Registering a company is an exciting process that has many benefits. It is a step by step process done through ASIC. Since May 2012, ASIC’s national register prevents company names from different states having the same name. This has helped to avoid confusion between states. Despite the company being registered nationally, a state or territory of registration must still be specified. This becomes the legal jurisdiction in which the company operates. Detailed below are key reasons for this.
1. Eligibility for state grants
The place of registration can determine whether a company is eligible for state grants or funding. Different states have different grants available. Researching what grants in different states may apply to your company may provide a hefty financial boost. For example, NSW currently has a maximum grant worth $25,000 on offer for technology start-ups. Temporary grants depending on the social or economic conditions of the time may also be available. At the time of writing, recovery grants related to COVID-19 are being processed in NSW.
2. Tax purposes
Different taxes will apply to companies in different states. A payroll tax is an example of this. This tax applies to the wages you pay as an employer. Each state or territory sets its own rules. Other taxes may apply to certain business activities. This includes things like land tax or fringe benefits tax. Knowledge of the relevant taxes that apply to your company in potential states prior to registration is essential. For more information on company taxation, click here.
3. Securing property
Companies looking to set up a physical premises need to be wary of state laws and regulations. The purchasing, leasing and development of property in Australia is governed at state, territory and local levels. The assessment process needed for approvals will also differ between states. Once again, the type of activities the company partakes in will be relevant in deciding which state to register the company in. More information about securing company property and setting up a company in general can be found here.
4. Avoiding a change of registration
Registering in the correct state saves time and money down the track. Registering in the wrong state can be a hassle for a company. Approval from shareholders is first needed for a change of state registration. ASIC requires notification of this change. Next, the relevant Minister must provide written approval. Finally, ASIC must receive another notification of the Minister’s approval and a $506 fee will apply. Registering in the correct state initially avoids this whole process.
Conclusion
Clearly, there are some important matters to consider when deciding what state to register your company in. Researching the differences in laws is the common theme amongst the key areas explained above to consider. Undertaking research has the added benefit of finding what the company’s best target audience may be. As each state has its own unique business landscape, one may have a better demographic suited to your company. Ultimately, consulting one of our business lawyers would be a great first step in deciding which state to register your company in.
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