When starting a business in Australia, one of the first decisions you'll need to make is how to structure your business. While there are several options available, one popular choice is to structure your business as a company. But is this the right choice for your business? In this post, we'll explore the pros and cons of structuring your business as a company in Australia.

What is a Company?

A company is a separate legal entity from its owners, known as shareholders. When you structure your business as a company, you become a shareholder in that company and are generally protected from personal liability for the company's debts.

Pros of Structuring Your Business as a Company

Limited Liability

One of the primary benefits of structuring your business as a company is the limited liability protection it provides. As a shareholder, your personal assets are generally protected from the company's debts and liabilities. This means that if the company goes bankrupt or is sued, your personal assets, such as your house or car, are generally safe.

Credibility

Structuring your business as a company can also increase your credibility with customers, suppliers, and other stakeholders. Having "Pty Ltd" (proprietary limited) after your company name can give the impression of a larger, more established business.

Easier Access to Capital

Companies can also find it easier to access capital, as they can issue shares to raise funds. This can be an attractive option if you're looking to expand your business and need additional funding.

Taxation

Structuring your business as a company in Australia can also bring tax benefits. Companies are taxed at a flat rate of 25% for small business and 30% for larger companies. This can help lower the overall tax rate of a business group. However, it's important to note that the tax benefits of structuring your business as a company will depend on your specific circumstances and should be discussed with a professional accountant or tax advisor.

Cons of Structuring Your Business as a Company

Structuring your business as a company can be more expensive than other business structures, as you'll need to register your company with the Australian Securities and Investments Commission (ASIC) and comply with ongoing reporting and regulatory requirements.

Increased Administration

As a company, you'll also need to comply with additional reporting and regulatory requirements, such as holding annual general meetings and maintaining accurate financial records.

Conclusion

Structuring your business as a company can provide several benefits, including limited liability protection, increased credibility, and easier access to capital. However, it can also be more expensive and require more administration than other business structures. Ultimately, the decision to structure your business as a company will depend on your specific circumstances and goals. It's important to seek professional advice before making this decision.

Book a call or teams meeting with us to discover if structuring your business in a company is right for you.