If you are planning to start a company in Australia, there are several considerations you need to think about before launching your business plans. This article will discuss the key components you should consider before starting your business in Australia.
Why Choose a Company Structure?
Choosing a company structure has many advantages for your business. As a company is its own separate legal entity, one of the major benefits of a company structure is that it limits your liability as owner of the business. This is because company shareholders are only personally liable for the debts or liabilities of the company up to the amount that is unpaid on their shares. Usually, the amount unpaid on shares is zero, so the company structure is particularly suitable for businesses that are going to be risk-taking.
Running your business with a company structure will also maximise its capacity for growth. Companies can raise capital by bringing on shareholders, and investors are more likely to invest in your business if it is an incorporated entity (in other words, a corporation).
How Do I Set Up My Company in Australia?
If you decide to use a company structure to start your business in Australia, it is important that you follow the right steps to set up your company properly. You will need to:
- decide on an available company name;
- establish your company’s rules;
- choose who will run your company. If you live overseas, you will need to find a resident director;
- pick your shareholders; and
- nominate your principal place of business in Australia.
Appointing a Resident Director
If you live abroad and run a company registered in Australia, you will need at least one resident director. A resident director is a director that ordinarily resides in Australia. They are usually either permanent residents or Australian citizens. After you have at least one resident director, you can start thinking about choosing foreign directors of the company. However, a majority of the directors of your company will need to be resident directors.
You can think of your resident director as your Australian guide. They make sure that your Australian company is tracking smoothly and performing all of its compliance obligations. Your resident director is also responsible for performing a number of important tasks on your behalf, including:
- lodging signed documents to regulatory authorities;
- representing shareholders to make sure that your company complies with the necessary protocols; and
- communicating with financial institutions and regulatory authorities to continue running the company.
Selecting Your Resident Director
Ideally, you should find a resident director who adds value to your business rather than one who only fulfils the legal requirements of running your company. Your resident director needs to be over 18 years of age and a permanent resident or citizen in Australia. They should also be aware of the duties that they will owe to your company and the consequences they will face if they fail to perform those duties.
A director is critical to running a company successfully, and a breach of their duties has serious consequences. As a result, it is a good idea to choose an experienced resident director. You should also make sure they have a clear understanding of the resident director’s role within your company before you invite them on board. It is best practice to put a contract in place that explains:
- the services they, as the resident director, will be providing;
- their obligations to your company; and
- how much they will be paid.
Living overseas does not prevent you from starting a company in Australia. If you are looking to start a new venture in Australia, structuring your business as a company offers several advantages. These include limited liability and a maximised capacity for growth. Importantly, you will also need to select a resident director to carry out all of the regulatory and compliance tasks in your absence. If you have any questions about business structuring or about setting up an Australian company from abroad, get in touch with LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.
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