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When operating your business, you may decide to incorporate a company if your business is growing or new equity partners join the operation. Incorporation also limits your personal risk. The process can be done either directly through ASIC, an accountant, business lawyer or another private service provider. There are several steps involved in the process, and you will need to pay the professional fees of the service provider and any registration costs required by ASIC. This article explains the cost of setting up a new company in Australia, including annual company review fees and additional corporate governance documentation.

Deciding on a Name

Before proceeding to registration, you will need to choose a name for your company. This can be a new name, your Australian company number (ACN) or a name you have previously reserved with ASIC. The cost of reserving a name through ASIC before registering your company is $51

You cannot choose a name already in use by another company or a name already registered to another operator. There are also restrictions on using certain words in company names, which might create a false indication that they are related to other Government bodies. Some examples include the following words:

  • bank; 
  • trust;
  • royal; or
  • incorporated.

Deciding on the Type of Company

Once you have chosen an available company name, you need to decide what type of company you will be incorporating. You can choose from the following:

  • proprietary company limited by shares (Pty Ltd);
  • unlimited proprietary company limited by a share capital (Pty);
  • public company limited by shares;
  • public company limited by guarantee;
  • unlimited public company with a share capital; or
  • no liability company (typically mining and resource companies).

For most small business owners, the choice of company type will be a Pty Ltd company. This is the most appropriate structure to divide equity ownership, provide for decision-making processes and limit the owners’ operating risk. 

Registration Costs of a Company Incorporation

In addition to paying any professional service fees to an individual or business completing the registration process on your behalf, you must also pay a company registration fee to ASIC. The fees are as below:

  • proprietary company that has share capital: $506;
  • public company with share capital: $506; or
  • public company limited by guarantee: $417.

Annual Reporting Requirements

After the registration process is complete, you will also be required to pay an annual reporting fee to ASIC. Your annual reporting requirements are necessary to continue the operation of your company. The type of company you choose to operate will dictate what your annual reporting requirements are. 

Your reporting requirements will differ depending on whether you are a ‘small’ or ‘large’ Pty Ltd company. Small Pty Ltd companies will generally not need to lodge financial reports but will need to pay an annual review fee. On the other hand, large Pty Ltd companies will have to lodge financial reports in addition to the annual review fee. The types of financial reports will depend on what type of company it is. 

Additionally, each company will receive an annual statement from ASIC, which will contain:

  • a statement of the company’s current details; 
  • an invoice for the company’s annual review fee; and 
  • the company corporate key. 

To maintain your company registration for the following year, you must complete the following steps:

  • pay your annual company review fee;
  • check and update your company details; and
  • pass a solvency resolution.

The annual review fees for each company type are listed below:

  • proprietary company: $273;
  • special purpose company (proprietary) $55;
  • special purpose company (public) $51; or
  • public company: $1267.

Corporate Governance Documentation

Your company structure does not need to have corporate governance documents such as a shareholders agreement and company constitution in place. However, these can be useful when navigating through how the company will deal with specific events such as shareholders exiting and entering, third party sales, and disputes between shareholders. It is best practice to have these documents in place so that all members understand their obligations, hence, avoiding disputes. In drafting these corporate governance documents, you will need to engage a lawyer to ensure these documents are tailored to your business. The additional costs for drafting these documents will vary. 

Further, your company will operate according to the ‘replaceable rules’ contained within the Corporations Act unless it has a constitution that specifies such rules do not apply. 

Key Takeaways

If you have decided to incorporate a company to operate your business, you need to be aware of the costs associated with this type of structure. The cost of setting up a new company does not stop at the registration fees. There is also an annual review or reporting requirement that you must pay and lodge annually to continue operating under this structure.

If you would like more information on the cost of setting up a new company in Australia, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

How do I incorporate a company?

There are several steps to incorporating a company. The first is to choose a business name and register your company with ASIC. Secondly, you need to decide what type of company you will be incorporating. Next, you may decide to set up a company constitution or draft a shareholders agreement. Each step will have varying costs attached to them.

 Do I need to pay company registration fees?

Yes, you must also pay a company registration fee to ASIC. The fees differ depending on the type of company you are incorporating. The registration fee for a proprietary company that has share capital is $506. For a public company with share capital, the fee is also $506. For a public company limited by guarantee, the fee is $417.

What are my companies annual reporting requirements?

After the registration process is complete, you will also be required to pay an annual reporting fee to ASIC. Your reporting requirements will differ depending on whether you are a ‘small’ or ‘large’ Pty Ltd company.

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