A company is a separate legal entity. This means the company has the same rights as a person and can sign documents, incur debt, acquire and sell property, and sue others and be sued.
A company is a complex business structure. There are additional reporting requirements resulting in higher set-up and administrative costs.
There are two types of companies in Australia.
A
private or ‘proprietary’ company is usually owned by a small number of shareholders, with shares in the company remaining private rather than traded on a stock market.
A
public company has shares that can be publicly traded on a stock market.
A private company can choose to ‘go public’ by issuing a public offering, usually to gain capital for expansion activities.
If you’re establishing a company, you must
register it with the Australian Securities and Investments Commission (ASIC). Company officers and directors must
comply with legal obligations under the
Corporations Act 2001.
ADVANTAGES |
DISADVANTAGES |
Limited liability for shareholders |
More expensive to set up and operate |
Understood and accepted structure |
Control is shared |
Potential for raising capital |
Complex reporting requirements |
Easy to sell or pass on |
Shareholders don’t assume liability for losses |
Profits can be reinvested or paid to shareholders |
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