESS • 5 NOVEMBER 2024 • 5 MIN READ

Top 9 things to think about when setting up a company in Australia

SECTIONS

1. What’s your company name?

2. Is your company going to be limited by shares or by guarantee?

3. Who are the directors and shareholders going to be?

4. Register your company with the ASIC

5. Other business and tax registrations

6. Get a company bank account

7. Choose an accounting software

8. Write a business plan and a budget

9. Hire a professional

Setting up a company is an exciting step towards your dream. However, it's important to be well-informed and prepared.

In this guide, we'll walk you through the top things to consider, from choosing a company name to understanding your legal and tax obligations.

1. What’s your company name?

Your company name (the one you register) doesn't have to be the name your customers know you by. You can use a different "trading name" for your day-to-day business.

Think of your registered company name like your legal ID – it needs to be unique and follow the rules. For example, you can’t use the same or largely similar name to another unrelated company. It’s also not allowed to contain any specific sensitive, abusive, offensive or illegal words. To check if the name is available, you can use this company name availability tool.

On the other hand, your trading/business name is more flexible, allowing you to create a brand that resonates with your customers. See more to register a trading/business name with ASIC.

2. Is your company going to be limited by shares or by guarantee?

Once you’ve decided to operate via a company structure, you need to decide whether your company is going to be limited by shares or by guarantee.

If you want to start a business to make money that you can personally benefit from, a "limited by shares" company is probably the best choice. This is the most common type of company. You own 'shares' in the company, and any profits are shared out among the shareholders.
If you're starting a non-profit organization like a charity or a club, then a public company "limited by guarantee" is the better option. This means the liability of the company’s members is limited to the amount members contribute. A public company must have at least three directors, one secretary and one member.

There’s more information on limited companies on ASIC’s website.

If you’re interested in knowing more pros and cons when setting up a company in Australia, read more details in our blog.

If you’re thinking about setting up as a company, Beany is here to help. Book a call with us to discuss your situation and how we can help with your accounting.

3. Who are the directors and shareholders going to be?

There are 2 main roles in a private company:

Shareholders: These are the owners of the company. They invest money in the company and in return, they get a share of the profits. This share of the profits is called a 'dividend'.
Directors: These are the people who manage the day-to-day running of the company. They make the decisions and ensure the company is operating smoothly.

It's important to note that one person can hold both roles. You can be a shareholder (owner) and also a director (manager) at the same time. Or, you could be just one or the other. Company directors are required by law to apply for a director identification number (director ID) and have director duties to the company.

Lastly, for Australian companies, at least one director must ordinarily reside in Australia.

4. Register your company with the ASIC

You may register a company with ASIC using the Australian Government’s Business Registration Service (BRS).

Once the company has been registered, you will also receive an ACN and a corporate key, which is a unique number for your company. You will need your corporate key to create an account online and update your details.

Ready to take the next step? Let Beany guide you through the company formation process, ensuring everything is done correctly and efficiently. Book a call with one of our team today.

5. Other business and tax registrations

Once your company has been registered, you may now apply for other registrations using the ABR website.

Australian Business Number (ABN): Once the company has been registered, you will need an ABN to start trading.
Tax File Numbers (TFN): You will need a TFN regardless of the type of business you are starting. Most businesses will apply for a TFN while completing their ABN application.
Good and Services Tax (GST): If your annual turnover reaches the GST threshold (currently $75,000), you'll need to register for GST. Once registered, you'll need to file regular GST returns, either annually, quarterly or monthly.
Pay As You Go (PAYG): If you have employees or you're a director taking a salary from the company, you'll need to register for PAYG. You will also need to withhold amounts from payments made to employees and send the withheld amount to ATO.

Read more on our blog: Guide to company taxes

6. Get a company bank account

When setting up a company in Australia, you should also consider opening a separate business bank account. This is because a company is a separate legal entity to yourself, even if you own it and run it. Any money the company makes or spends should come out of this bank account - it makes your company’s finances so much cleaner and easier, especially during the tax season!

7. Choose an accounting software

There is so much value in using accounting software, such as Xero, from the outset. A key benefit is that you can clearly see how your business is doing, and more specifically which products or services are doing particularly well or not so well.

8. Write a business plan and a budget

We all know the saying fail to prepare and you’re preparing to fail. This couldn’t be more relevant for a company.

Before you jump in, it's crucial to do your homework. Understand your customers, your competitors, and the overall market. Then, create a clear plan outlining how you'll reach your goals.

Also, it’s important to make a budget. This helps you keep track of your spending and spot any problems early on. Think of it like a roadmap for your finances – it keeps you on track and helps you avoid getting lost.

Read more: What is a budget?

9. Hire a professional

There is so much to think about when setting up a company in Australia, but if you do it right it can be a super exciting journey. If it’s completely new to you then it’s a good idea to get a professional, like an accountant involved. They can help with everything from checking if the company structure actually suits your needs, company registration, to filing year-end company tax returns.

Beany - your easy business accountant

Need a helping hand with setting up a company and more? At Beany, we specialise in making accounting and tax a breeze. Our team of experts can handle your tax compliance so you can focus on what you do best – running your business. Let Beany be your trusted accounting partner. Get in touch with us or register today.

Sara Tan

Lead Accountant

Passionate about telling stories with numbers and has a deep understanding and appreciation for small businesses, having worked with entrepreneurs throughout her career.

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