What are the legal requirements for incorporating your business in Australia even if you are a foreigner? And how can an entrepreneur raise funds for their business growth and sustainability?
Australia is the sixth largest country in the world and the largest country by area in Oceania, making it a suitable place for entrepreneurs to start a business.
As a high-income economy, Australia generates its income from mining, exports, banking, manufacturing, services, agriculture and international education. You may want to see other profitable business ideas in Australia here. The country has well-developed international trade relations, and free trade agreements with other countries and operates a liberalism scheme related to foreign investment.
Foreigners have legal rights to start and own a business in Australia as the government has signed DTAAs with other countries to protect investors, especially from double taxation.
What are the Australian laws you need to comply with when registering your business? Australia accommodates businesses that comply with WHS (Work, Health and Safety) regulations and codes of practice, guarantees employee wages, has compensation insurance for each employee, comply with tax obligations and fair trading.
In this article, we will explain the legal requirements you need to register your business in Australia. In addition to that, we will give you hints on how to fund your new business in Australia.
Common Legal Requirements for Incorporating Your Business in Australia
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Business registration in Australia is not as difficult as you think. All you need is to pay attention to certain codes for doing business if you intend to carry out the registration yourself or hire an Australian business registration professional.
The codes you should pay attention to cut across Australian consumer law, the competition and consumer act, Australian standards, codes of conduct and fair trading laws. These are all perspectives on operating a business in Australia. Meanwhile, the following below are the legal requirements for business registration in Australia.
Understand your business needs and rights
The Australian Securities and Investment Commission (ASIC) is the authority in charge of business registration. A proper understanding of your business needs is required to determine the business structure to operate within Australia.
When you set up a company, you create a legal entity that’s separate from you. A company in Australia has different legal, financial and record-keeping responsibilities and requirements compared to other business structures, so it’s important you know what’s involved before registration.
Business.gov.au has a ‘Help me decide’ tool to help applicants understand and choose the right business structure.
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Business name selection and reservation
You can only use an available name to register your business. Every American intending to start a business in Australia needs to know this. The ASIC has a check name availability search to help applicants see if their business name is available for use.
In the past, multiple businesses could bear the same name as long as they were registered in different regions and states but it is no longer acceptable under ASIC national register. Today, whether your business is in Queensland, Victoria, New South Wales, South Australia, Western Australia or Tasmania, once the name is taken in one state, you can’t use it in another state.
Once your name is approved by ASIC, they go ahead to reserve the name for two months. However, you must complete your business registration within that period or you will have to request a name reservation extension.
Decide how your company will operate
In Australia, companies are governed by a set of rules which determine how the business will operate. The rules are either replaceable rules, the constitution of the company or a combination of both.
Replaceable rules are a basic set of rules to manage your company if the company does not want to have a constitution. A constitution, on the other hand, is a written document of all applied rules for governing the company. Companies must keep a copy of their constitution with their company records.
Fulfill your legal obligations as an officeholder
In Australia, under the Corporations Act, you must fulfill certain legal obligations for your business registration. The following are the legal requirements for a business office holder in Australia:
- Ensure that details of the company are updated
- Maintaining company records on the register
- Appropriate payment of annual review and lodgement fees.
- Application for DIN (Director’s Identification Number) for your company director
Get consent from the necessary personnel
To further process your business registration, you must get written consent from your director, secretary and one member (It is expected every company must have one member at least).
Your director and secretary must live in Australia if you intend to operate a proprietary company but at least two directors must reside in Australia if your company intends to operate as a public company. The consent of the owner of your office address is also required. Meanwhile, you are not to give the authorities these consent copies but keep them in your company records.
Proceed with the business registration
Upon successful presentation of the legal requirements, you can now proceed to register your business in Australia either via paper or online (the online registration has exemptions). Applicants can register using the Australian Government’s Business Registration Service (BRS) or contact a private service provider (PSP)
The BRS charges a low fee compared to the PSP and they also combine tax registration with business registration. Once the company application is received and processed, you will provide the Australian Company Number (ACN) which will be used to apply for your Australian Business Number (ABN).
When all applications are fixed, your certificate of registration would be sent and your corporate key- a unique number for your company. The corporate key is to create an account online and update your details.
Now, you have been able to successfully register your business in Australia. You can now display the company’s name anywhere you conduct your business and also display the company’s ACN and ABN on any document for publishing.
How Can You Fund Your New Business in Australia?
There are several means for funding your business in Australia. This includes:
Apply for grants
The Australian government recognizes the importance of startups as a means of generating employment for the population. This makes the government initiate the implementation of certain grant programs to boost the growth and sustainability of new businesses. The available grants programs in Australia are:
- Export Market Development Grants (EMDG)
- Austrade Landing Pad
- The Entrepreneur’s Programme
- Accelerating Commercialization
- Research and Development Tax Incentive
Several states in the country also provide their own grants for residents.
Some of the big Australian banks provide low or zero-interest loans to help businesses grow. These business loans are targeted at young male or female entrepreneurs in certain industries, and geographical locations on an unsecured basis and at a competitive rate.
Another way to raise funds for your business in Australia is through crowdfunding. Crowdfunding is a credited means of sourcing funds for small businesses and entrepreneurs. Crowdfunding involves funding a project by raising money from a large number of people who contribute individually as they can via the internet. Australia has its own local crowdfunding sites which include IndieGoGo, VentureCrowd and Pozible.
Friends and Family
You can start with your personal savings to fund your business. You may be lucky to find friends and families who believe in you to either contribute or borrow some cash to add to your business funds.
Business angels usually provide startup capital best known as seed capital. They look for high-potential businesses to invest in so they can get a good ROI. Knowing how to approach investors for funding is a skill every entrepreneur needs to learn. This type of business funding helps entrepreneurs to get continued business support, enterprise, mentoring, and contracts.
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FAQs About Starting a Business in Australia
Can I run a business without registering in Australia?
It’s illegal to operate a business without being duly registered as a business entity in Australia. Having an unregistered business name is a breach of the Business Names Registration Act 2011. Breaching this law attracts a penalty of 30 penalty units ($6660, at the time of publication).
Can a non-Australian citizen have an ABN?
Non-residents may be entitled to an Australian Business Number (ABN) if they are carrying on or starting an enterprise in Australia or making supplies connected with Australia’s indirect tax zone.
Choosing a funding source is a crucial decision for your business. Therefore, it is important you understand your business goals and purpose before picking a funding source. The reason is that each business funding source has its benefits and shortcomings, so you will need to consider your options very well.