The limited liability company is a legal entity that can be found in Australia as well, as this business form is prescribed by the commercial legislation of almost all countries. The limited liability company in Australia is seen, from a legal point of view, as a separate entity than its founders, with separate assets and debts.
The limited liability company in Australia can also be referred to as a private proprietary company. An aspect that should be clarified from the beginning is that this company type does not require a minimum share capital and this can be an advantage when calculating the start-up costs necessary for investing here. If you need further information on the advantages that can be offered by a limited liability company, our team of specialists in company formation in Australia remain at your disposal; you can also address to us if you want to know how to open bank account in Australia.
The characteristics of a limited liability company in Australia in 2021
Foreign investors who want toopen a company in Australia operating as a limited liability company must know that they can easily set up this legal entity, as there aren’t any restrictions applicable to foreign businessmen. However, when registering the limited liability company in Australia, investors should know the following:
• the company needs at least 1 shareholder for its incorporation;
• this company type accepts a maximum of 50 shareholders;
• it is necessary to appoint 1 director and 1 resident director;
• the directors must meet the minimum age requirement, which is of at least 18 years old;
• if all the documents are correctly completed and submitted with the local institutions, the limited liability company in Australia can be incorporated in minimum 2 days and maximum 5 days.
When opening this business form, investors have to be aware of the fact that they have the legal obligation of preparing financial statements during each year of financial activity. More than this, the company may also need to be registered for the Goods and Services Tax (GST) in the case in which the company’s sales reach a value of more than AU $75,000. Extensive details on how to register for tax purposes can be offered by our team of consultants in company incorporation in Australia.
The advantages of company formation in Australia for a limited liability company are not limited to the aspects that we presented above; investors can benefit from additional rights that are prescribed by the national legislation, which provide the possibility of a flexible business environment. Some of the highlights that can be an interest for an investor opening a limited liability company are the following:
• the investor can rent the office premises for the company prior to completing all the steps for company formation in Australia;
• the local or foreign businessman has the right of developing an business activity through a limited liability company by renting the services of a virtual office;
• the legal entity can be used for carrying business operations on the Australian territory;
• the company can enter commercial contracts with local clients and it can also issue invoices to local clients;
• through this business form, the investor is allowed to import in Australia raw materials;
• the company can also enter export operations from Australia.
In Australia, the immigration law provides the right to foreigners to relocate here for employment purposes, which can be done based on a temporary employment contract or a long-term employment contract (employees can work part-time or full-time). When opening a limited liability company in Australia, investors are allowed to hire foreign workforce.
In almost all the situations prescribed by the immigration law (few exemptions do apply), foreigners will need to obtain a work permit, which is issued when the formalities for a work visa are completed following the applicable immigration procedures. Businessmen who want to hire foreign workforce should know that these formalities can be completed in a period of approximately six months, but this can vary depending on the work visa applicable to a foreigner; for more details on how to employ foreign workforce, we invite you to address to our specialists in company incorporation in Australia.
The procedure for company formation in Australia has not been modified in 2021, thus, foreigners who are familiarized with the local incorporation requirements do not have to update their knowledge; however, investors who are new on the Australian market and who want to start a business in 2021, will need to learn plenty rules and regulations and here, our team of consultants can be of help for those who want to register a limited liability company, as well as for those who are interested in other company types.
What are the registration costs for a company in Australia?
Please be aware that the process of company formation in Australia does imply the payment of various fees; additional costs can appear from registering an office and other similar aspects. As we presented earlier, a local company, including the limited liability company, has to be registered with the Australian Securities and Investment Commission.
The registration itself has specific fees, which are prescribed by the Corporations (Fees) Act 2001 and Corporations (Review Fees) Act 2003. The fees are updated each year, on 1st of July, in accordance with the modifications deriving from the consumer index prices. Currently, starting with 1st of July 2020, those who want to set up a company in Australia must pay the following fees:
• if the company is registered under the Section 118 and if the company has a share capital, the fee is of $506;
• if the company does not have a share capital, then the fee will be of $417;
• if the company is registered under the section 601 BD, there are 2 fees – of $417 and of $506;
• the registration of a foreign company in Australia is charged with a fee of $ 506;
• the change of any type of information related to a legal entity is charged with a fee of $9.
What are the main taxes for a limited liability company in Australia?
A limited liability company in Australia represents an entity that is liable to taxation, as the main purpose for which is set up is to obtain an income from the sale of various goods or services. One of the main taxes applicable to this company type is the corporate income tax, which is charged at the standard rate of 30%.
A lower rate of 27.5% is available for companies which are included in the base rate entity or in the small business entity categories. The characteristics which provide the possibility of a legal entity to be included in one of the two categories are given by the annual income and the percentage of the passive income obtained by the respective companies; an extensive presentation on these aspects can be offered by our specialists in company formation in Australia.
Companies in Australia are also liable to the payment of the capital gains tax, which is applied to the disposal of assets of legal entities. This tax can also be charged to foreign companies, but only to the assets they purchase and use in Australia. It must be observed that the tax can also be imposed to small businesses, but only in certain conditions.
The video below offers a short presentation on the limited liability company in Australia:
A limited liability company is liable to the payment of the Goods and Services Tax, which represents a national consumer tax applied to almost all the goods and services sold on the Australian market; this tax represents an equivalent of the value added tax that is applied in most of the world’s jurisdictions.
As a company developing a commercial activity here, it is also necessary to pay the payroll tax, charged on the activities developed by the company’s employees. Businesses can also be liable to the payment of the land tax or the fringe benefits tax.
What are the basic steps for company incorporation in Australia?
Regardless of the company type that is selected for incorporation in this country, the company’s founder has to follow a set of steps when registering with the local authorities. One of the basic aspects necessary when registering a limited liability company in Australia is to select a company name that meets the provisions of the law.
A suitable name has to unique at a national level. In Australia, it is accepted to include various characters in the company’s name, besides letters (numbers are accepted, such as are the following signs: “&”, “-“, “:”, “,” and others). The trading name must also reflect the legal entity under which the company operates. Thus, in the case of a limited liability company in Australia, investors will have to add at the end of the company name the abbreviation “Ltd.”, used for this company type.
Those who want to set up a company in Australia must also take the necessary measures in order to obtain a company number, which is compulsory for all legal entities operating here. The number is obtained from the Australian Securities and Investments Commission. The Australian Company Number (ACN) has to appear on all official company documents.
Another important step that provides legal personality to a limited liability company in Australia is drafting and signing the company’s bylaws. The statutory documents must include specific provisions that specify the manner in which the company can function, what the basic objects of activity are, it states its registered office, the rights and the obligations of the shareholders and numerous relevant matters; you can request assistance on the applicable regulations from our specialists in company formation in Australia.
After the company’s documents are signed and after the company has obtained an identification number and registered with the necessary institutions, the company’s representatives have to open a corporate bank account and this procedure can be completed at commercial banks operating in Australia.
In this case, the banks have the right of requesting a wide range of company documents, as per the regulations of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. We invite you to contact our team of consultants, who can easily help you open a company in Australia.
Call us now at +44 203 287 0408to set up an appointment with our business consultants in Canberra. Alternatively you can incorporate your company without traveling to Australia.
As a BridgeWest client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Australia.