What is Business Incorporation?

Business incorporation essentially means registering a new company. Often we see the word Incorporation shortened to 'Inc.' at the end of a business name. The Incorporation process involves selecting a name, adopting a constitution, and lodging these details with the relevant regulatory body. In Australia, this regulatory body is the Australian Securities and Investment Commission (ASIC), which is an independent Commonwealth Government body maintaining Australia's corporate markets and financial services.

How to Incorporate your Business

The Business incorporation process can be done online, by filling out a simple form and paying a small fee. It is a very quick process that takes literally minutes. Years ago, before the introduction of the online process, it used to take months to incorporate a company. The Incorporation process used to be very time-consuming, and it was frustrating for business owners who wanted to start a new company straight away. As they say, "Time is Money!" To solve this problem, people came up with the idea of 'shelf companies'. That is, professionals such as solicitors and accountants would pre-incorporate a number of companies and then leave them 'on the shelf' until someone came along who wanted to start up a company immediately. The new business owner would then buy the 'shelf company' off the solicitor or accountant. However, this was an unnecessarily expensive as it would involve transferring the shares of the shelf company to the purchaser, appointing new directors and changing the shelf company name.

Now a days, it certainly is much more easier and more convenient to start up your new company! Business owners can either register their new company themselves online at the ASIC website, or can enlist the services of a professional well trained in Business incorporation.

What does Business Incorporation Involve?

As mentioned above there are four basic steps to incorporating a company: selecting a name, adopting a constitution, gaining the consent of the directors and any other founding members, and finally lodging the application and fee with the relevant regulatory body. For many business owners the second step, adopting a constitution, is the most difficult. Essentially, a company constitution acts as a 'contract' between the company and each member, each director and the company secretary. It also affects dealings between the company members. As a result, members of a company can request copies of the Constitution. The concept of a constitution can be quite daunting; establishing set rules and agreeing on the correct wording can be very time-consuming. However, there are many templates of business constitutions available on the internet which can assist directors in this process.

Even more conveniently, under the relevant legislation, the Corporations Act, there are replaceable rules, which companies can use instead of developing their own Constitution. The replaceable rules are very comprehensive, covering everything from what the powers of the directors are to how to vote at company meetings. Alternatively, some business owners choose to use a combination of both their own Constitution and the replaceable rules. A lawyer can help you decide which is the most appropriate option for your business.

Business Incorporation Equals Business Opportunities

The main benefit of Incorporation is that it protects members from any debts and liabilities incurred by the business. This in turn generates greater Business opportunities. Firstly, people dealing with the organisation are guaranteed that it will continue to trade regardless of any changes to its employees or managers. Secondly, an incorporated business will be able to buy and sell property in its own name. Thirdly, the organisation will be able to enter enforceable contracts and apply for Government grants and tenders. This last point is perhaps the most important in creating Business opportunities. By winning tenders and entering contracts for future work, a business ensures that it will continue to profit and grow. Ultimately, customer confidence is maintained in the reputation of the organisation.

Is There Anything Else I Should Know?

Although there are several advantages associated with Business incorporation, there are also some legal responsibilities attached. For example, Government regulatory bodies, such as ASIC, have the power to request the financial statements and accounts of incorporated organisations. Additionally, an incorporated business must appoint a public officer who will be the person that receives legal documents on behalf of the company. Before incorporating your business make sure that you have the written approval of the people who have agreed to be the directors, company secretary and other specific members. The directors and secretary must be 18 years or older, and they must usually live in Australia.

Hopefully this has given you a brief overview of what Business incorporation is. As you can see, the Incorporation process is very simple and it is highly recommended for your business. Incorporation helps your company to grow, and can generate many new Business opportunities which may not have been previously

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