Using a Company to do business

So you've just set up a new Australian limited company. What next?

Display your company name
A company must display its name prominently at every place at which the company carries on business that is open to the public. A public company must also display its name and the words "registered office" at its registered office. Companies often put up a copy of their Certificate of Incorporation.

Use your Australian Company Number (ACN) correctly
Every Australian company has its own unique 9 digit ACN. When your company registers with the tax authorities for GST, it will be issued an 11 digit Australian Business Number (or ABN). The ABN will be the ACN with 2 extra digits at the start.

When the company does business, such as entering into contracts or issuing invoices, it should make sure its full name is on the document (you can abbreviate parts of the name, such as Limited to Ltd, and Proprietary Limited to Pty Ltd) and have either its ACN or ABN after the name. Most companies use the ABN if they have one, for example Big Company Pty Ltd ABN 11 234 567 789.

Keeping records and notifying changes of details

A limited company has to keep records, including:

  • registers of shareholders (showing all issues of new shares, details of share transfers, and current shareholders)
  • registers of option holders (if you have them)
  • minutes of general meetings of shareholders
  • minutes of meetings of directors (detailing all resolutions that were passed etc)
  • registers of charges created by the company over company property, and
  • financial records that enable an assessment of the company’s financial position and performance, and could if necessary be used for financial statements to be prepared (and audited if necessary) for at least seven years after the transactions are completed. All public companies need to file audited accounts with ASIC annually. ASIC can require proprietary companies to file audited accounts too, so it is important to keep good financial records.

Any change in directors (including a change of residential address), secretary, shareholders, registered office, company name, or Constitution has to be notified to ASIC. Every issue of new shares has to be notified, as does the creation of a charge (such as a mortgage) over company property. For most of these items there is no ASIC filing fee if the notification is filed within 28 days. Late fees apply if filed outside time limits.

Annual reports and annual fee

All companies will receive from ASIC an Annual Statement showing current registered details. Any changes to those details must be notified to ASIC. Every company also has to pass a directors' solvency declaration each year around the time of the Annual Statement. There is an annual fee (currently $212) payable to ASIC to maintain company registration.

In addition to the Annual Statement, a public limited company has to lodge audited financial statements (balance sheet, profit and loss statement, cash flow statement) with ASIC each year. Public companies which are listed on ASX have even more onerous reporting obligations, and specialist advice should be sought.

A "large proprietary company" also has to publicly file audited financial statements in the same way as a public company. A "small proprietary company" does not have to prepare and file audited financial statements, unless ASIC or its shareholders require it to.

Tax compliance

All Australian companies need a "Public Officer" who is responsible under Australian tax law for the company's tax filings. The Public Officer can be the same as one of the directors or the secretary. You can notify the Public Officer to the Australian Taxation Office (ATO) after the company is incorporated. You don't need to notify ASIC of the Public Officer when you incorporate the new company.

Two other numbers a limited company will need for tax compliance are:

  • a Tax File Number (TFN) - this is used for filing tax returns and other dealings with the ATO.
  • an Australian Business Number (ABN) - this is needed if the company will be paying GST or charging GST on its invoices to its customers.

You can download the application forms for a TFN and ABN from the ATO website.

Companies which earn income during a tax year (1 July to 30 June) should consider filing a tax return with the ATO, even if they make a loss for the year. Tax is a very complex topic, and you should get qualified tax advice from your accountant or tax adviser. Don't leave it too late, as penalties and interest on overdue amounts can be steep. The tax return deadline is normally 31 October each year, but you can have a later lodgement date if you use a registered tax agent.