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Small Business Section

Setting Up

 

 

 

 

 

 

 

 

 

 

 

Register the Company

NB: All foreign companies that seeks to establish a business in Australia are required to register a company name which can be done with ASIC.

You need to decide on your business structure. You can read about the different structures here. If you decide on being a sole trader (which means that your business is not a company & thus not subject to the Corporations Act), you can register your business name with the appropriate state authority (go here for the list). You'll need to apply for an ABN. If you wish to register as a company, read this for more information.

You can search for ABN, ACN or name here.

History

Australian company law (governed by Corporations Act 2001) has its roots in English common law. The joint stock company was the first of its kind which had developed in the early 1600s. However, after one of the joint stock company crashed, the Bubble Act 1700 was put into place to prevent the joint stock companies coming into existence so such a collapse wouldn't happen again. During the early 1800s, joint stock activity occurred again (with huge investments in the industrial revolution) & the Bubble Act was subsequently repealed. Similar activity began occuring in Australia following Britain's steps.

Company law started off as being state law in the initial stages in Australia. As such, registration was required in each state which made incorporating difficult. There was a push to nationalise company law. The Uniform Companies Code was the first of this attempt. The states would all implement the same corporation law initially but went their own ways after & was no longer consistent. In the '70s, a similar thing happened with the cooperative scheme.

In 1989, the Corporation Act was passed.

The validity of this federal legislation was questioned in NSW v Cwlth. The High Court looked at s.51 of the Australian Constitution & found that the Commonwealth only had authority to regulate companies that were already formed.

Later in 2000, the states referred their power to the Commonwealth & we have the resulting Corp'n Act 2001 as it is now which is readily enforced by ASIC.

Company Forms

Sole Trader

You can start beoming a sole trader pretty much instantly. You can register for your ABN & get it on the spot online. You pay the progressive tax rates so it could be highly taxing if your profits go to the sky. If you damage property to the sum of $10 million, that money's going to come from your bank, your car, your mortgage & anything else you might own (unlimited liability). The good thing's that there aren't too many regulations.

Partnerships

You have the same problem of unlimited liability with partnerships. If you open up a partnership with your friend & he spends more than you can afford for something you didn't know about or authorise, you'll still be liable (esp. if it looks like business as usual). The best part is that even after you leave, you can still be held liable. If you intend to start a partnership which does have many advantages, make sure you consult the relevant people.

Companies

There are a couple of ways to distinguish the different types of companies.

You can have your public companies (Something Ltd) or your proprietary companies (Something Pty Ltd). The public companies may be listed or not listed. Listed companies face more regulation.

 

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