If you own a business, you could be debating whether or not to incorporate it as a limited company. There are benefits and drawbacks to forming a limited company, and the decision ultimately comes down to the needs and objectives of your organization. We’ll examine the benefits and drawbacks of incorporating a limited corporation in this post and address some associated queries.
Being a limited business has limited liability protection as its principal benefit. This indicates that the firm and its owners are independent legal entities, and that any obligations or liabilities incurred by the business do not affect the owners’ personal assets. A limited company incorporation can also help your firm appear more professional, which may draw in additional clients and investors. As a limited company, you may find it simpler to raise funds because you can issue shares to investors.
On the other side, forming a limited corporation has some drawbacks as well. One of the biggest disadvantages is that starting and maintaining a limited corporation can be more expensive and time-consuming. You must submit annual accounts and returns, register with Companies House, and adhere to other regulatory obligations. You’ll also be responsible for paying company tax, which is currently fixed at 19% of your profits.
You will have to pay an annual fee to the Australian Securities and Investments Commission (ASIC) if you want to incorporate as a limited company. The cost for a proprietary corporation is $273 as of 2020. The ASIC website should always be checked for the most recent fee information as this fee is subject to change.
No, GST is not included in the ASIC costs. GST will also be due in addition to the annual ASIC charge.
You can incur late fines and penalties if you don’t pay your ASIC payments on time. ASIC may also file a lawsuit against your business, which could lead to penalties, court orders, or even the deregistration of your enterprise.
In conclusion, the value of forming a limited company depends on the particular requirements and objectives of your organization. Incorporating as a limited company can be the best option for you if you’re searching for limited liability protection and a more polished image. However, it’s crucial to carefully assess any potential disadvantages, such as higher expenses and more legal obligations. If you do decide to incorporate, be careful to pay your annual ASIC fees on time and to the letter in order to avoid fines or other legal repercussions.
If their annual turnover exceeds $75,000 or if they must register for Goods and Services Tax (GST), sole proprietors in Australia must register with the Australian Securities and Investments Commission (ASIC). They are not needed to register with ASIC, but they may still choose to, if their revenue is less than $75,000 and they are not registered for GST.
The nature and structure of the firm will determine how much it will cost to register a business in NSW. For instance, it costs $36 to register a sole proprietor business name for a year, yet it might cost up to $506 to register a proprietary limited company. Before registering, it’s crucial to conduct your homework and weigh the advantages and disadvantages of each business form.