10 Steps to Set Up a Company in Australia

In Short

• Setting up a company in Australia requires registering with the Australian Securities and Investments Commission (ASIC) and obtaining an Australian Company Number (ACN).
• You must decide key details before registration, including the company name, directors, shareholders, share structure and governing rules.
• If the company will operate a business, it must also obtain an Australian Business Number (ABN) and establish appropriate financial and record-keeping systems.

Tips for Businesses

Before registering your company, confirm your proposed company name is available and not registered as a trade mark. Decide who will act as directors and shareholders, determine the share structure and consider whether to adopt a company constitution. After registration, apply for an ABN, open a business bank account and implement proper accounting and record-keeping systems.

Summary

This article explains the legal and practical steps involved in setting up a company for business owners in Australia. It outlines the registration process, governance decisions and post-registration requirements under Australian corporate law. The content was prepared by LegalVision’s business lawyers.

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On this page

• 1. How Will You Register Your Company?
• 2. Choose a Company Name
• 3. Choose Your Company’s Rules
• 4. Choose Your Shareholders and Directors
• 5. Choose Your Share Structure
• 6. Choose the State/Territory to Register Your Company In
• 7. Choose the Principal Place of Business and Registered Office
• 8. Complete the Relevant Paperwork or Online Form
• 9. Obtain an Australian Business Number (ABN)
• 10. Set Up Your Company’s Financials
• Key Takeaways
• Frequently Asked Questions

Before registering a new company, it is important to understand that there are several ways to structure a business, each with different rights and obligations. One option is a company, which is a separate legal entity from the individuals who run it. To set up a company in Australia, you must register it with the Australian Securities and Investments Commission (ASIC) and obtain an Australian Business Number (ABN) if it will operate a business. While registration can usually be completed online, some circumstances may require a paper application. This article outlines the key steps to set up a company.

1. How Will You Register Your Company?

You can complete the company registration process yourself with the assistance of a lawyer or an accountant. You can register a company online or via a paper form. 

Once you submit the online registration application and ASIC processes and accepts your application, your company will be instantly registered. Provided ASIC has no objections to your registration application, your company should be registered within 20 minutes of submission.

There may also be certain circumstances where you will need to register your company using a paper form. Such circumstances include, but are not limited to:

• the price per share upon incorporation is more than two decimal places;
• a director or shareholder wanting to suppress their residential address and use an alternate address. 

In these cases, you will need to obtain an ASIC Form 201, complete it and mail it to ASIC along with ASIC’s company registration fee. Registering your company using this method is timely. Once ASIC receives your registration application, it may take up to three weeks for them to process the application. ASIC will then mail you notice of your application’s acceptance and the relevant incorporation documents (i.e. registration certificate). 

2. Choose a Company Name

You must have a business name to set up your company. You may choose your own name, provided it is available for use, or you can use the company’s Australian Company Number as the company name. 

When applying to register a company, your chosen name must not be identical to or too similar to an existing company or registered business name. You should check the ASIC Register and the business names register to ensure the name is available. It is also important to search IP Australia’s Australian Trade Mark Search to confirm the name is not a registered trade mark, as this could lead to infringement issues.

There are also certain restricted words which, if included in your chosen company’s name on the registration application, will mean your application will be rejected. You can find a list of restricted words and expressions on ASIC’s website.

3. Choose Your Company’s Rules

Before you start a company, you may want to decide what rules will apply to govern the company. This can generally be:

• the replaceable rules from the Corporations Act 2001 (Corporations Act), which means that the company does not require its own written constitution; 
• a constitution; or
• a combination of the two.

A company constitution is a document that contains the rules governing a company’s operation. It can determine the threshold for making certain decisions and the processes in certain situations, among other matters. It also defines the rules your company’s directors and shareholders must follow when operating the company.

The replaceable rules found in the Corporations Act will automatically apply if your company does not have a constitution. Unlike the replaceable rules, a constitution will not automatically apply to your company. If you would like to adopt a company constitution, you will need to draft one. It is generally best practice to engage a lawyer to draft one for you. 

Broadly, a company constitution is a bespoke agreement that you can tailor to the specific needs of your company.

4. Choose Your Shareholders and Directors

You must decide who will be the shareholders (also known as members) and directors of the company. A company’s directors are the people who control the company. They take a hand in the day-to-day operations of the company. An Australian private company must have at least one director ordinarily residing in Australia, and each director must be at least 18 years of age.

5. Choose Your Share Structure

After you have chosen your shareholders, you must decide how many shares they will each be issued and what class of shares they will own. 

The class of the shares will determine the rights and restrictions of those shareholders. Generally, the standard and most common class of shares issued are called ordinary shares. If a shareholder holds ordinary shares, they will receive the right to:

• vote at shareholder meetings;
• receive dividends; and
• participate in surplus assets upon winding up of the company. 

For example, you can create preference shares which generally attract the following enhanced rights, among others:

• priority to receive dividends over all other classes of shares;
• priority to receive the amount paid on the shares upon winding up of the company; and
• anti-dilution rights.

The company can also create a new class of shares that has restricted rights, such as:

• no right to vote at shareholder meetings;
• right to receive dividends;
• right to receive surplus assets upon winding up of the company; or 
• any combination of the above, among others. 

Notably, if you select a class of shares other than ordinary shares in your registration application, having that class of shares will not mean anything if that class of shares does not have the rights and restrictions attached to those shares set out in the company’s constitution. 

6. Choose the State/Territory to Register Your Company In

You can set up a company in any state or territory of Australia. However, you can only register the company in one state or territory. The state or territory of incorporation does not affect the company’s ability to trade in various states or territories. Still, it does affect which government grants it can apply for and receive. 

If you apply for government grants, it is vital that you determine the state or territory in which you must register your company. Changing the state or territory of incorporation after incorporation is a complex and lengthy process. It generally involves the following:

• approval from shareholders; 
• notifying ASIC; 
• obtaining the relevant Minister’s written approval; and 
• ASIC is being notified of the Minister’s approval, along with the payment of a fee. 

7. Choose the Principal Place of Business and Registered Office

A company must nominate a principal place of business and registered office. If the registered office is not at premises occupied by the company, then the occupier’s consent must first be obtained. The registered office and principal place of business addresses are not able to be PO boxes. 

ASIC uses these addresses to contact the company where necessary. On this basis, it is important that you or your registered ASIC agent update the company’s addresses when they change. If a change in address occurs, you must notify ASIC within 28 days or risk receiving late notification fees payable by the company. 

8. Complete the Relevant Paperwork or Online Form

After you have made all the decisions in steps 1 to 7 above and obtained the relevant consents, you can register the company (see step 1).

Once the company has been registered, there are further steps that are required to ensure your company is ready to operate a business. We have listed below two steps that follow closely after setting up your company.

9. Obtain an Australian Business Number (ABN)

After registering your company with ASIC, the next crucial step is to obtain an Australian Business Number (ABN) if your company is planning to conduct business in Australia. 

Obtaining an ABN is also important for the following reasons:

• allows you to register for Goods and Services Tax (GST) if your annual turnover exceeds $75,000; 
• enables you to claim Goods and Services Tax (GST) credits;
• helps other businesses verify your business identity for transactions; and
• necessary to obtain an Australian domain name.

To apply for an ABN, you will need to:

1. have your company’s ACN (Australian Company Number) ready, which you received upon company registration;
2. visit the Australian Business Register website;
3. complete the online application form, providing details about your business activities and structure; and
4. submit the application.

The process is usually quick, and in most cases, you will receive your ABN immediately after submitting the application. However, in some instances, it may take up to 28 days if additional processing is required.

10. Set Up Your Company’s Financials

Once your company is registered and you have obtained an ABN, it is crucial to establish robust financial systems. This step is often overlooked but is vital for maintaining compliance with Australian tax laws and ensuring smooth business operations. It includes the following steps: 

1. Open a Business Bank Account: Choose a bank and open a dedicated business account in your company’s name. This is essential for separating personal and business finances, which is a legal requirement for companies in Australia.
2. Set Up an Accounting System: Implement an accounting system that suits your business needs. This could be a simple spreadsheet for very small businesses or more complex software for larger operations. 
3. Establish a Record-Keeping System: Develop a system for storing and organising financial records. The Australian Taxation Office (ATO) requires businesses to keep records for at least five years. 
4. Understand Your Tax Obligations: Familiarise yourself with the various taxes your company may be liable for, such as Company Income Tax, Goods and Services Tax (GST), Pay As You Go (PAYG) Withholding and Fringe Benefits Tax (FBT).

Corporate Governance Guide for SMEs

Running a small business? Download this free guide to understand your corporate governance responsibilities, including the decision-making processes.

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Key Takeaways

Setting up a company requires planning and an understanding of the various components that go into the registration process. It is best practice that you consult a lawyer to understand your obligations as a director or shareholder and how a company operates its business. If you register your company with incorrect details, it may be a costly and lengthy exercise to correct those mistakes.

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Frequently Asked Questions