Private Company Structure Guide

A private company structure is a separate legal entity that has the ability to operate and execute in its own right similar to an individual. All private companies are managed by Australian Securities and Investments Commission (ASIC), and any new company names must be unique.

Private Company Structure Guide

A private company structure is a separate legal entity that has the ability to operate and execute in its own right similar to an individual. All private companies are managed by Australian Securities and Investments Commission (ASIC), and any new company names must be unique.

Company Strcture Options

When establishing a new company, one of the big considerations is the shareholding entity. An individual or number of individuals can hold the shares of the company, they can also be held by another entity including a discretionary trust or another company. The main advantage of having a discretionary trust as a shareholder, is the flexibility to distribute the dividend income received to any beneficiary of the trust.

A typical company structure is displayed as follows:

Director – Is responsible for the day to day running of the Company, they can be held personally liable for GST, employees PAYG & Super if not paid, they are also liable if trading insolvent or fraudulently.

Shareholder – Is the ultimate controller of the company, they have the ability to remove and appoint directors and are also entitled to the profits of the company through payment of dividends based on the proportion of shares held.

Private Company Structure Diagram

Pros

• Typically provide a level of asset protection from personal assets
• Ability to pay its own tax and retain funds for reinvestment in the business
• Provides a possibility to add additional owners and split ownership interests
• Better suited to accommodate medium/large businesses

Cons

• Administration time and costs are often higher than other structures
• Income received by individuals is not eligible for small business tax offset
• Dividends should only be paid after income tax has been paid, to ensure tax credits are attached to dividend

We recommend getting in touch with our team to ensure you have the correctstructure setup for you and your business.

The information provided on this page is intended to be a general guide only and does not constitute advice. It has not considered your personal circumstances, your particular objectives, financial situation or needs, we recommend seeking independent advice from the respective profession in regards to any information provided on this page.

‘Liability limited by a scheme approved under Professional Standards Legislation’

Company Structure Options

When establishing a new company, one of the big considerations is the shareholding entity. An individual or number of individuals can hold the shares of the company, they can also be held by another entity including a discretionary trust or another company. The main advantage of having a discretionary trust as a shareholder, is the flexibility to distribute the dividend income received to any beneficiary of the trust.

A typical company structure is displayed as follows:

Private Company Structure Diagram

Director – Is responsible for the day to day running of the Company, they can be held personally liable for GST, employees PAYG & Super if not paid, they are also liable if trading insolvent or fraudulently.

Shareholder – Is the ultimate controller of the company, they have the ability to remove and appoint directors and are also entitled to the profits of the company through payment of dividends based on the proportion of shares held.

Pros

• Typically provide a level of asset protection from personal assets
• Ability to pay its own tax and retain funds for reinvestment in the business
• Provides a possibility to add additional owners and split ownership interests
• Better suited to accommodate medium/large businesses

Cons

• Administration time and costs are often higher than other structures
• Income received by individuals is not eligible for small business tax offset
• Dividends should only be paid after income tax has been paid, to ensure tax credits are attached to dividend

We recommend getting in touch with our team to ensure you have the correctstructure setup for you and your business.

The information provided on this page is intended to be a general guide only and does not constitute advice. It has not considered your personal circumstances, your particular objectives, financial situation or needs, we recommend seeking independent advice from the respective profession in regards to any information provided on this page.

‘Liability limited by a scheme approved under Professional Standards Legislation’

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