How to set up a company in Australia: step by step

Registering a company is quick on paper, but the decisions behind it matter long after the registration comes through. This guide walks through the steps and the choices to get right.

Before you register

A company is a separate legal entity with its own obligations. Before you register, it is worth being clear on why you are using a company at all, rather than trading as a sole trader or through a trust. The usual reasons are limited liability and the flat company tax rate. If you are not sure the company is the right structure, read our comparison of the structures first, or speak to us and your accountant together.

A point we make to every new client. Registering the company is the easy part. The decisions that cause trouble later are the ones people rush, such as who owns the shares, in what proportions, and what happens if an owner wants out. Think about those now, not after a dispute.

Step 1: Choose a company name

You can register a name, or simply use the Australian Company Number as the name. If you choose a name, it must not be identical to an existing company or registered business name, and some words are restricted. Check availability before you settle on branding. Registering a company name is not the same as securing a trade mark, so if the brand matters, consider a trade mark search as well.

Step 2: Decide the officeholders

Every company needs at least one director. A proprietary company does not need a secretary, but can have one. At least one director must ordinarily reside in Australia.

Each director now needs a director identification number, which they must apply for themselves. Directors also need to consent in writing to act. Directors carry real legal duties, so make sure anyone taking the role understands what they are signing up for.

Step 3: Decide the shareholders and share structure

This is the step we most often see rushed. You need to decide who the shareholders are, how many shares each holds, and what class of shares they are. The split should reflect the real deal between the owners.

Think ahead here. If you plan to bring in investors, reward key staff, or allow for different rights to dividends and control, the share structure should allow for it. Changing it later can be awkward and can have tax consequences. If there is more than one owner, this is also the point to plan a shareholders agreement.

Step 4: Choose a constitution or the replaceable rules

A company is governed either by the replaceable rules in the Corporations Act 2001 (Cth), by its own constitution, or by a combination. The replaceable rules are a basic default set. A constitution is a tailored rulebook for the company.

Our view is that any company with more than one shareholder, or any real plan to grow, should have a proper constitution rather than relying on the default rules. The default rules are thin, and they do not deal well with the situations that actually cause disputes.

Step 5: Register with ASIC

The company is registered with ASIC, usually online. You lodge the company details, the officeholders, the shareholders, and the registered office and principal place of business. On registration, ASIC issues the Australian Company Number and the certificate of registration.

There is a registration fee payable to ASIC, and an annual review fee payable each year on the anniversary of registration. The fees are indexed on 1 July each year, so check the current amounts on the ASIC fees page.

Step 6: After registration

Registration is the start, not the finish. After the company exists, you usually need to apply for a tax file number, register for an ABN, and register for GST if your turnover requires it. Open a company bank account in the company's name, and keep the company's money entirely separate from your own. Set up a register of members and keep your records in order.

The separation of money is the point we press hardest. Treating the company account as a personal account is the fastest way to undermine the limited liability you set the company up to get, and it causes real problems if the company is ever examined or wound up.

Frequently asked questions

How long does it take to register a company? The registration itself is usually quick, often the same day when lodged online. The decisions beforehand are what take time.

How much does it cost? There is an ASIC registration fee and an annual review fee each year, plus any professional fees for the constitution and advice. Check the current ASIC fees on their website.

Do I need a constitution? You are not required to have one, but we recommend a proper constitution for any company with more than one shareholder or real plans to grow.

What is a director identification number? A unique identifier each director must apply for personally before or shortly after becoming a director.

Keep reading

• Business structures and start-ups
• Sole trader, company or trust: which structure is right?
• Why your start-up needs a shareholders agreement

This article contains general information only and is not legal advice. For advice about your situation, please contact us. Liability limited by a scheme approved under Professional Standards Legislation.