Before forming a new business, it’s worth noting that there are different business structures. Each has its own set of rights and obligations that are unique to it.
A company is a legal entity distinct from the people who operate it. If you are thinking of starting or growing your business, you might as well want to establish your company. It is very important to register a company. While registering a company may seem daunting, it contributes to the growth and recognition of your business. There are several other advantages of registering a company, but also a few things to keep in mind.
Benefits of Registering a Company
1. Limited Liability
You will be legally responsible for the debts and losses of your business as a sole trader or partnership. This might be risky, as it puts your funds at risk. However, a registered company is a separate legal entity that allows you to protect your assets. Business debts are not passed to you, allowing you to focus on building your company.
2. Minimum Tax Liability
The current company and small business tax rates in Australia are lower than the highest personal tax rate. You are taxed as an individual, and your business gains are taxable as a sole trader. Additionally, your business will qualify for a variety of tax deductions.
Depending on the revenue generated by your company, you may likely pay less tax under a registered business.
3. Conflicts with the Founders
Registering a company is quite beneficial if a problem arises with your cofounder. When you register your company, shareholders have limited control. Registered companies allow you to separate ownership and management. You may have several shareholders but not designate management. This will enable specialists to focus on shareholder profit to operate the company entirely.
4. Brand Reputation
Registration improves your company’s reputation and perception. You’ll also be liable to ASIC and have an ACN (ACN). Becoming a registered company is vital in future commercial operations because many businesses only recruit or engage with registered companies.
5. Raise Investment
Raising capital may be necessary for your company’s growth. As a registered company, you will have an easier time attracting investors and raising funds. It allows you to borrow money, sell stocks, and raise equity capital more significantly. Investors prefer registered companies over sole traders or partnerships. They are well aware that there is a formal framework to take their investments.
Requirements for an Online Company Registration
Online registration of company necessitates the following information:
- For Directors and Secretaries: Each personnels’:
- Entire name
- Complete residence address
- Date and place of birth
- For Shareholders: Each shareholders’:
- Full name
- Full address
- Number of shares
- The detailed information of the registered office and significant place of company’s addresses.
- It is also essential to obtain written approval from the individuals who will fill the below positions:
- Managing Director (minimum 18 years of age)
- Deputy Secretary (minimum 18 years of age)
- Constituent (minimum one member)
Today, startups are the universal symbol of development. They are increasing in popularity across the globe due to a variety of utility features. The decision to register a company is always the best option. It provides you with a sense of your company’s future.
Yes, company registration is the initial stage in the entrepreneurial journey. By registering, you give your company value, identification, and a reputable market image.