Foreign Business in Australia
Australia welcomes foreign enterprise. It has never been easier to do business in Australia.
The most common structures for foreign business are either:
- Establish a branch office; or
- Register an Australian subsidiary company.
From an administrative perspective, neither option is better than the other. Both a branch office and an Australian company require you to register with the Australian Securities and Investments Commission (ASIC) and to have a person who is ordinarily resident in Australia, who controls or is the local agent of that business. Both options also generally require lodgement of financial statements with ASIC.
‘Ordinarily resident’ does not necessarily mean that the director must have permanent residency or citizenship in Australia, but they must satisfy the ordinarily resident test and have an adequate working visa.
In our view, it is simplest to trade in Australia through an Australian company. The reasons for this are as follows:
- All directors and owners (i.e. shareholders) do not need to be resident in Australia. Only one director must be resident in Australia;
- Suppliers, landlords and customers will have a greater confidence dealing with an Australian entity;
- There may be effective ways of licensing intellectual property between your foreign and Australian companies;
- If the Australian venture is unsuccessful, the Australian company can be severed from the foreign company/group.
In our opinion, you should only trade through a branch office in Australia if there are compelling taxation reasons for doing so.
Foreign individuals ordinarily resident in Australia can also incorporate an Australian company (subject to visa conditions). We do not advise foreign individuals (or Australian individuals for that matter) to trade in their personal name in Australia unless there are compelling taxation or professional reasons for doing so.
Here’s what you need to do to incorporate an Australian company and start business:
- Incorporate your company. That is, register your directors and shareholders with ASIC and obtain an Australian Company Number(ACN);
- Register for relevant taxes – goods and services tax (GST) and pay as you go withholding (PAYG);
- Obtain any government registrations specific to your business (e.g. food premises, liquor licence, childcare / education approvals, professional registration etc.);
- Register your business name and intellectual property. A business name alone provides no IP protection in Australia;
- Find an Australian accountant and choose the right accounting software to suit your business;
- Take out adequate insurance to suit your needs and keep it updated as your business grows (e.g. public liability, fire and theft, product or professional liability, business interruption insurance, life and income protection insurance);
- Establish relationships with your suppliers and understand their payment terms;
- Set down clear terms and conditions with your customers. If you’re providing consumer products and services, be aware that some guarantees and warranties cannot be avoided at law in Australia.
We regularly advise on company incorporation and business set-up in Australia. Your individual circumstances are crucial to determining the right structure for you.
DISCLAIMER: This post is the opinion of the author and in no way constitutes legal advice.
This article has been written by Nick Hitchens. Nick has a background in business management and law. He is a key advisor to a range of Australian and International businesses. He founded Hitch Advisory in 2015. Register here for personal legal advice on your Business Development in Australia!