Embarking upon a new business venture can be both exciting and stressful. It is important to know what is involved so that you don’t waste your time or your money. Before registering a company, you must first decide whether an incorporated business structure is right for you. Will such a business model meet your business needs and aspirations? If not, what are the alternatives that are available to you?
As a general guide, there are four primary business structures that may be utilised:
- A sole proprietorship – trading on your own;
- A partnership – trading with two or more individuals or entities but not as an incorporated company;
- A trust – an entity that holds assets for the benefit of another; or
- A company – an incorporated and separate legal entity.
Having decided that you do indeed wish to proceed as an incorporated entity, you must then register your company. Effectively registering a company is a multifaceted undertaking and requires several important issues be addressed.
Registering a company
Selecting a business name
- The first step in registering a company involves selecting a business name. The business name you choose must be distinct. You cannot choose a name that is already employed by another entity. Furthermore, your name must clearly identify the liability of your members. At this point in time, you will have to decide whether you wish to proceed as a company limited by shares (i.e. as a proprietary limited or Pty Ltd company) or if the liability of your constituents will be unlimited (i.e. proprietary).
Deciding on an internal management structure
- The second step in registering a company requires you to select a suitable management structure. As an incorporated entity, you can choose to adopt your own constitution. The constitution will specify the company’s objectives and provide for the internal management of the firm. Alternatively, you may choose to be governed by the replaceable rules found in the Corporations Act 2001 (Cth). If you desire to do so, you may even use a combination of the two.
- Before lodging an application for the registration of a company, you must first obtain the written consent of the intended directors, secretary and shareholders. There are limitations as to who may be a director or secretary. The consent does not need to be lodged with the Australian Securities and Investments Commission (ASIC) but it must be kept as a matter of company record.
Understanding your obligations
- If you wish to appoint yourself as a company director or secretary, it is imperative that you are well aware of your legal obligations under the Corporations Act 2001 (Cth) and/or under the corporate constitution.
Completing and lodging the application with ASIC
- To affect a registration of a company you must complete Form 201, pay the necessary registration fee and lodge both with ASIC. Upon registration the same will issue you with an Australian Company Number, they will register your company and also issue you with a certificate of registration. Your company will come into existence on the day that it is registered.
Post registration considerations
Having successfully registered your company, there are numerous post-registration considerations that you must turn your attention to, including:
Displaying your Australian Company Number
- Your Australian Company Number must appear on your company’s common seal (if any), every public document and all documents that are required to be lodged with ASIC. For piece of mind, most companies choose to display their Australian Company Number as a matter of fact on their letterheads.
Opening up a bank account
- After registering your company, you must set up a corporate bank account into which all company earnings are to be deposited.
Registering for Goods and Services Tax
- Depending on your annual turnover, you may also need to register for Goods and Services Tax.
Appointing an auditor
- Proprietary companies need not appoint an Auditor, provided that all shareholders consent to this course of action. If you commence operating as a public company, that is one that is listed on the stock exchange, you will need to appoint an auditor within one month of registration.
Displaying your business name
- The name you register must be displayed at your registered business premises or other place of business that is open to the public.
All companies must maintain a;
- minute book;
- share registry;
- register of company charges;
- register of option holders (if any); and a
- common seal register (if a common seal is being used).
Maintaining financial records
- As a company, your directors will have to setup and maintain legible financial records. Such records must be kept for no less than 7 years.
- All companies are under a strict duty to notify ASIC of changes to their share allotment, officeholders and/or place of business within the prescribed period.
Want to know more about the steps involved in registering a company? Our dedicated and friendly team of LegalVision business lawyers would be happy to assist you. Call us on 1300 544 755 and find out how we can help today.