Business entities in Australia
Registering a company in Australia according to ASIC requirements and the Corporation Act of 2001 is the most common way to start doing business in this country. If you are interested to learn more about the Australian limited liability company (locally known as a proprietary company) and other types of businesses entities available in Australia, then this page is of interest to you.
Doing business in Australia with a local entity
The Australian limited liability company (private proprietary company)
- A limited liability company can be formed in Australia with only i) one shareholder ii) one director and iii) no minimum paid-up capital. Foreigners living outside of Australia have to appoint at least one director living in Australia. Healy Consultants can provide nominee services as a strategy to comply with this legal obligation;
- After securing its registration certificate (locally known as the Australian Business Number, or ABN), the company must prepare financial statements every year. The Australian authorities however only require local businesses to register and report for GST only if their annual sales exceed AU$75,000 (approximately US$55,000);
- Best uses for an Australian proprietary company: the Australian proprietary company is usually used when a single entrepreneur or a group of businessmen who already know each other want to do business in Australia.
The Australian trading trust
- In Australia, it is possible to use a trust as an alternative to a trading company. In order to do so, the trustee(s) must register the trust with the Australia Companies Registrar and the tax authority in order to obtain an Australia Business Registration Number and a Tax File Number. The main requirement for acceptance is to appoint a resident either as i) trustee or (if all trustees are residing overseas) ii) public officer;
- The trading trust is usually structured as a tax transparent entity, not subject to corporate income tax in Australia provided all its income is passed through to the trust’s beneficiaries;
- Best uses for an Australian trading trust: the trading trust is an interesting business vehicle for a family-owned business.
The Australian limited liability partnership (LLP)
- The Australia Partnership Act of 1963 provides for the registration of limited partnerships, between i) general partners who are liable for the partnership’s activities on their personal assets and ii) limited partners who are only liable for their committed contribution at the formation of the partnership. At least one general partner must be residing in Australia;
- Partnerships are usually tax transparent, in the sense that the income derived through the partnership is not taxable at the “corporate” level but as personal business income of the partners themselves. The partnership however is still subject to standard GST and employer registrations;
- Best uses for an Australian LLP: due to the unlimited liability of the partners, a partnership is a good entity to raise corporate finance with banks, provided the general partners have sufficient collateral for the requested loan.
The Australian public limited company (unlisted public company)
- Registration of a public company in Australia follows similar requirements and requirements to those applying to a proprietary company. The main differences are i) the need to appoint at least three directors, amongst whom two resident directors (instead of one) and ii) the obligation for the financial statements to get audited (while proprietary companies can benefit from the SMEs exemption);
- Best uses for an Australian PLC: The Australian public company is usually used by group of businessmen who want to do business in Australia while making sure that the management represents all parties and the financial statements represent a fair summary of the company’s profits and losses. Such entity is also required before an eventual IPO on the Australian Stock Exchange.
The Australian free zone company
This entity currently does not exist as Australia does not provide for free trade zones.
Doing business in Australia with a foreign entity
The Australian branch
- Foreign corporations can register a local branch of their overseas company. The procedures to do so are easy to complete and only require i) appointment of a local agent allowed by the foreign company to accept services of process and notices on behalf of the foreign company and ii) a registered address in Australia. After its registration, the branch must submit annual financial statements with the Australian Companies Registrar (ASIC);
- Best uses for an Australian branch: the main disadvantage of a branch compared to a subsidiary is that the overseas company is subject to unlimited liability for the activities (and losses) of its Australian branch. A branch is hence recommended only if the operations in Australia will be simple to manage from overseas and do not create any legal risk. Another advantage of the branch is to consolidate the financial results of the Group it belongs to.
The Australian Representative Office
- Where a foreign company does not intend to carry on business in Australia, it may seek to establish an Australian representative office. Such an office must however only engage in activities which will not amount to carrying on business, for example market research;
- Best uses for an Australian representative office: the representative office is an attractive business entity prior to first ventures in Australia, when our Client only wants to conduct a market survey or have a local presence in the country.
Comparison table of different types of business entities in Australia
|Operations and logistics||LLC||Trading trust||LLP||PLC||Branch||RO|
|Also known as:||Pty. Ltd.||Trading trust||LLP||Public proprietary||Branch||RO|
|Office premises before registration?||Yes||Yes||Yes||Yes||Yes||Yes|
|Our Firm can supply a Australia virtual office?||Yes||Yes||Yes||Yes||Yes||Yes|
|Doing business in Australia permitted?||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to sign contracts with local Clients?||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to invoice local Clients?||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to import raw materials?||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to export goods?||Yes||Yes||Yes||Yes||Yes||No|
|Accounting and tax|
|Corporate tax on local income?||Yes||No||No||Yes||Yes||Not allowed|
|Corporate tax on foreign income?||Yes||No||No||Yes||No||Not allowed|
|Statutory audit required?||No||No||No||Yes||Yes||Yes|
|Annual tax return to be submitted?||Yes||Yes||Yes||Yes||Yes||Yes|
|Access to DTAAs?||Yes||No||No||Yes||Yes||No|
|Issued share capital required?||US$1||US$1||US$1||US$1||None||None|
|Resident director/representative required?||Yes||Yes||Yes||Yes, 2||Yes||Yes|
|Australian shareholder/partner required?||No||No||Yes||No||No||No|
|Minimum number of directors?||1||1||2||3||1||1|
|Minimum number of shareholders?||1||1||2||1||Parent company||Parent company|
|Individual shareholders allowed?||Yes||Yes||Yes||Yes||No||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors||Yes||Yes||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff?||Yes||Yes||Yes||Yes||Yes||Yes|
|How long to get work permit approved||6 months||6 months||6 months||6 months||6 months||6 months|
|Fees and timelines||Check fees||Check fees||Check fees||Check fees||Check fees||Check fees|
|Detailed engagement timelines?|
|Estimate of engagement costs||AU$7,997||AU$18,976||U$6,847||AU$7,997||AU$7,990||AU$6,900|
|Draft invoice||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF|