Reading time: 4 minutes

Incorporating a business is a big step, although it brings with it a range of advantages. The main benefit of incorporating is that a company is a separate legal entity distinguished from its directors, owners and members. Incorporating is particularly important when your current business structure is no longer suitable because your business has outgrown it. With this in mind, many businesses will wonder when the right time to incorporate is. This article will take you through when a business should incorporate and why. 

When Should a Business Incorporate?

There is no precise point in time when a business should incorporate. Instead, the best time will depend on the unique circumstances of your business. With this in mind, there are a few key indicators that your company is ready to incorporate. We outline some of these indicators below.

Protect liability

One of the key advantages of incorporating is the ability to protect your personal liability. Incorporating is a good option if you find that your business is taking on more risk and you want added protection. Incorporating will ensure that your personal assets remain safe and that your personal real estate and savings are not at risk.


Incorporating is one way to make your business more attractive to investors when your business is seeking investors. This is because investors often want a formal structure to make their investment in.

Transfer of ownership

Another advantage of incorporating is that it makes it easier to transfer ownership of your business. Whether you intend to pass on your business to your children or wish to sell, incorporating provides an effective structure to simplify this process. 

In addition to the above factors, there are other critical times where you should consider incorporating. For example, before launching a product or service to the market or before a new business partner joins.

Why Should a Business Incorporate? 

A primary advantage of incorporating is the protection of personal assets of the owners. This is because the owners’ personal assets are separate from company assets. Ultimately, this will help prevent personal losses if your company encounters financial or legal issues.

Further, incorporating may have a range of taxation benefits. Incorporating can also make it easier to access and raise capital. Similarly, incorporating can bring legitimacy to your business, which can improve your overall business success.

How Does a Business Incorporate?

Before incorporating your business, you should ensure that you understand the duties and obligations of being a company director. There are serious consequences for directors who do not comply with these duties and obligations. Primarily, these duties involve ensuring you act in the company’s best interests.

Directors' Duties Complete Guide

If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.

Download Now

You will then need to register your company using the Australian Government’s Business Registration Service (BRS). This service combines all the tax and business registrations your business needs. Depending on your company type, the necessary registrations will vary. 

Once your application has been processed, you will be issued an Australian Company Number (ACN). Likewise, you can use your ACN to apply for an Australian Business Number (ABN). At this time, the Australian Securities and Investments Commission (ASIC) will place your company name on its register and provide you with a certificate of registration.

Key Takeaways

Incorporating is a great way to help grow your business. Some key indicators that suggest it might be time to incorporate your business include when: 

  • your business is taking on more risk, and you want the protection of limited liability;
  • you want to make your business more attractive to investors; or
  • you are considering passing on or selling your business.

If you need help with incorporating, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

When should a business incorporate? 

There is no precise point in time when a business should incorporate. Instead, the best time will depend on the unique circumstances of your business. Some key indicators that suggest you might be ready to incorporate include if you find that your business is taking on more risk and you want added protection. Likewise, you may be seeking investors or are considering the future of your business, such as selling it or passing it on.

Why should a business incorporate?

There are a range of advantages to incorporating your business if it outgrows its current structure. These advantages include limited liability, simpler transfer of ownership, enhanced credibility and a greater ability to raise capital for your business. 


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards