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Company Setup

If you are planning to start a business in Australia, setting up a company could be a pivotal step toward ensuring its success and sustainability.


Setting up a company in Australia is a strategic move that offers numerous advantages and sets the stage for long-term business success. These include limited liability and potential tax advantages while also enhancing the credibility of your business.


This guide is designed to help you thoroughly understand the process of setting up a company in Australia and determine when it is the best option for your business.

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Why Should You Use a Company for Your Business in Australia?

Setting up a company provides several key benefits that can contribute significantly to the robustness and growth of your business:

Limited Liability

One of the most significant advantages is limited liability protection. This setup helps protect your personal assets in the event that your company encounters financial trouble or legal challenges.

Tax Benefits

Companies in Australia benefit from a flat corporate tax rate, which can be more advantageous compared to personal income tax rates.

30% Tax Rate:

  • Base Rate Entities: Historically, the standard corporate tax rate in Australia has been 30%. This rate generally applies to companies that are not considered "base rate entities".

  • Non-Base Rate Entities: Typically, these are companies that have an aggregated turnover of more than $50 million, and more than 80% of their income is considered "passive income" (e.g., rent, interest, royalties, dividends). These companies continue to be taxed at the 30% rate.

25% Tax Rate

  • Base Rate Entities: A lower corporate tax rate of 25% applies to companies classified as base rate entities. To qualify as a base rate entity, a company must have an aggregated turnover of less than $50 million, and no more than 80% of their assessable income can be passive income.

  • Small Business Entities: This rate was introduced to support small and medium-sized businesses. It allows these businesses to retain more earnings that can be reinvested into the business for growth and employment.

Furthermore, companies are eligible for various tax deductions and incentives that can be leveraged for tax optimisation.

Credibility and Perpetual Succession

A company structure facilitates easier access to funding avenues such as equity financing and the ability to issue shares, which can be crucial for scaling operations or funding new investments.

Raising Capital

A company structure facilitates easier access to funding avenues such as equity financing and the ability to issue shares, which can be crucial for scaling operations or funding new investments.

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When Should You Use a Company for Your Business in Australia?

Consider establishing a company under the following circumstances:

High-Risk Business

If your business involves substantial risk or potential for legal liabilities, a company structure can provide a critical buffer for your personal assets.

Expansion Plans

For businesses with ambitious growth targets or those looking to attract investment, a company can provide the necessary structure to facilitate external financing and enhance credibility.

Tax Planning

If your business expects considerable profits, utilising a company structure can help you take advantage of various corporate tax deductions and incentives.

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Company Setup FAQs

  • What is a proprietary limited company?

  • A proprietary limited company, designated by 'Pty Ltd', ‘Proprietary Limited, ‘Pty Limited’ or ‘Proprietary Ltd’ at the end of the business name, is a company that operates privately and has not offered shares to the general public. This structure restricts the right to transfer shares and limits the number of shareholders to 50 non-employee shareholders.

  • What are the ongoing compliance requirements for companies in Australia?

  • Companies in Australia must adhere to various compliance requirements including:


  • - Filing annual financial reports and tax returns.

  • - Holding at least one annual general meeting each year.

  • - Maintaining accurate financial records.

  • - Complying with regulations imposed by ASIC and the ATO.

  • What is a company?

  • A company is a legal entity separate from its owners, providing limited liability to its shareholders. It can own property, incur debt, enter into contracts, and sue or be sued.


  • Are there any restrictions on foreign ownership when setting up a company in Australia?

  • Yes, while foreign investment is generally encouraged, certain industries such as media, telecommunications, and transport may have restrictions or require approval from the Foreign Investment Review Board (FIRB) depending on the scale of investment and the nature of the business.

  • How can I choose the most suitable business structure for my company in Australia?

  • Choosing the right business structure involves considering potential liability, tax obligations, operational flexibility, and future business goals. Consulting with business advisors like HelloLedger and business solicitors can help tailor the structure to your specific needs, whether you're starting a business alone or with partners.

  • What are the key tax implications and obligations for companies in Australia?

  • Companies are taxed at a corporate tax rate, currently 25% for eligible entities, and must comply with GST regulations if their turnover exceeds $75,000 annually. They also have PAYG withholding obligations for employee salaries and must ensure compliance with superannuation guarantee requirements.

  • Can I change my business structure after setting up a company in Australia?

  • Changing your business structure is feasible but involves legal and tax considerations. It is crucial to seek advice from legal and business experts to navigate the implications and ensure any changes are made effectively.

  • How much does it cost to set up a company?

  • The cost to set up a company varies depending on the complexity and specific requirements of your business. For detailed information and a tailored quote, please contact our office directly.

  • What is ASIC?

  • ASIC (Australian Securities and Investments Commission) is the regulatory body responsible for overseeing companies, financial markets, and financial services organisations in Australia to ensure they operate in a fair and transparent manner.

  • What steps are involved in registering a company in Australia?

  • The steps to register your company in Australia, include choosing a company name, deciding on a company structure, registering with ASIC and the ATO, obtaining necessary licenses and permits and setting up bank accounts and accounting systems.

  • What are the key obligations for companies to comply with corporations legislation?

  • Companies must ensure they maintain proper financial records, holding annual general meetings (AGM) if required. Additionally, they must adhere to governance standards and directorship duties, such as acting in the best interest of the company, avoiding conflicts of interest, and ensuring solvency. Directors are also required to keep ASIC informed of any changes in the company’s details, such as changes in addresses, officeholders, members, share structure, or ultimate holding company.

  • What are the differences between a director and a shareholder?

  • A director is responsible for managing the day-to-day operations and making strategic decisions for the company. They have a legal duty to act in the best interests of the company and its shareholders. A shareholder, on the other hand, owns part of the company through shares but does not typically take part in daily management. Shareholders primarily focus on overall outcomes such as profit distributions and major company decisions, often exercising their rights through voting at shareholders' meetings.

  • How do I protect my company name and intellectual property?

  • To protect your company name, consider registering it as a trademark with IP Australia, which grants exclusive rights to use, sell, and license the mark in Australia. For broader intellectual property protection, including patents, designs, and copyrights, registration through the appropriate channels is crucial. Regular monitoring of the market to detect any infringement and timely legal action are also vital components of effective IP protection.

  • How do I fund my new company?

  • Funding options for your startup, include self-funding, seeking investors, applying for loans, and exploring government grants available for new businesses in Australia.

  • How does company setup differ for non-residents?

  • Non-residents looking to establish a company in Australia must adhere to specific requirements, such as having at least one director who resides in Australia. Additionally, non-residents should be aware of potential restrictions under the Foreign Investment Review Board (FIRB) regulations, which may require approval depending on the business sector and the extent of foreign investment.

  • Can a company be set up with only one person?

  • A company can indeed be set up in Australia with just one person who can act as both the sole director and sole shareholder. This structure is known as a proprietary limited company (Pty Ltd), providing flexibility for solo entrepreneurs to own and manage their business under a corporate framework. However, having a single director can also pose risks, such as limited oversight and increased responsibility, which might affect decision-making and increase the burden during periods of absence or illness.

  • What are common mistakes to avoid when setting up a company?

  • Common mistakes to avoid when setting up a company include neglecting to create a clear business plan, underestimating the necessary capital, failing to comply with legal and tax obligations, and overlooking the importance of market research. Additionally, not securing the necessary intellectual property protections or choosing the wrong business structure can lead to significant challenges as the business grows.

  • What insurance do I need when setting up a company?

  • When setting up a company, it’s crucial to consider various types of insurance to protect against potential risks. Common types include Public Liability Insurance to cover legal liability for third-party injuries or damage, Professional Indemnity Insurance if your company offers advice or services, Workers' Compensation Insurance to cover employees in case of work-related injuries, and Property Insurance for business premises and equipment. The specific needs can vary greatly depending on the industry, size, and activities of your company.

  • What are common mistakes to avoid during the creation of a company?

  • During the company creation process, common mistakes include failing to properly register the business with the relevant authorities, such as forgetting to register for an ABN or not setting up the correct tax registrations. Additionally, inadequately defining shareholder agreements and director responsibilities, not choosing the appropriate company name that aligns with future branding, or ignoring the need for proper legal and accounting advice can create long-term legal and operational issues.

Get in Touch

Ready to say Hello to hassle-free accounting and tax services and Goodbye to worries? 

Contact us at HelloLedger and let’s embark on the journey to financial clarity and success together.

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