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
|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