So, you’ve been thinking about starting a company for a while. Now it’s finally time to turn your dream into a reality and breathe life into your ambition. But where do you start and how do you go about it?
Firstly, you need to be sure that a company structure is right for you.
A company is an entity that has separate legal existence from its owners. This means if you start a company, as an owner, you’ll be a director in a management and operations sense and a shareholder in a financial sense. A company’s legal status gives it the same rights as a person, which means that a company can incur debt, sue and be sued.
Business.gov.au has a ‘Help me decide’ tool that can help you work out whether or not a company is the right business structure for you. Once you’re sure of this, you need to choose what kind of company you’re going to be.
There are two main types of companies – private (proprietary) and public – but you can also register your company as a not-for-profit or charitable organisation, registrable Australian body, or special purpose company.
In Australia, all companies must be registered with the Australian Securities and Investments Commission (ASIC). But before you can do this, there are five prerequisites you must achieve, which we’ve listed below.
1. Choose a name
It’s always a good idea to have an original company name that sets you apart from your competitors. To make sure no one else has registered your name, check ASIC’s business name availability search.
You also need to make sure your company name reflects the company’s legal status. For example, if your company is private the name will have to include Pty Ltd.
Be sure your choice of name doesn’t breach any of ASIC’s naming conventions. For example, you cannot call yourself ‘bank’, ‘trust’, ‘royal’ or ‘incorporated’ without government approval. Visit ASIC’s website for more details about this.
One thing to note is that you can register a company name and then trade under a different business name. For example, ‘Alpaca Party Pty Ltd.’ can register ‘The Alpaca Party' as a business name and use that name on all of its signage.
2. Choose your company’s rules
Choosing your company rules comes down to two things – do you need a constitution, or can you use the replaceable rules from the Corporations Act?
Replaceable rules are a basic set of rules for managing your company. Using them means your company doesn’t need to formulate a written constitution. Alternatively, you can devise your own constitution in accordance with the Corporations Act and keep it with your company's records.
3. Choose your officeholders
Every company needs a secretary, a director and a shareholder (also known as members).
Approach your nominated secretary, shareholders and directors and seek written consent to make sure they understand the obligations of their position.
Officeholders are ultimately responsible for a company's adherence to the Corporations Act. This includes ensuring company details are kept up-to-date, maintaining company records and details on the register, and paying the appropriate lodgement fees and annual review fees as required.
4. Choose your share structure
After you’ve chosen your shareholders you must decide how many shares they will own and what class of shares they will be issued. Ordinary shares are the most common.
A proprietary limited company must not conduct any activity that requires disclosure to investors. They may only offer shares to members of the company or employees/subsidiaries of the company.
5. Nominate a principal place of business
A company must have a principal place of business and registered office.
If your registered office doesn’t belong to the company – for example, the company’s registered office is your accountant's office – you must get their written permission to use the address.
Once you have done all of these things, you’re ready to register the company with ASIC. You can register the company online using the Australian Government Business Registration Service, use a private service provider like your accountant or solicitor, or lodge a paper form directly with ASIC.
You must complete all information on the form, sign it and pay the fee. Once your application is processed, you will receive an Australian Company Number (ACN).
Once you have this, you can register the company and ASIC will send you a certificate of registration, as well as a corporate key (a unique number for your company). You will need your corporate key to create an account online and update your details.
After your company is registered, make sure that the company's name is on display wherever the company conducts business and is open to the public, ensure the company's ACN/ABN is displayed on any documents the company publishes, and be sure the company's details are kept up-to-date.
Once these five essentials are ticked of your list you can then apply for business insurance to stay protected. It’s easy to find out how much cover you’ll need. Simply get a quick business insurance quote online or talk to one of our helpful insurance specialists on 13 24 81.