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 1: 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 that you or a representative resides in Australia and 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 company 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 2: 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 company successful 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 consents 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).
Step 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, generally, means 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 percent 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.
If you need any assistance with starting a company in Australia, get in touch with our business lawyers.