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In Short
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Choose the Right Business Structure: Select a structure that aligns with your goals, considering factors like tax implications and residency requirements.
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Register Your Business: Incorporate your company with the Australian Securities and Investments Commission (ASIC) and obtain necessary tax registrations, including an Australian Business Number (ABN) and Tax File Number (TFN).
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Comply with Local Laws: Adhere to employment regulations, consumer protection laws, and ensure your intellectual property is protected.
Tips for Businesses
When setting up in Australia, it’s crucial to understand local regulations and fulfil all legal obligations. Engaging with local professionals can help navigate the complexities of Australian business law, ensuring compliance and smooth operation. Regularly review your business practices to stay aligned with any legal updates.
Table of Contents
- Step One: Deciding on Your Business Structure
- Step Two: Incorporating an Australian Company or Registering Your Foreign Company
- Step Three: Registering for Taxation
- Step Four: Paying Local Employees
- Step Five: Understanding the Australian Consumer Law
- Step Six: Protecting your Intellectual Property
- Step Seven: Understanding Australian Business Regulations
- Key Takeaways
- Frequently Asked Question
Are you thinking about doing business in Australia? This article will help you identify the key steps you will need to take to set up your business and operate in Australia.
Step One: Deciding on Your Business Structure
The first step in doing business in Australia is to decide on your business structure. As a potential business owner, you will need to consider which structure is most beneficial to you. Depending on your chosen business structure, there will be requirements for you or a representative to reside in Australia, as well as different tax and legal implications.
There are many business structure options available to you. For example, you may choose to set up as a:
- sole trader;
- trust; company;
- joint venture;
- partnership; or
- foreign company.
However, the most common business structure for foreign companies is to:
- incorporate an Australian company; or
- register as a ‘foreign company’.
This article will provide details on how to incorporate an Australian company and register your foreign company.
Step Two: Incorporating an Australian Company or Registering Your Foreign Company
Incorporating a Company in Australia
An Australian subsidiary may incorporate as a proprietary (private) or public company, and it may have limited or unlimited liability.
Most commonly, companies are registered as a private company that is limited by shares. By way of quick assessment, private companies may have an advantage over a public company because it has simpler disclosure and reporting obligations and is, generally, less expensive to administer. Further, a private company will require that there is only one director that must reside in Australia. Whereas, a public company must have at least three directors (two of which must reside in Australia) and at least one secretary that must reside in Australia.
To incorporate a proprietary company limited by shares successfully with the Australian Securities and Investments Commission (ASIC), you will need to do the following:
- select a name and check that it is not already in use;
- adopt a company constitution or choose to be governed by the “replaceable rules”, or a combination of both. The replaceable rules are set out in the Corporations Act 2001;
- obtain written consent from each person who agrees to become a director, secretary or member of the company; and
- complete an application form and lodge it together with the fee with ASIC.
ASIC will then register your company and issue a certificate of registration. Your company will then receive an Australian Company Number (ACN). At this point, you are entitled to conduct business anywhere in Australia.
Registering a Foreign Company
A foreign company conducting business in Australia is also required to register with ASIC. A registered foreign company has the power to hold land in Australia and, at common law, they may sue and be sued.
To register a foreign company, you will need to complete ASIC’s application form and lodge it with ASIC. The form will need to include a certified copy of your constitution or equivalent and a list of its directors. Your company must appoint a local agent that will be responsible for the company’s compliance with the Corporations Act 2001 and your company must have a registered office in Australia.
When a foreign company registers with ASIC, you are given an Australian Registered Body Number (ARBN).
Continue reading this article below the formStep Three: Registering for Taxation
You will also need to apply for a Tax File Number and Australian Business Number, and, where appropriate, you will need to register for GST. You will make these applications through the Australian Taxation Office. Incorporated companies will use their ACN to do this, and foreign companies that are registered will use their ARBN numbers to do this.
Step Four: Paying Local Employees
Doing business in Australia may involve hiring locals. Should your business hire locals, you will be required to comply with Australia’s Fair Work Act 2009 (Cth), any applicable Award standards, taxation legislation and superannuation obligations.
It is important that you revisit your compliance with these requirements at least once a year. Australia’s Fair Work Commission annually reviews its national minimum wage for employees. For example, on 1 July 2016, the minimum wage increased by 2.4% from the previous year. Not complying with the minimum wage or a relevant Award standard may incur penalties and set back for your business.
Step Five: Understanding the Australian Consumer Law
Through the Australian Consumer Law (ACL), Australia has a national system that protects all consumers who interact with an Australian business. The ACL also imposes obligations on all businesses that operate in Australia.
The Australian Consumer Law covers general standards of business conduct; it prohibits unfair trading practices; provides basic consumer guarantees for goods and services; and, regulates the safety of products and services.
Step Six: Protecting your Intellectual Property
To establish, or maintain, the credibility and presence of your business, it is important that you protect your Intellectual Property rights in Australia. It will be essential that you register any trade marks associated with your business with IP Australia. Registration will give you exclusive rights to its use in the relevant class of goods and services.
Step Seven: Understanding Australian Business Regulations
When doing business in Australia, it’s crucial to understand and comply with various regulations that govern business operations. These regulations are designed to ensure fair competition, protect consumers, and maintain business integrity.
One key area is competition law, overseen by the Australian Competition and Consumer Commission (ACCC). The Competition and Consumer Act 2010 prohibits anti-competitive practices such as price fixing, market sharing, and abuse of market power. Businesses must ensure their practices don’t restrict competition or harm consumers.
Environmental regulations also play a significant role in Australian business operations. Depending on your industry, you may need to comply with various environmental protection laws at both federal and state levels. This could involve obtaining specific licenses, meeting emissions standards, or implementing waste management practices.
Additionally, businesses in specific industries may face sector-specific regulations. For example, financial services companies must comply with regulations set by the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA). Food businesses need to adhere to food safety standards set by Food Standards Australia New Zealand (FSANZ).
Navigating these regulations can be complex, especially for foreign businesses unfamiliar with the Australian legal landscape. It’s often advisable to seek professional legal advice to ensure full compliance and to stay updated on any changes in regulations that may affect your business operations.
This Board Reporting Toolkit can help you meet your compliance needs, by explaining your obligations as a director and providing you with a series of tools and templates to ensure you can correctly undertake your key obligations.
Key Takeaways
- Carefully choose your business structure, considering tax implications and residency requirements.
- Register your business with ASIC, either as an Australian company or a foreign company.
- Obtain necessary tax registrations, including TFN, ABN, and GST, if applicable.
- Comply with Australian employment laws when hiring local staff.
- Understand and adhere to the Australian Consumer Law.
- Protect your intellectual property rights in Australia.
- Familiarize yourself with Australian business regulations, including competition law, data privacy, and industry-specific requirements.
- Consider seeking professional legal advice to navigate the complexities of Australian business law and ensure full compliance.
- Stay informed about regulatory changes that may impact your business operations.
If you have any questions about your business structure, 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 Question
Do I need an Australian resident director to set up a company?
Yes. If you incorporate a private company, at least one director must reside in Australia. If you set up a public company, you will need at least three directors, two of whom must be Australian residents.
What tax registrations are required to do business in Australia?
Businesses must register for:
- A Tax File Number (TFN)
- An Australian Business Number (ABN)
- Goods and Services Tax (GST) (if annual turnover is $75,000 or more)
Foreign companies will use their Australian Registered Body Number (ARBN) for tax registration.
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