Company
Tax Returns
Company Tax Returns
A company structure has its benefits to protect your personal assets but it does come at a cost. If you are looking to grow quickly or raise capital a company structure may be right for your business. Read on below to see how a company structure works as well as the advantages and disadvantages.
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Speak to us today to see how operating your business as a company can help you achieve your goals sooner!
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How A Company Structure Operates
A company is a separate legal entity that is owned by shareholders, managed by directors, and operated by employees. The company structure offers limited liability protection to its shareholders, meaning that they are not personally liable for the debts and obligations of the company beyond the amount of their investment in the company.
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Here are some key features of a typical company structure in Australia:
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Company Name and Registration: The first step in setting up a company is to choose a name that is unique and not already registered with the Australian Securities and Investments Commission (ASIC). Once a name is chosen, the company must be registered with ASIC, which involves completing certain forms and paying a registration fee.
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Shareholders: A company can have one or more shareholders who own a portion of the company's shares. Shareholders are not involved in the day-to-day operations of the company, but they have the right to vote on important decisions, such as the appointment of directors and the approval of major transactions.
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Directors: The directors are responsible for managing the company's affairs and making important decisions. They are appointed by the shareholders and are usually responsible for developing the company's strategy, overseeing its operations, and ensuring compliance with legal and regulatory requirements.
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Company Secretary: A company secretary is responsible for maintaining the company's records, filing reports with ASIC, and ensuring that the company complies with its legal and regulatory obligations.
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Employees: A company can employ one or more employees to carry out its operations. Employees are not owners or shareholders of the company, but they play a crucial role in the company's success.
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Annual Reports and Meetings: A company is required to hold annual general meetings (AGMs) where the shareholders can vote on important matters such as the election of directors, the approval of the company's financial statements, and the payment of dividends. The company must also file annual reports with ASIC that disclose important financial and other information about the company's operations.
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To become a company, an entity must:
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be incorporated under the Corporations Act 2001
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be registered with the Australian Securities and Investment Commission (ASIC)
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Advantages Of A Company Structure
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Limited Liability Protection: One of the primary advantages of operating as a company in Australia is that the company provides limited liability protection to its shareholders. This means that the shareholders' personal assets are protected from the company's debts and liabilities. Shareholders are only liable for the amount of money they have invested in the company.
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Separate Legal Entity: A company is a separate legal entity from its shareholders. This means that the company can enter into contracts, own property, and sue or be sued in its own name.
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Access to Capital: Companies can raise capital by issuing shares to investors. This allows companies to access funding from a wide range of investors and can help them to grow and expand their business.
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Continuity: A company has perpetual succession, meaning that it can continue to operate even if its shareholders or directors change. This provides greater continuity and stability to the business.
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Credibility: Operating as a company can help to establish credibility with customers, suppliers, and other stakeholders. This is because a company is subject to greater regulation and oversight than other business structures, and is required to comply with certain legal and reporting requirements.
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Tax Benefits: Companies are subject to a lower tax rate than individuals, with the current corporate tax rate in Australia at 30%. This can provide significant tax benefits for businesses that operate as a company.
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Limited Personal Liability: In addition to limited liability protection, operating as a company can also help to limit personal liability for directors and officers. As long as they act in good faith and in the best interests of the company, they are generally protected from personal liability for the company's debts and liabilities.
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Disadvantages Of A Company Structure
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Compliance Costs: Companies in Australia are subject to a range of legal and regulatory requirements, which can be time-consuming and expensive to comply with. For example, companies are required to register with the Australian Securities and Investments Commission (ASIC), file annual reports, maintain accurate financial records, and comply with tax laws.
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Governance Requirements: Companies are required to have a board of directors, which must comply with a range of governance requirements, including regular meetings, keeping accurate records, and making decisions in the best interests of the company. This can be a significant burden for small businesses that may not have the resources to dedicate to these requirements.
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Liability for Directors: Directors of companies in Australia have a range of legal obligations and can be held personally liable for certain actions taken by the company. For example, directors can be held liable for breaches of occupational health and safety laws, environmental laws, and competition laws.
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Public Disclosure: Companies in Australia are required to file annual reports with ASIC, which are publicly available. This means that information about the company's financial performance, ownership structure, and other key information is available to the public, which may not be desirable for some businesses.
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Taxation: Companies in Australia are subject to corporate income tax, which is currently set at a rate of 30% for most companies. This can be a significant burden for small businesses that may not have the resources to manage their tax obligations.
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Company Tax Returns
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