The Australian Bureau of Statistics has reported a significant increase in the number of registered businesses. In 2020-21, the new business registration shot up to 3.8%, and in June 2021, it was reported that 2,402254 businesses are trading in Australia actively. Do you know why this number has increased despite the fear that a pandemic would lead to mass business failures? Thanks to the esteemed organisations that pave the way for the budding entrepreneurs and help them register a company in Australia.
If you are here to start your own business, don’t forget to register, or you can say legitimise your company. Though registering a new business can seem like an arduous task, there are many benefits also that you can reap. This article outlines five significant benefits of registering a company and how doing this can help your business soar. Read on!
- Limit your liabilities and risks
The extent of your liability is associated with the number of shares you hold in the business. If you are a sole trader, you will be legally responsible for all possible aspects of your business, including debts and losses. This means, if you make an error in your business doings or sell a defective product, you will be solely liable. Running a business in this way is quite risky because, in such a case, your assets can also be seized to repay the debted.
Therefore it is essential to legitimise your company because this will make your business a separate legal entity. Moreover, debts attached to the company will not stick to your assets.
- Minimise your taxes
When you are a sole trader, you must be aware that you are taxed as an individual, and your business’s revenue is considered your income. This way, you will have to pay more tax depending on how much revenue your business generates. However, your company will be entitled to tax reductions for training, advertising, repair, and maintenance under a company structure. Over that, the good news is that the tax rate for companies and small businesses in Australia is much lower than the tax rate for an individual.
- Enhances your reputation and brand awareness
Registering your company enhances your reputation and brand awareness. Plus, it gives your prospective clients or customers a sense of confidence that your business has permanence and is not a fly-by-night business. This will ultimately help you in future dealing and take your business to the next level because most third parties engage or hire only the registered companies. Hence, for your business to be successful, you must get it registered.
- Debt financing and raising capital
No doubt, raising money is vital for the expansion and development of any business, but it will be harder to accomplish if you are not a registered company. Whether it is an investor, lender or bank, all will want to see the proof of your business registration. Indeed, only a registered business can borrow money from reputed commercial banks or institutional lenders with ease. Besides this, you will attract investors, sell shares and raise funds for your business only if your company is registered.
- Resolves cofounder conflicts
Once your business is registered, the owners will clearly understand the stake they have in decision-making. If any conflicts arise with the cofounders, the owners’ control is subject to the number of shares they own and is not decided by any pre-registration verbal or written promises. This way, registering your company will help you immensely in resolving the conflicts among the cofounders.
Hopefully, now you have understood what the benefits you enjoy when you register a company in Australia are. So before you go ahead with your business, register your business today and turn it into the lucrative venture you always wanted it to be.