A company is a legal entity with higher set-up and administration costs. Companies also have additional reporting requirements.

A company is run by its directors and owned by its shareholders.

While a company provides some asset protection, its directors can be legally liable for their actions and, in some cases, the debts of the company.

Companies are regulated by the Australian Securities & Investments Commission (ASIC).

Key features

In this business structure, the company:

• must apply for a tax file number (TFN) and use it when lodging its annual tax return
• is entitled to an Australian business number (ABN) if it is registered under the Corporations Act 2001. A company not registered under the Corporations law may register for an ABN if it is carrying on an enterprise in Australia
• must be registered for GST if its annual GST turnover is $75,000 or more
• owns the money that the business earns – the individuals who control the business cannot take money out of the business, except as a formal distribution of the profits or wages
• must lodge an annual company tax return
• usually pays its income tax by instalments through the pay as you go (PAYG) instalments system
• pays tax at the company tax rate or lower company tax rate (if a base rate entity)
• may be eligible for small business concessions
• must pay super guarantee contributions (SGC) for any eligible workers. This includes you, if you are a director of the company, and any other company directors.