Companies are distinct legal entities separate from their shareholders or directors.
In Australia, the most common types of Companies are:
• Proprietary Limited companies
Cannot raise money from the general public through share issues.
• Public companies
Usually formed to raise or borrow public money by listing
the company’s shares for trading on a stock exchange.
Advantages of companies
• Generally, shareholders can only lose the value of their shares
and are not liable for the company’s debts. (i.e. limited liability)
• Legal arrangements are in the company’s name, not in the name
of its directors providing a corporate veil of protection.
• The business structure ensures continuity of management and ownership
in the event of the death or disability which provides great assistance
for succession planning and estate planning.
• The tax rate for companies is less than the highest rate for individuals.
Disadvantages of companies
• Companies are more regulated than other business structures.
• The rules for establishing and running a company are more complex
and costly than other business structures.
• There is often an imputation trap problem where company franking credits
become inaccessible to the shareholders.
• Leasors, suppliers and lenders are reluctant to lend money or enter into
contracts or leases with proprietary limited companies unless Directors or
Shareholders provide personal guarantees effectively removing part of
the corporate veil.
• Directors who fail to meet their legal obligations, they may be held
personally liable for the company’s debts.
Let Bartley Partners help you explore your options.
Everyone’s business and personal needs differ.
Setting up a Company can be the perfect solution for many situations.
Give us a call on 8338 1033 to discuss the solution that works best in your situation.