Understanding the difference between registration vs incorporation can save you a lot of time if you’re currently deciding to start up a business or company. Sometimes, the words incorporation and registration are used interchangeable. However, there are key differences between registration vs incorporation. Both businesss structures have their perks. But, it truely depends on the type of business you wish to set up. So, to clear up any confusion you may have, here are the differences between registration vs incorporation.
What is Registration?
If you are planning to start out your own business, at the bare minimum you will need to register your business.
Business registration takes two forms:
An ABN is an 11 digit number that allows the government and community to identify your business. Your ABN also makes it a lot easier to keep track of all your businesses transactions, for tax purposes. A business name is simply the name your business operates under. It is extremely important to register your business if you are, or planning to, conduct any sort of trade or services. Business registration can strengthen the brand of your business and allow clients and customers to easily identify your business.
Do I have to Register my Business?
Many often wonder, do I have to register my business? Well, more often than not, yes. But, it does truely depend on the circumstances of your business. Let’s break this question down into two parts: registration of an ABN and business name registration.
Business Name Registration:
In general, you cannot conduct business in Australia unless you have a registered business name. But, there is a small exception. Under the Business Name Registration Act, when you are conducting business under your own name, as a sole trader, then your business does not need to register a business name. This is simply because as a sole trader, your business name is your own legal name. The same principle applies to most partnerships. This is because most partnerships will operate under the names of the partners.
Australian Business Number (ABN):
Now, if you are conducting business and therefore earning money or profits, it is extremely likely you need to register for an ABN to trade legally. Commonly, individuals working as a sole trader, company, partnership, body corporate and unincorporated association will need an ABN to conduct their businesses legally. The general rule of thumb is that most businesses will need an ABN. However, not all businesses will. If you’ve considering whether to register for an ABN, you can speak to one of our consultants.
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Get startedWhat is Incorporation?
There seems to be a lot of confusion around registration vs incorporation. It’s quite common to get the two muddled up. Incorporation is also called ‘Company Registration’. Now, it’s easier to look at business registration as more of a necessity, and incorporation is a choice. So, why would anyone choose to incorporate their business if they can conduct their business through simple registration? Well, it all depends on the type of structure, liabilities, management etc you desire. The main reason many people choose to incorporate their business is so their business can become a seperate legal entity.
Difference between Registration and Incorporation
A business that is a seperate legal entity, or incorporated, is a business that owns its debts and assets, including property, distinct from the assets and debts of its director or owner. Because of this, the incorporated business structure is viewed as a ‘legal person’. It has a seperate legal identity from its directors or owners.
The simple registration of a business does not result in the creation of a seperate legal entity. So, incorporation is almost the ‘next-level’ of registration. It is a great way to promote the growth of your business, as well as promote your brand and investment opportunities. However, the incorporation process can be lengthy, time consuming and a bit legally complicated. But, we aim to make your company registration simply, effective and swift. For more information on company registration, speak to one of our consultants today.
Key Takeaways
The type of business structure you choose, whether registration vs incorporation, really depends on the type of business you will be conducting. Most of the time, business registration is all that is needed to legally trade/provide services within Australia. However, if you are looking to take your business to the next level, you may consider incorporating or registering your company. To learn more about how we can help, get in contact with us today!
