A business owner is one of the legal forms of a business in Australia. There are approximately more than 20,000 companies get registered in Australia. Various nature of companies’ registration options is available, including proprietary limited company, sole proprietor, partnership, etc. However, it is not so difficult to register a business in Australia these days. The company registration offers:

• Potential tax benefits

• Protection from personal liability

• Growth options

Nonetheless, the directors are seriously involved in all the impositions. The directors should stay updated on each and every matter of the company and their duties towards the company’s legal and operational issues. Since the breach of matters related to legal, operational, management, and other duties can lead to criminal liability and fines. Here, you will learn the pros and cons of registering a company in Australia.

Pros

Limited liability

The leading advantage of a registered company is that it has limited liability. Generally, you are liable to pay the creditors up to the degree of own capital and assets, plus unpaid money even your share (this is usually nil, since most companies issue their fully paid shares, for a simple amount like $1.00). Besides, you or your company has a distinct legal entity. Remember, a company or firm is separated from the person, management, or owners who operate it.

Generally speaking, if a director or owner acts honestly and does not provide a personal guarantee for the obligations or debt. In this case, a great advantage is that the personal assets of the owners and directors will stay away from the reach of the creditors of the company.

'Impression' created on people

It is a reality and the fact that the people around you are impressed by a registered company in Australia, especially hearing a name ending with “Pvt Ltd”. The impression affects the level of your business. Even your peers, business rivals, suppliers, and competitors begin to trust your entity and positive growth.

Attracting investment/capital

If you have a company in Australia, you may find it easy to attract investors around the globe. Even it is easier when it comes to applying for a business loan. Since the investors are confident that they are not liable to pay extra invest in the business other than what they have already paid. They would contribute only the amount for which they were agreed, in case of financial crises). In case, a passive investor becomes a silent partner; he would be liable to pay equity funds. They would be fully liable and exposed to the debt. This is a case when a company is going through a financial crises phase.

Besides, a company is also liable to facilitate the partner in profit and expose to the changes made by the company from a management perspective.

Perpetual succession

A corporation runs on indefinitely basis (unless it is wounded up). Regardless of the retirement or death considerations of owners/shareholders/, managers, and directors.

Cons

High costs of registration

Since 28 May 2012, company registration in Australia is conducted on a national level with the government fee or charges of $36 per annum registration period. Further, the government charges $85 for a three-year registration period.

Australian business registration is a country-wide entity and costs approximately $650 to $750 through a 'company formation agent'. When you consider doing so through an accountant, this would cost roughly $1200 or $1500. In case you use Incorporator (the information supplier), the total would cost $665 (including GST). However, if you are more concerned with the price, you should make your price comparisons.

It is important to know that the company registration will eliminate the need to register the business name (you always need to use the exact and full company name including the ending name, such as Pvt Ltd).

Ongoing costs

You need to renew the business name periodically. Depending on your registration tenure, you would need to renew it after either one year or three years, when your registration is expired. The government again would charge you $36 – if you need a one-year registration plan or $85 for three years plan.

On the other hand, a 'standard' private business is liable to pay ASIC review charges of $230 each year. Moreover, there are other various ongoing costs of the companies. A few examples of ongoing cost include accounting fees additionally associated with maintenance of company accounts.

High taxation

Individuals and businessman (including the traders under a simple registered company name) are liable to pay high taxes - the top tax rate is 47% (it includes 2% Medicare levy). On the other hand, Australian companies are liable to pay their taxes at a business tax rate of 30%. However, this does not come up with the concept that companies will always be liable for 'less tax'. This is because the tax rates for individuals are on a sliding scale, and they include an initial tax-free threshold.

The fiscal year begins July 1 and ends June 30. However, the calendar year can also be used, on-demand to the tax authorities. The other business taxes include the tax on additional benefits. Companies must go to a certified account commissioner to perform an annual audit of their financial statements. Australian companies and foreign companies, in general, receive the same tax treatment as non-resident companies. They are only taxed on your income of Australian origin.

Trouble in export

If you have an export-related business, for example, you are a manufacturer, you may face a few hurdles in exporting goods. Here are some problems you may face:

• Time and dedication to study and know the target market.

• Request financial support.

• Obtain new special quality certifications.

• Modify the product, the packaging or its presentation.

• Logistics and adapt to new distribution channels.

• Create new products to adapt to new markets.

Well, take these points as the requirement of exporting business, instead of challenges and hurdles. They would allow you to start your exporting business in the safest way.

Winding up the company

The ASIC has a few requirements. It is mandatory for all the companies to meet these requirements to dissolve their business. Fulfilling those requirements will enable the ASIC to accept the request to cancel the registration of a company. The requirements of ASIC state that there must be no outstanding debts, assets must not be under $ 1,000, no fines or pending fees, etc.