Australia

Sakura Consulting works with you to ensure you establish a business entity that fits your needs for Australia. Below are the most common business entities in Australia:

Company:

A company is a separate legal entity, which means the company has the same rights as a natural person and can incur debt, sue, and be sued. The company’s owners (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 and may require registration 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 understanding and compliance with all obligations under the Corporations Act 2001.
  • 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.
  • Requires an annual company tax return to be lodged with the ATO.

Partnership:

A partnership is a business structure that involves a number of people who carry on a business together. Parties may choose a partnership over a sole trader structure if the business will be ran with another person or a number of people (up to 20). There are two types of partnerships – general and limited. Partnerships are governed by the relevant law depending on the state or territory:

Key aspects of a partnership structure
  • It’s relatively easy and inexpensive to set up.
  • It requires a separate Tax File Number (TFN).
  • If you are carrying on an enterprise, you can apply for an Australian Business Number (ABN) but this is not compulsory.
  • It’s not a separate entity – partners are personally liable for the debts of the business.
  • Partners share control and management of the business with the other partners.
  • The partnership doesn’t pay income tax on the income earned. Partners pay tax on the share of the net partnership income you each receive.
  • Requires a partnership tax return to be lodged with the Australian Taxation Office (ATO) each year.
  • Each partner is responsible for their own superannuation arrangements – you are not an employee of the partnership.
  • You must be registered for GST if the annual income turnover is $75,000 or more.