There are two business configurations
that may be suitable for a small group like yours: a single proprietorship
(sole trader) or a registered company.
While you may consider setting up a company single
proprietorship, the Corporations Act of 2001 does let you to set up a company
with now one person to personal and run the whole thing.
If this is the method you want to go, then all you have to do is tip to your option
in the ASIC register application as "a proprietary company with incomplete
legal responsibility". You will be together the sole shareholder and the
sole director of your company. The company is legally careful as a sole
shareholder/director proprietary company.
You may speculate why anyone would decide
to register as a sole proprietary company rather than as a single
proprietorship. Well, there is some genuine compensation to being registered as
a sole shareholder/director company. Here are some potential reasons persons decide
a company of a sole proprietorship:
Lawful character of company.
Once a company is register with the ASIC and an ACN have been is issue, the
company becomes a legal entity with a character that is independent and
separate from its shareholder. The feature has important facts legally: A
company can enter into contracts in its own name and it can also use, and be
sued. Consult to contractor Umbrella Company for advice all type help when new setting
up a company.
When a company is in debt, the money payable does not mechanically turn out to
be the money owing of the shareholder.
As a consequence, a civil court case for the compilation of a sum of
money next to the company is not necessarily a legal act against the
shareholder.
This is because the legal responsibility of a shareholder is limited to the worth
of his shareholdings unless he previously signed a personal guarantee in favor of
the one pursuing legal action. This built-in restraint is not available in
single proprietorships or for sole traders.
So if you are conduct business by yourself, and you desire to limit your
business liability, then the sole shareholder proprietary company is for you.
Flexibility in rights
If your business grows in the prospect and you wish to create incentive for
your non-shareholder employees who have contributed to the achievement of your
company, and then a good way is to increase their involvement by transferring
shares in the company to them.
This is also known as a stock choice. Because of the company's arrangement, you
are capable to accommodate additional non-shareholder employees into the
company shareholdings without having to terminate the company's legal status.
Continuity
Another benefit of the self-governing personality of the company is that it may
carry on existing for the duration of its registration, notwithstanding change
in the ownership of the company's shares. The death or retirement of a
shareholder or the sale, transfer or assignment of the rights to a company's
shares will not mean the termination of a company's existence.
You may one day decide to hand over the reins of the company to someone else,
such as one of your experienced managers or employee-shareholders. Even when
there is a change of directors, the company will still exist as its registered
self.
It is worthwhile speaking with a legal adviser or accountant as to what is the best
structure for yourself and your business. Also dissimilar countries may have special
legislation on this so check locally as well.
It is likely to register a company online, but if this is a daunting prospect
for you, there are selected registered agents, who can advise and manage your
online company registration.
