Setting up a company - What you need to knowIf you’ve decided to start your own company – first of all, congratulations! It’s an exciting time when you become your own boss in an exciting new endeavour. However, there are a number of steps you need to take before you’re up and running.
1. Confirm that the company structure is right for youFirst of all, you need to be sure that the company structure is right for you. A company is a legal entity which is regulated by the Australian Securities and Investments Commission (ASIC). It has higher set up and administration costs due to additional reporting requirements. It’s run by directors but owned by shareholders. It’s best to seek advice through a lawyer or other professional in this initial stage.
2. Choose a company nameWe don’t mean that you need to agonise over a clever sounding name for your company – when you set up a company, the name must show its legal status. For a propriety, or privately held, company, the word ‘proprietary’ or the abbreviation ‘Pty’ must be in the name and it must show the liability of the members. You also need to make sure that the name you want isn’t already taken. You can do this through the name checker on the ASIC website.
3. Decide how the company will be governedThe next step is to decide how your company will be internally governed. You’ll need to decide if you want to use replaceable rules, the company’s own constitution or a combination of both. Replaceable rules refer to the provisions of the Corporations Act 2001. The company constitution must be kept in company records. You can find more information about the internal governance of your company here.
4. Understand the obligations of an officeholderAs director or secretary of a company, you need to comply with the requirements of the Corporations Act 2001. Before you formally register your company, you need to be fully aware of your legal obligations as you’re responsible for the company’s compliance.
5. Get formal consentBefore you can register your company, you need to obtain written consent from a director, secretary and member. All these roles must be filled by people older than 18 years. A proprietary company doesn’t need to have a secretary but must have at least one director. If your registered office will not be occupied by your company, you need to get written consent from the occupier that your company can use that address.
6. Formally register your companyWhen you’re ready to register, you can register your company through a business service provider or directly through ASIC using forms from their website.
7. Know your legal obligationsWhen you’re setting up your company, you need to be aware of your legal obligations. Your company name must be clearly displayed at every place open to the public that your company does business. When you’re company is registered, you’re provided with an Australian Customer Number (ACN) which must appear on a number of formal documents.
Visit the ASIC website for further information about setting up a company.
For information on insurance for your company, contact CGU today.