What is a company?
A company is a type of business structure that is a separate legal entity from its owners.
It’s a complex business structure, with higher set-up and administrative costs because of extra reporting requirements and higher-level legal obligations. The structure, costs and legal obligations make a company structure better suited to a medium to large business.
As a separate legal entity from its owners, a company can sue and be sued and incur debts. The company’s owners (the shareholders) can limit their personal liability and are generally not liable for company debts.
The company lodges an annual company tax return with the Australian Taxation Office and must be registered for goods and services tax if the annual turnover is $75,000 or more.
The business operations are controlled by the company directors and owned by the shareholders.
The company structure makes it easier to sell or transfer ownership of the business.
A company is an internationally recognised and respected business structure and confers a perception of size and professionalism.
A company must be registered with the Australian Securities and Investments Commission. Company officers and directors must understand and comply with their legal obligations under the Corporations Act 2001 (Cwth).
A company has its own advantages and disadvantages compared to other business structures, so it’s very important to get legal advice early on about which structure will best suit your business.