1. Sole Proprietorship :
In case of a Sole Proprietorship, the owner of the business has complete responsibility for all the business activities. He has unlimited liability and is solely liable for all the debts and losses occurring from the business. Setting-up a Sole proprietorship in Australia is very easy and cost-effective. As a sole trader, the owner is the controller and manager of the entire business. The business owner is liable to file tax returns using Tax File Number(TFN).
2. Limited Liability Company :
The structure of a limited liability company is a little more complex. These type of companies have a separate legal entity and the directors and shareholders are not personally liable for any liability that arises in the company.
Registration of a limited liability company in Australia is done through the Australian Securities and Investments Commission (ASIC). Directors are responsible for the business operations and shareholders own shares of the company. The company has to file tax returns with ATO annually.
3. Partnership Firm :
A partnership firm is a business structure in which two or more people come together to start a business. The maximum number of partners in a partnership in Australia is 20.
There are two types of partnerships structures in Australia– General and Limited. Formation of the partnership is quite easy and cheap and requires a separate Tax File Number. The partnership is not a separate legal entity and .e. all the partners are personally liable for debts of the business and all the liabilities incurred.
The tax return is filed with the Australian Taxation Office (ATO) annually and requires individual Tax File Number . If the turnover of a partnership is more than $75,000 than registration for GST is mandatory.
Lower tax rates - Small Proprietary Limited Companies pay a corporate tax of 27.5%, which is considerably lower than the highest tax rate for individuals, which currently stands at 49 percent at the highest bracket. Thus, conducting business through a private limited company enables you to reduce your firm’s overall tax bill in Australia.
Access to the Australian Market - Incorporating a company in Australia allows you to take advantage of Australia’s large, mixed-market economy. With a 24.6 million population and a GDP per capita of US$53,799.94 as of 2019, the country offers some of the most diverse and lucrative market opportunities in the world. In addition, operating in Australia allows you to take advantage of the numerous free trade agreements, offering truly enormous potential as a foreign investor, with access to Europe, Asia, and America.
Anonymity - One of the best advantages of incorporating a private limited company in Australia is that under Chapter 6D of the Corporations Act 2001, the company is not required to disclose its investors or shareholders. As a business owner, this allows for greater levels of anonymity when operating a business. As regulatory burden is much lower you are able to conduct business freely and without the threat of competition stealing your customers.