Setting up a business in Australia
There are a few options for investors when establishing businesses in Australia. They can setup a new company, register a foreign company or acquire an existing company.
Four major types of structures that investors can use to setup a business
- Sole trader
Establishing an Australian Company
Australian companies are incorporated businesses and they are separate legal entities.
Australian Securities and Investments Commission (ASIC) is the regulator in Australia and all companies are required to register under ASIC.
Registering as a foreign company
Foreign entities may wish to carry on business in Australia as a foreign company. The Australian Securities and Investments Commission (ASIC) outlines the criteria which defines foreign companies and the rights foreign companies hold in Australia.
As with Australian companies, foreign companies must be registered with ASIC. ASIC is also responsible for the ongoing regulation of foreign companies.
Acquiring an Australian company
ASIC maintains a register of regulatory and guidance documents relating to the takeover of companies.
Investors interested in acquiring an Australian company should refer to ASIC’s takeovers and reconstructions.
Proposals by foreign investors to acquire Australian companies may require the submission of a formal proposal. This is subject to approval by the Australian Foreign Investment Review Board (FIRB). FIRB examines proposals and advises the Australian Government on whether those proposals are suitable for approval under the Government’s policy.
Registering a trade mark and domain name
Companies entering Australia will want to protect their rights and prevent others from using their name by registering a trade mark and domain name. Information on how to do this is available in this Guide under Australian Intellectual Property laws.
Tax issues in Australia
Tax Registrations are required before a business starts trading. Australian Business Number (ABN) and Tax File Number (TFN) are required to be obtained from the Australian Taxation Office.
Tax Reporting and paying tax
Our financial tax year is from 1 July to 30 June. Income tax returns are required to be filed with the Australian Taxation Office every year. Income tax is calculated on the net profit of businesses. You may be eligible for a range of deductions for business expenses to reduce your assessable income. If required the tax year can be changed in accordance with a holding company’s overseas tax reporting period.
Business activity statements (BAS)
Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.
If you are a business, you use a BAS to report and pay the GST your business has collected and claim GST credits.
BAS reporting can be on a cash or accruals basis. Quarterly BAS reporting is the most common type. Monthly and annual GST reporting are also available for different GST circumstances.
Separate bank accounts are required if you are operating a partnership, company or trust. With a business account, you’ll find it easier to track your business expenses and income, control your business expenses and income, clearly show your business finances separately from your personal finances, get the information you need for your accountant and to meet your tax and reporting obligations. A business bank account also makes your business look more professional to your customers.
Due to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, all account holders and signatories must be identified. The documentation differs for different business structures, however for a domestic private company, the following information is required from the company:
- Full company name, as registered with Australian and Securities Investments Commission (ASIC)
- Australian Company Number
- Australian Business Number
- Company’s registered office
- Company’s place of business
- Full names of ALL company directors
- Date and state of registration or incorporation
- Full business name/trading name
- Australia regulator and company license
- Foreign tax residency information (if applicable)
Each signatory and the beneficial owner will also need to provide their own personal identity documents:
One primary photographic identification document: Passport or driver’s licence (either Australian or foreign)
or, One primary non-photographic identification document: birth certificate or citizenship certificate (either Australian or foreign) and one secondary identification document (listed in each bank’s identity checklists).
START YOUR BUSINESS CHECKLIST
- Consider a business structure
- Apply for Australian business number (ABN), goods and services tax (GST) and business name
- Setting up record-keeping and accounting systems
- Understand your tax and legal obligations
- Arranging business insurance and workcover
- Setting up business bank accounts
- Employing people and work health and safety regulations
- Grants and finance assistance
- Online businesses
- Buying an established business or a franchise
- Importing and exporting goods regulations
It is not always easy when starting a business in a foreign country. We offer advice and support to assist you to setup your new business in Australia. Services including advising proper business structures and accounting system, provision of taxation and accounting advice, preparation of financial reports and tax returns. We also have strong connections with lawyers, bankers, insurance brokers, business brokers, real estate agents, human resources and information technology consultants.