Creating a Proprietary Limited or private company can be the perfect solution in many different business situations, and Bartley Partners in Adelaide can use our experience and expertise to help you to explore your options. Everyone’s business and personal needs differ, and so we use our extensive knowledge in the area of creating private companies to help you find the right option for you.
Companies are distinct legal entities separate from their shareholders or directors. In Australia, the most common types of companies are:
- Proprietary Limited companies, which cannot raise money from the general public through share issues.
- Public companies, which are usually formed to raise or borrow public money by listing the company’s shares for trading on a stock exchange.
Advantages to setting up a company
- 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 death or disability, which provides great assistance for succession planning and estate planning.
- The tax rate for companies is lower 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.
- Lessors, 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 may be held personally liable for the company’s debts.
Call us on (08) 8338 1033 to discuss the steps to setting up a company that best suits your situation and circumstances.