Companies

Companies

A company structure offers numerous benefits, such as limited liability, potential tax advantages, and increased credibility. However, it also comes with additional responsibilities, regulatory requirements, and costs. Deciding whether a company is the best vehicle for your business depends on your specific needs, goals, and long-term plans.

Our services for Companies

1. Company Name Registration – We help you choose and register a unique company name with ASIC.
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2. ASIC Registration – We handle all the paperwork for ASIC registration and ensure you obtain your ACN and advise you on obtaining an ABN.
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3. Shareholder Agreements - We draft tailored shareholder agreements to ensure smooth operations.
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4. Directors' Duties & Compliance – We offer advice on your legal responsibilities as a director and ensure compliance with corporate laws.
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5. Ongoing Legal Support – From contracts to compliance, we can provide you with continuous legal support for your business.

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Key Considerations When Using a Company Structure

1. Limited Liability Protection One of the primary advantages of operating as a company is the limited liability protection it offers to its owners (shareholders). In a company structure, the shareholders are generally not personally liable for the company’s debts beyond their investment in shares. This can provide peace of mind, particularly if the business carries significant financial risk. However, this protection can be compromised if the company is not operated in accordance with legal requirements, or if personal guarantees are given by directors.
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2. Corporate Governance and Formalities Unlike sole traders or partnerships, companies are governed by a formal structure that includes shareholders, directors, and officers. Companies must adhere to strict governance requirements, including holding regular meetings, maintaining detailed records, and filing annual financial statements. These requirements can be more time-consuming and costly than other business structures, so it’s important to consider whether you have the capacity to manage these obligations.
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3. Taxation and Deductions Companies are generally taxed separately from their owners, which can offer potential tax benefits. In many cases, companies can access tax rates that are lower than individual income tax rates, especially when reinvesting profits back into the business. Additionally, companies can claim a wider range of deductions, including salaries paid to employees, office expenses, and certain types of business-related costs. However, the tax treatment of a company can be complex, and it's essential to work with your accountant to ensure that your company is optimised for tax efficiency.
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4. Raising Capital Companies can raise capital more easily than other business structures by issuing shares or attracting investors. This can provide the necessary funding to scale and grow the business. If you plan to seek external investment or potentially take the company public in the future, having a company structure will be advantageous. However, the process of raising capital and managing investors comes with its own set of challenges, including regulatory compliance and shareholder expectations.
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5. Ownership and Succession Planning A company allows for flexibility in ownership through the issuance of shares. This makes it easier to transfer ownership interests, whether to family members, partners, or third-party investors. In terms of succession planning, companies provide a clear framework for passing on ownership interests, which can be particularly useful in family businesses. The ability to sell shares or bring in new investors can also provide flexibility as your business grows.
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6. Complexity and Ongoing Costs While a company offers several advantages, it also introduces complexity and ongoing costs that may not be required in other business structures. These include the costs of registering the company, maintaining corporate records, preparing annual financial reports, and fulfilling statutory obligations. Additionally, you may need to pay directors’ fees, manage payroll, and file tax returns. It’s crucial to consider whether your business can afford these costs, particularly in the early stages of growth.
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7. Regulatory Compliance Companies are subject to a wide range of regulations, including corporate governance standards, financial reporting requirements, and compliance with laws such as the Corporations Act. Depending on the nature of your business, you may also be required to comply with specific industry regulations. Non-compliance with these regulations can lead to penalties or even legal action, so it’s important to assess whether you’re prepared to manage these legal obligations.

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Why Legal Advice is Crucial

Given the complexities associated with establishing and operating a company, seeking legal advice is essential to ensure that you make the right decision for your business. A lawyer with expertise in business law can help you:

• Determine whether a company structure is the best fit for your business, considering your goals, industry, and growth potential.
• Advise on the type of company that is most suitable, and assist with the incorporation process.
• Draft or review key documents such as the company’s constitution, shareholders’ agreements, and director’s agreements, ensuring that they reflect your intentions and protect your interests.
• Guide you on the legal implications of operating a company, ensuring compliance with relevant laws and regulations.
• Help you understand and manage the governance and reporting obligations associated with running a company.
• Provide ongoing legal support to navigate challenges such as shareholder disputes, and contract negotiations.
• Discuss with you the benefits of having a Shareholder’s Agreement. This is an opportunity for shareholders to ensure that they are all on the same page in regards to future decisions, such as how and who to sell their shares to in the future, etc.

Establishing a company is a significant commitment, and legal advice ensures that the process is done correctly, efficiently, and in line with your business objectives. It’s not just about choosing the right structure—it's about setting up your company in a way that maximizes its potential for success and protects your interests in the long run.

If you're considering using a company structure for your business or need help determining the most suitable business structure for your needs, don’t hesitate to get in touch with one of our experienced business lawyers. We can guide you through the decision-making process and help you set your business up for long-term success.