Setting up a company in Australia is a big milestone - and a smart way to set your venture up for growth. A company gives you limited liability, credibility with customers and investors, and a structure that can scale as your business evolves.
At the same time, there are legal steps you don’t want to miss. With a clear checklist, you can move from idea to incorporated company with confidence and stay compliant from day one.
This guide walks you through what a company is, the key setup steps, the laws you’ll need to follow, and the essential documents to have in place. We’ll keep it practical and straightforward so you can focus on building your business.
Why Choose A Company Structure?
A company (most commonly a proprietary limited, or Pty Ltd, company) is a separate legal entity. It can own property, sign contracts, earn income, and be responsible for its own debts - separate from its owners (shareholders) and controllers (directors).
That separation provides limited liability. In simple terms, if the business runs into trouble, your personal assets are generally protected, provided directors comply with their duties and you don’t give personal guarantees.
By comparison, sole traders and partnerships do not offer this “corporate veil.” For founders seeking credibility, external investment, or the ability to bring on co-founders and staff, a company is often the right fit.
Planning Your Setup: Key Decisions Before You Register
A bit of planning now will make your company setup smoother and help you choose the right options for the long term.
- Business Model And Goals: What problem are you solving? How will you make money? Are you aiming to raise capital or stay lean and owner-operated?
- Founders And Ownership: Who will be directors and shareholders? How will equity be split, and how will decisions be made?
- Name And Brand: Is your preferred company name available, and is your brand clear of conflicts? Locking down your brand early with a registered trade mark can protect your identity as you grow.
- Risk And Compliance: Are there licenses or industry rules to comply with? What contracts and policies do you need in place before launch?
Documenting these points in a short plan will guide your setup decisions and help you avoid expensive changes later.
Step-By-Step: How To Set Up A Company In Australia
1) Choose Your Company Type
Most small and medium businesses register as a proprietary limited (Pty Ltd) company. Other options include public companies (for large businesses raising from the public) and companies limited by guarantee (often for not-for-profits).
For a typical startup or growing SME, a Pty Ltd offers limited liability and flexible ownership without the heavier reporting obligations of a public company.
2) Confirm Your Company Name
Choose a name that’s available and not confusingly similar to an existing company or registered trade mark. Your “company name,” “business name,” and brand can be different, but consider how they work together for customers and investors.
It’s common to register the company under a legal name and operate under a trading name (registered as a business name), while protecting your brand with a trade mark.
3) Decide Directors, Shareholders, And Addresses
Set out who will be directors, who will own shares, and where the company will be based (registered office and principal place of business). Australian law generally requires at least one director who is an Australian resident, which you can check against the Australian resident director requirements.
4) Register The Company With ASIC
Register your company with the Australian Securities and Investments Commission (ASIC). On registration, you’ll receive an Australian Company Number (ACN) and a Certificate of Registration.
You can file directly or use a registered agent. If you’d like an expert to handle the forms and structure details, our lawyers can assist with full company set up.
5) Adopt A Company Constitution
You can rely on the Corporations Act “replaceable rules,” or adopt a tailored Company Constitution. A custom constitution gives you more control over decision-making, director powers, share classes and transfers, and procedures if a founder exits.
If you have more than one shareholder (or plan to in future), adopting a constitution at the start can prevent headaches later.
6) Apply For ABN, TFN, And (If Required) GST
After ASIC registration, your company should apply for an Australian Business Number (ABN) and a Tax File Number (TFN). You’ll also register for Goods and Services Tax (GST) if your projected turnover is at or above the $75,000 threshold, or if you choose to register voluntarily.
Note: This is general information only - it’s best to confirm tax registrations and timing with your accountant or tax adviser.
7) Put Ownership And Founder Rules In Writing
Where there’s more than one owner, a Shareholders Agreement is essential. It sets out how decisions are made, what happens if someone leaves, how shares can be transferred or issued, and how disputes are resolved.
This agreement works alongside your constitution - think of it as the rulebook for your relationship as co-owners.
8) Open A Company Bank Account And Set Up Records
Keep business and personal finances separate. Open a company bank account and set up bookkeeping and recordkeeping systems. Good financial hygiene is critical for compliance and makes investor or loan due diligence much easier down the track.
9) Get Execution And Authority Processes Right
Put clear signing processes in place. Companies can sign documents under section 127 of the Corporations Act (for example, two directors, or a sole director/secretary for a single-director company) - you can read more about signing documents under section 127.
Day-to-day, you might also use delegations of authority or board resolutions so team members know who can approve what.
10) Check Licences, Insurance, And Operational Readiness
Depending on your industry, you may need additional permits (for example, local council approvals, professional registrations, or sector-specific licences). Arrange appropriate business insurance, set up your website and domain, and line up supplier and customer contracts before launch.
What Laws Do New Companies Need To Follow?
Corporations Law And ASIC Obligations
Companies must comply with the Corporations Act 2001 and ASIC requirements. Key ongoing obligations for proprietary companies include:
- Annual review: Pay the annual review fee and keep company details up to date (this is not a public “annual report” requirement).
- Solvency resolution: Directors pass a solvency resolution annually confirming the company can pay its debts when due.
- Notifying changes: Tell ASIC about changes to addresses, directors, or share structure within the required timeframes.
- Director duties: Directors must act in good faith, with care and diligence, for proper purposes, and avoid improper use of position or information.
Tax And Payroll Compliance
Register for PAYG withholding if you’ll have employees, and meet superannuation and Single Touch Payroll obligations. Your accountant can advise on BAS cycles, GST, and any special concessions available to small businesses. Again, treat this as general information - your tax adviser is best placed to tailor it to you.
Employment Law
If you hire staff, you must comply with Australian employment law (Fair Work Act, National Employment Standards, modern awards, and workplace health and safety). Always issue a compliant Employment Contract and keep accurate records of hours, pay, and leave.
If you engage contractors, use a separate Contractor Agreement and ensure the contractor relationship is genuine. The obligations and risks differ from employment, so treat them differently in your paperwork and day-to-day management.
Australian Consumer Law (ACL)
If you sell goods or services, the ACL applies. This covers misleading or deceptive conduct, unfair contract terms, consumer guarantees, and advertising standards. Getting your customer terms and marketing right from the start helps build trust and keeps you compliant.
Privacy And Data Protection
Many small businesses collect personal information (names, emails, phone numbers). Under the Privacy Act 1988, the Australian Privacy Principles generally apply to “APP entities” - typically businesses with annual turnover over $3 million, and some smaller businesses engaged in specific activities (for example, health services, handling TFNs, or providing services to larger APP entities under contract).
Even if you’re not legally required to comply, publishing a clear, tailored Privacy Policy and handling data responsibly is best practice and often expected by customers and partners.
Intellectual Property (IP)
Protect your name and logo early to avoid costly rebrands. Consider registering a trade mark for your brand through Register Your Trade Mark, and make sure you own what your team or contractors create by using appropriate IP assignment or licence clauses in your contracts.
Essential Legal Documents For Your New Company
Having the right contracts and policies in place reduces risk, clarifies expectations, and sets professional standards from day one.
- Company Constitution: A tailored Company Constitution sets out internal rules for decision-making, issuing shares, director powers, and meetings.
- Shareholders Agreement: A Shareholders Agreement governs the relationship between owners, including voting, exits, transfers, dividends, disputes, and what happens if someone stops working in the business.
- Customer Terms And Conditions: Clear customer terms (or a Service Agreement) set pricing, deliverables, timelines, warranties, and limits on liability. Online businesses should also include website or app terms.
- Privacy Policy: A transparent Privacy Policy explains how you collect, store, use, and disclose personal information. It’s legally required for many businesses and a strong signal of trust for all.
- Employment Contracts: Issue a compliant Employment Contract to each employee, and use a separate Contractor Agreement for contractors. Add workplace policies (e.g., leave, code of conduct, WHS) as your team grows.
- Supplier And Partner Agreements: Get terms in writing with key suppliers and partners so pricing, service levels, IP ownership, confidentiality, and termination are clear.
- Non-Disclosure Agreement (NDA): Use NDAs when discussing sensitive information with prospective investors, suppliers, or partners.
- IP Assignment/Licence: Ensure the company owns the IP created by employees and contractors, or has the necessary licences to use it.
You may not need every document on day one, but most companies will need several of these before going live. Having them tailored to your business - not just pulled from a generic template - makes a real difference when things don’t go to plan.
Alternative Paths: Buying A Business Or A Franchise?
Starting from scratch isn’t the only option. You could buy an existing business (acquiring clients, team, and goodwill), or join a franchise system with a proven brand and operating model.
If you buy a business, expect to conduct legal due diligence, negotiate a business sale agreement, and arrange assignment or transfer of key contracts and licences. For franchises, you’ll need to comply with the Franchising Code of Conduct and carefully review the disclosure document and franchise agreement.
Both options still benefit from a company structure - especially if you’ll be taking on leases, employees, or supplier contracts in the business name.
Key Takeaways
- A company is a separate legal entity that offers limited liability and a scalable ownership structure - a strong foundation for growth in Australia.
- Map out early decisions (name, directors, share split, brand, risk areas) before you register to avoid costly changes later.
- Follow a clear setup sequence: register with ASIC, adopt a constitution, obtain ABN/TFN (and GST if required), open a bank account, and set up recordkeeping.
- Know your ongoing obligations: annual ASIC review, solvency resolution, director duties, payroll and tax compliance, employment law, ACL, privacy, and IP protection.
- Put strong documents in place from day one: constitution, shareholders agreement, customer terms, privacy policy, employment and contractor agreements, and supplier contracts.
- Treat privacy carefully: many small businesses are not strictly covered by the APPs, but a clear Privacy Policy and good data practices are expected by customers.
- Where there’s complexity or multiple owners, early legal advice can save time, reduce risk, and help you avoid expensive mistakes.
If you would like a consultation on setting up your company in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
