General Information and Accounting Issues

The most popular and plentiful Company is what is termed the Proprietary Limited Company. PTY LTD. (Standard Company). It is generally owned by two Director/Shareholders, and is also a Single Director Company,The members are generally family members.The reason of having a company is because the Company tax rate is 30%;Liability as to insurance is contained, and ability of contractual agreements is made easier.

A Single Director company is possible and is run solely by that Director/member. Companys have "Members" who are shareholders, and also "Directors" who are "Officeholders" and usually The Directors are shareholders,(members). Directors do not necessarily have to own shares in the company. therefore not a member, but an Officeholder; generally running the company for the benefit of the shareholders.

"PTY LTD" companies can only have a maximum of 50 non-employee Members/Directors. Because they are generally family companies and also do not have a turnover in excess of $10 million there are lighter demands for reporting to Aust Securities and Investment Corporation. (ASIC)

The company is a separate legal entity from the Directors and the Directors are normally liable for the debts of the company to that amount unpaid on their shares (Generally $1.00).Personal Liabilities to the banks when raising funds for the Company are a different matter.This does not exempt the liability of the Directors who must act solely for the benefit of the company not themselves.In fact the Corporations Law lays down very strict guidelines for Directors acting on behalf of the company. Large numbers of Company's now formed are for the "contracting" business, mainly tradesmen. The idea of this is to throw back to the individual the responsibilty of Worker's Compenstion insurance and Indemnity Insurance.They must have these anyway if they are truly sub-contracting.There are benefits to the company structure which far outweigh this inconvenience.

The idea of a company is to limit the liability of the Directors and protect their assets such as homes etc.This canot happen under a Single Trader or Partnership. This does not apply to any undertakings that you have given the banks for mortgages etc.The banks require personal indemnification generally over personal assets for any business loans etc.

The main way of obtaining money from the company is by way of wages (which must be treated normally) or Directors Loans. Directors Fees and Divdends are other ways and generally used at the end of the financial year, for 'creative purposes'.We include what is known as a 'Division 7' Loan agreement for loans to members or directors, It is a deed of arrangement with minimum repayment amounts stated.

There is a different tax regime for companies (as compared to that of individuals) and the Rate of Tax for a Company is at 30%, whereas an individual starts paying the rate of 30% over $21.600 and 42 cents over $63,000 then to 47 cents over $95,000. If you earn over $63,000 the tax payable by an individual is 42 cents in the dollar, a bit under half? So there are obvious tax benefits after you have paid your wages up to the 30 cent level and keep the rest in the company and declare it as a dividend taxable at 30%.Also half the profit must be declared as a dividend every year.
Ordinary shares have more rights than class or preference shares which the directors through the Constitution set out the rights for each class. Generally Preference Shares have no voting rights but are guaranteed either a dividend or a return on capital of the shares and are sometimes given to borrowers,children or relatives. The dividend if any is declared by the Directors and applies to the shares. This also applies to the rights on winding up the company

The "Authorised Capital" of a company is a misleading number as it has nothing to do with the worth of a company, it only represents the number of shares you would be allowed to use were the company to allowed to do so, The "Issued Capital" is the number of shares you have allocated to yourselves.This is the amount you are liable on.IE. the amount unpaid on the shares, generally these are paid up at $1.00 when the company is formed.

The larger Pty Ltd Companies come under reporting guidelines and generally have a turnover over $10 million.

ASIC has laid down what is called "Replaceable Rules" which govern the running of the company. They apply to all companies. It is however advisable to have what was called a "memorandum and articles of association" now called a "Constitution" governing the company. The Company's Constitution can override and alter specific "Rules".

Public Companies have a larger share register (ours are 900,000) with variable share rights (as many as 11) and set out in their Constitution. They are not limited by the number of members.

No Liability Public Companies (NL) is reserved for mining companies and the Directors are not liable for any amounts unpaid on shares.

There are also Superannuation Guarantee Companies dedicated solely to run and preserve member’s superannuation.

All companies must have a Registered Office in Australia.Also a 'Residential Director' living in Australia.They are also required to have a Public Officer for notices etc. for liasing/talking to the Tax Office.

Proprietary Companies must have at least one Director, but the Office of Secretary is optional. Public Companies must have at least 3 Directors and a Secretary (All residents in Australia).

Company's whose members are non residents need a Director who is an Australian Resident and also a Registered office held here for services of notices.We can accomodate this structure.Please contact us! Most important for foreign residents is to obtain a Tax File Number. It is a requisite for all commercial dealings and company compliance in Australia.You must have an Australian Business number so GST Requirements are met

Banking in Australia is firm if not severe on companies. We do provide all the details, and more than what they will require. Just present the package and let them copy the documents. If you take up the opportunity of us supplying you with the Taxation Office Australian Business Number and your Tax File Numbers, things will speed up.

The process is that when we receive the completed 'Oreder Form' we go on line to ASIC ( Australian Securities and Investment Corporation),to form the Company and obtain the company's Australian Company Number (ACN) The Company is Registered. We then apply to the Taxation Office on your behalf to issue the new Company with an ABN,(Australian Business Number), Tax File Number and Register for GST.If there are any problems it will show up here, we attend to the problem by liasing with you and remendy it, obtaining your ABN that day. The ABN will show up on the Tax Office's web portal that evening.

We register you for GST purposes. The cut off point is now $75.000 for voluntary registration, Paid quarertly and accounted for on a cash basis. Not everybody falls into this catergory. It is more important that the other Taxation Documents, Australain Business Number, Tax File Number.GST Number. Pay as You Go Numbers,are obtained. These are for the 'Bank Account Opening' We apply for all these that same day and confirm /send confirmation of the numbers. Your Company, once we have done our job will appear on the Government Business Portal.(ASIC SITE www.searchasic.gov.au)This will alow anybody dealing with you to look up your number independantly. (Try not to let the bank charge you a fee for this as confirmation is free and in our documentation, You can find it and print it off.) It should not hold up the Bank Account openings.

COMPANY NAME Consider the fact that the company name should reflect the "Business Name" This saves you the cost of reserving a "Business Name! ($230 for 2 years).Or changing the Company Name ($330) Search from our site for Identical Names( Button Below) Explore alternatives if the name is not available. It also helps with domain names

We have at no extra charge the 'Division 7A Loan Agreement' This is just a simple form acknolwding the fact that small amounts of or 'drawings' and accumulated debits for expenses,as allowed in partnerships, must be repaid or acknowledged and a interest rate of 1% above the 'Nominal' rate of the day,Repayments are negotiated between the Directors.

This cost for our 'Complete Company'is only $695; Remember this includes application to the tax office for your ABN, TFN and GST.overnight Postage and Everlasting File;

Our 'STANDARD COMPANY' set up has everything including all Statutory Requirements required to open up your accounts, but not the added service of obtaining from the Aust Tax Office your Australian Business Number, Tax File Number or Gst Number. You will have to arrange thiese numbers yourself. There is no service for the Tax Office. The Documents listed are Overnight Posted to you within 24 hours,we then follow up if and when you have received the documents.

These costs are on the home page;
Hope this has been useful. You may always ask/ring for any matters that need explanations.

Regards JOHN COSGRAVE