A company is a type of business structure. You may consider a company structure when starting or growing your business.
A company is a separate legal entity, unlike a sole trader or a partnership structure. This means the company has the same rights as a natural person and can incur debt, sue and be sued. The company’s owners (the shareholders) can limit their personal liability and are generally not liable for company debts.
A company is a complex business structure, with higher set-up and administrative costs because of additional reporting requirements.
You need to register a company with the Australian Securities and Investments Commission (ASIC). Company officers and directors must comply with legal obligations under the Corporations Act 2001.
Key aspects of a company structure
- Is a separate legal entity.
- Has limited liability compared to other structures.
- Is a more complex business structure to start and run.
- Involves higher set up and running costs than other structures.
- Requires you to understand and comply with all obligations under the Corporations Act 2001.
- Means that business operations are controlled by directors and owned by the shareholders.
- Must be registered for goods and services tax (GST) if the annual GST turnover is $75,000 or more. The registration threshold for non-profit organisations is $150,000.
- Means the money the business earns belongs to the company.
- Requires an annual company tax return to be lodged with the ATO.
- Check out ASIC's Guide for Small Business Directors for more about your legal obligations as a company director.
- Understand more about each business structure, including sole trader, partnerships and trusts.
- Read more about the tax obligations of a company structure on the Australian Taxation Office (ATO) website.
- Understand your director obligations and responsibilities on the ASIC website.
- Read about your company and the law on the ASIC website.
- Visit our Changing from a sole trader to a company section for a comparison of the differences between a sole trader and a company structure.
- Find out more about registration and licences, including registering for an Australian Business Number (ABN) or Australian Company Number (ACN).
- Read through our New business topic for steps on how to get started.
- Find out about dissolving partnerships and companies, if you are looking to sell or close your business.