Published: April 2025

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Starting a company in Australia is an exciting venture, but it requires careful planning and adherence to legal, tax, and regulatory requirements. This detailed guide covers everything you need to know to incorporate a company, obtain necessary registrations, meet compliance obligations, set up an accounting system, and understand key timelines. Whether you're a local entrepreneur or a foreign investor, this guide will help you navigate the process and set your business up for success.

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Incorporating a Company in Australia

Incorporating a company creates a separate legal entity, offering benefits like limited liability and access to corporate tax rates. The process is regulated by the Australian Securities and Investments Commission (ASIC). Here’s how to do it:

Steps to Register a Company

For detailed guidance, visit ASIC’s Steps to Register a Company.

1. Choose a Business Structure:
   • The most common structure for small businesses is a Proprietary Limited (Pty Ltd) company, which limits shareholders’ liability and is suitable for small to medium-sized enterprises.
   • Decide if the company will be limited by shares (shareholders’ liability is limited to their share value) or unlimited with share capital (shareholders have unlimited liability).
   • Use the business.gov.au "Help me decide" tool to confirm if a company structure suits your needs.
2. Select a Company Name:
   • The name must be unique and not already registered. Check availability using ASIC’s name availability search.
   • Include “Pty Ltd” to indicate proprietary limited status.
   • Avoid restricted words (e.g., “bank” or “royal”) unless approved. Alternatively, you can use the Australian Company Number (ACN) as the name.
3. Determine Governance Rules:
   • Choose between replaceable rules (default rules in the Corporations Act 2001) or a custom constitution. Proprietary companies with a single director/shareholder don’t need formal rules unless additional members are added.
   • If using a constitution, keep a copy with company records.
4. Appoint Officeholders:
   • A proprietary company must have at least one director who resides in Australia. A company secretary is optional.
   • Obtain written consent from each director and secretary (if appointed) and retain these records.
5. Define Share Structure:
   • Decide on the number of shares, share classes, and amounts paid/unpaid per share.
   • Obtain written consent from shareholders agreeing to their share allocation. Maintain a share register to record shareholder details.
6. Register with ASIC:
   • Use the Business Registration Service at business.gov.au for a streamlined process, which allows simultaneous registration for an ACN, ABN, and taxes.
   • Alternatively, engage a private service provider (PSP) (e.g., accountant or lawyer) or use services like Cleardocs or Taxopia. PSPs charge additional fees beyond ASIC’s registration fee (approximately AUD $573 for 2024/25).
   • Provide details like officeholders’ names, addresses, share structure, and governance rules.
   • Registration typically takes 15 minutes online and is confirmed within 2 business days if all documents are provided.
7. Post-Registration:
   • ASIC issues an ACN and a Certificate of Registration.
   • Open a business bank account (mandatory for companies to separate personal and business finances).
   • Appoint a public officer within 3 months of incorporation to handle tax matters with the Australian Taxation Office (ATO). The company secretary is the default public officer unless otherwise specified.

Key Considerations

• Costs: ASIC’s initial registration fee is approximately AUD $573, with an annual review fee (around AUD $310) due on the anniversary of registration.
• Foreign Owners: If the company is more than 50% foreign-owned, additional ASIC reporting requirements apply, such as lodging financial statements.
• Director Residency: At least one director must reside in Australia. Foreign directors need a Director Identification Number (Director ID).

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Essential Tax and Company Numbers

To operate legally, your company needs several unique identifiers for tax and regulatory purposes.

Australian Company Number (ACN)

• Issued by ASIC upon incorporation.
• A 9-digit number used to identify the company in ASIC records and on legal documents.
• Required before applying for an ABN.

Australian Business Number (ABN)

• An 11-digit identifier for interacting with government agencies and other businesses.
• Required for GST registration, invoicing, and avoiding 47% withholding tax on payments from other businesses.
• Apply through the Business Registration Service or ATO Business Portal during or after company registration. The process is free and takes about 15 minutes.

Tax File Number (TFN)

• A unique number for tax purposes, issued by the ATO.
• Apply simultaneously with the ABN via the Business Registration Service.
• Required for lodging tax returns and managing company tax obligations.

Director Identification Number (Director ID)

• A unique 15-digit identifier for company directors to verify their identity and prevent fraudulent activities.
• Mandatory for all directors, including foreign directors, before appointment.
• Apply through the Australian Business Registry Services (ABRS) using myGovID or by phone/paper for non-residents. The process takes about 5–10 minutes and is free.
• Directors keep their Director ID for life, even if they change companies.

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Registering for Taxes and Reporting Obligations

Australian companies must comply with various tax obligations, including GST, PAYG withholding, and business activity statements (BAS).

Goods and Services Tax (GST)

• What is GST?: A 10% tax on most goods and services sold or consumed in Australia.
• When to Register:
  • Mandatory if your GST turnover (gross income, excluding GST) is $75,000 or more ($150,000 for non-profits) in a 12-month period (current or projected).
  • Voluntary if below the threshold, especially if you want to claim GST credits on business purchases.
  • Mandatory for taxi/ride-sourcing services or businesses claiming fuel tax credits, regardless of turnover.
• Registration Process:
  • Register online via the Business Registration Service, ATO Business Portal, or by completing the NAT 2954 form.
  • Requires an ABN. Takes about 15 minutes online, with confirmation within 28 days.
  • Must register within 21 days of exceeding the threshold to avoid penalties.
• Obligations:
  • Charge 10% GST on taxable sales and issue tax invoices (must include ABN, GST amount, and buyer details for sales over $1,000).
  • Lodge a Business Activity Statement (BAS) monthly, quarterly, or annually to report GST collected and claim GST credits.
  • Pay GST to the ATO (net of credits). If credits exceed GST owed, you may receive a refund.
• Accounting Methods:
  • Cash basis: Report GST when payments are made/received (suitable for small businesses with turnover under $10 million).
  • Accruals basis: Report GST when invoices are issued/received (mandatory for larger businesses).
• Timelines:
  • Lodge BAS quarterly (due 28th of the month following the quarter) or monthly for businesses with turnover over $20 million.
  • Annual GST returns are available for small businesses with turnover under $75,000 (due with the company tax return).

Pay As You Go (PAYG) Withholding

• What is PAYG Withholding?: Tax withheld from payments to employees, contractors (without ABNs), or other businesses.
• When to Register:
  • Mandatory if you employ staff or engage contractors without an ABN.
  • Register before withholding any tax.
• Registration Process:
  • Apply via the Business Registration Service or ATO Business Portal when registering for an ABN or GST.
  • Free and takes about 10 minutes.
• Obligations:
  • Withhold tax from employee wages based on ATO tax tables.
  • Report and pay withheld amounts via BAS (quarterly or monthly).
  • Lodge annual PAYG withholding summaries to the ATO and issue payment summaries to employees.
• Timelines:
  • BAS lodgment due dates align with GST (quarterly: 28th of the month following the quarter; monthly for large businesses).
  • Annual PAYG summaries due by 14 July following the financial year.

Pay As You Go (PAYG) Instalments

• What is PAYG Instalments?: Prepayments of company tax based on estimated income.
• When to Register:
  • Mandatory for companies with annual tax liability of $8,000 or more or turnover of $20 million or more (monthly instalments).
  • The ATO notifies you if instalments are required.
• Obligations:
  • Pay instalments monthly or quarterly, calculated using an ATO-provided instalment rate or your own estimate.
  • Report via BAS or Instalment Activity Statement (IAS) for businesses not registered for GST.
• Timelines:
  • Quarterly instalments due 28th of the month following the quarter.
  • Monthly instalments due 21st of each month for large businesses.

Business Activity Statement (BAS)

• What is BAS?: A form to report GST, PAYG withholding, PAYG instalments, and other taxes.
• When to Lodge:
  • All GST-registered businesses must lodge BAS.
  • Non-GST businesses lodge IAS for PAYG obligations.
• Lodgment Frequency:
  • Quarterly: Most common for small businesses (due 28 October, 28 February, 28 April, 28 July).
  • Monthly: For businesses with turnover over $20 million or specific industries (due 21st of each month).
  • Annually: Optional for small businesses with low GST turnover (due with tax return).
• Process:
  • Lodge online via the ATO Business Portal, myGov, or accounting software like Xero.
  • Use a registered BAS agent for accuracy and extended lodgment deadlines.
• Timelines:
  • Set up BAS lodgment within 1 month of GST registration.
  • Late lodgment incurs penalties, so use accounting software for reminders.

Company Tax

• What is Company Tax?: Tax on the company’s taxable income (revenue minus deductions).
• Rates (2024/25):
  • 25% for base rate entities (turnover under $50 million, passive income ≤80% of assessable income).
  • 30% for other companies.
• Obligations:
  • Lodge an annual company tax return by 28 February or 15 May (if using a tax agent) for the financial year ending 30 June.
  • Pay tax by the due date (typically 1 December for large companies; aligns with lodgment for others).
• Process:
  • Prepare financial statements and tax return using accounting software or a tax agent.
  • Lodge via the ATO Business Portal or through a registered tax agent.
• Timelines:
  • Start preparing financial records from day one of operations.
  • Engage a tax agent 3–6 months before the tax return due date for complex businesses.

Other Taxes

• Payroll Tax:
  • State-based tax on wages if your annual Australian wages exceed the state threshold (e.g., $1.2 million in Victoria, $1 million in NSW).
  • Register in each state/territory where employees work.
  • Lodge monthly or annually, depending on the state.
• Fringe Benefits Tax (FBT):
  • Applies to non-cash benefits provided to employees (e.g., company cars).
  • Register with the ATO when you start providing benefits.
  • Lodge an annual FBT return by 21 May and pay any tax due.
• Superannuation:
  • Pay superannuation (11.5% of wages in 2024/25) for eligible employees, including directors employed by the company.
  • Report via Single Touch Payroll (STP) using payroll software.
  • Pay quarterly by the 28th of the month following the quarter.

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Other Compliance Requirements

Beyond taxes, companies must meet legal and regulatory obligations to operate lawfully.

Director Responsibilities

• Act in the company’s best interests and avoid conflicts of interest.
• Maintain accurate financial records for at least 7 years.
• Notify ASIC of changes (e.g., director details, share structure) within 28 days.
• Ensure the company remains solvent (able to pay debts). Directors may be personally liable for debts if the company trades while insolvent.

Public Officer

• Appoint within 3 months of incorporation.
• Must be an Australian resident, at least 18, and capable of handling tax obligations.
• Responsible for ATO communications and ensuring tax compliance.
• Notify the ATO of the appointment using a template notice (included in services like Cleardocs).

Record Keeping

• Maintain records of financial transactions, tax invoices, share registers, and officeholder consents.
• Use digital tools like Xero or MYOB for streamlined record keeping.
• Store records securely for 7 years to comply with ATO and ASIC requirements.

Annual Review

• Pay ASIC’s annual review fee (around AUD $310) and confirm company details annually.
• Failure to pay may lead to deregistration.

Industry-Specific Licences

• Certain industries (e.g., construction, healthcare, food services) require specific licences or permits.
• Check with business.gov.au or state/territory authorities for requirements.

Workplace Compliance

• Comply with Fair Work Act for employee rights, wages, and conditions.
• Register as an employer with the ATO for PAYG withholding and superannuation.
• Implement workplace health and safety (WHS) policies as per state/territory laws.

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Setting Up an Accounting System

An efficient accounting system is critical for compliance, financial management, and tax reporting.

Recommended Tools

• Cloud-Based Software:
  • Xero: Integrates with the ATO for BAS lodgment, tracks GST, and manages payroll via STP.
  • MYOB: Suitable for small to medium businesses, with features for invoicing and tax reporting.
• Spreadsheets: Suitable for very small businesses but less efficient for BAS and tax compliance.
• Custom Solutions: Larger businesses may use ERP systems like SAP or NetSuite.

Setup Steps

1. Choose Software:
   • Select based on business size, budget, and features (e.g., GST tracking, STP compliance).
   • Costs range from AUD $20–$100/month for cloud-based solutions.
2. Configure Accounts:
   • Set up chart of accounts for income, expenses, assets, and liabilities.
   • Link to the business bank account for automatic transaction imports.
3. Enable Tax Settings:
   • Configure GST tracking (cash or accruals basis).
   • Set up PAYG withholding and superannuation reporting.
4. Integrate Payroll:
   • Use STP-enabled software to report wages and super to the ATO.
   • Automate payslips and payment summaries.
5. Hire a Professional:
   • Engage a bookkeeper for daily transactions and a BAS agent for BAS and tax returns if you choose to do so. For example some services here.
   • Registered agents (check the Tax Practitioners Board) offer extended lodgment deadlines and tax planning advice.

Best Practices

• Reconcile Regularly: Match bank transactions with accounting records monthly.
• Track GST: Ensure all taxable sales and purchases are recorded accurately.
• Backup Data: Use cloud storage or external drives to secure financial records.
• Review Reports: Generate profit and loss statements and balance sheets quarterly to monitor performance.

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Timelines for Starting a Company

Below is a suggested timeline to incorporate and set up a company, assuming no delays or complex requirements:

• Week 1–2: Choose business structure, check name availability, decide governance rules.
• Week 3: Register with ASIC, obtain ACN, apply for ABN and TFN.
• Week 3–4: All directors apply for Director ID (before appointment).
• Week 4–6: Open business bank account, appoint public officer (within 3 months).
• Week 5–6: Register for GST (if required), PAYG withholding, and payroll tax.
• Week 6–8: Choose and configure accounting software, hire bookkeeper/tax agent if you want to.
• Week 8–10: Set up BAS lodgment schedule (first BAS due after first quarter).
• Ongoing: Lodge BAS monthly/quarterly, pay super quarterly, file tax return annually, pay ASIC annual review fee.

Key Deadlines

• GST Registration: Within 21 days of exceeding $75,000 turnover.
• Public Officer Appointment: Within 3 months of incorporation.
• BAS Lodgment: Quarterly (28th of the month following the quarter) or monthly (21st of each month).
• Company Tax Return: 28 February or 15 May (with tax agent) for 30 June year-end.
• ASIC Annual Review: Due on the anniversary of registration.

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Additional Considerations (Optional)

Here are other factors to ensure a smooth setup and operation. Note some of these are optional:

Engaging Professionals

• Accountants/Tax Agents: Maximise deductions, ensure compliance, and save time. Services offer packages starting at AUD $180–$1,300, depending on complexity.
• Lawyers: Draft custom constitutions or review contracts.
• Business Advisors: Assist with strategic planning and industry-specific compliance.

Business Insurance

• Public Liability Insurance: Protects against claims for injury or property damage.
• Professional Indemnity Insurance: Covers errors in professional services.
• Workers’ Compensation: Mandatory if you employ staff (state-based requirements).
• Get a fast and free online quote to assess how much this might cost here

Digital Tools

• Use myGovID and Relationship Authorisation Manager (RAM) for secure ATO and ASIC interactions.
• Adopt Single Touch Payroll (STP) software for payroll compliance.
• Leverage ATO’s free workshops and webinars for tax education.

Foreign Entrepreneurs

• Non-residents can incorporate a company but must appoint an Australian resident director.
• Register as a foreign company if operating an existing overseas entity in Australia.

Cash Flow Management

• Create a budget using tools on business.gov.au.
• Monitor cash flow with accounting software to meet tax and super obligations.
• Set aside GST and PAYG withholding in a separate account to avoid shortfalls.

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Common Mistakes to Avoid

• Not Registering for GST When Required: Leads to penalties and backdated GST payments.
• Ignoring Director ID Requirements: Directors face fines for non-compliance.
• Poor Record Keeping: Inaccurate records trigger ATO audits and fines.
• Missing BAS Deadlines: Incurs penalties and interest. Use a BAS agent to stay on track.
• Mixing Personal and Business Finances: Companies must maintain a separate bank account to avoid tax and legal issues.

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Resources for Further Assistance

• ASIC: Guidance on company registration and compliance
  • https://asic.gov.au/for-business/registering-a-company/steps-to-register-a-company
• ATO: Tax and super resources, workshops, and helplines
  • https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/starting-your-own-business
• business.gov.au: Tools for business planning, registrations, and licences (business.gov.au).
  • https://register.business.gov.au
• Tax Practitioners Board: Confirm your registered tax or BAS agent is on the register
  • tpb.gov.au/public-register/
• Xero/MYOB: Accounting software with ATO integration.
  • https://www.xero.com/au/accounting-software
• Bookkeeper
  • https://www.scalesuite.com.au/services/finance

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Conclusion

Starting a company in Australia involves incorporating with ASIC, obtaining key identifiers (ACN, ABN, TFN, Director ID), registering for taxes (GST, PAYG, etc.), and meeting ongoing compliance obligations. By setting up a robust accounting system and engaging professionals, you can streamline the process and focus on growing your business. Follow the timelines and best practices outlined in this guide to ensure compliance and avoid costly mistakes. With careful planning, your Australian company can thrive in a dynamic and supportive business environment.

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Disclaimer: Scale Suite does not provide legal advice. The information in this guide is for general guidance only. Businesses should consult a qualified advisor, such as an accountant, lawyer, or tax agent, to ensure compliance with Australian laws and regulations tailored to their specific circumstances.

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