As a foreign investor, you might want to participate in a partnership business with friends, family or business partners as you set up your business in Australia. It is fairly easy to set up a partnership business and can be done with two or more business partners. But due to the presence of multiple partners as owners in this instance, each of the partners only needs to report their individual share of income on their individual tax returns.
However, it is mandatory for a partnership to report its income and expenses to the ATO. Although, it’s not mandatory for partners to register for a separate Tax File Number for the business, however, if there isn’t already a TFN for a partnership then the ATO will create one by default.
It must be understood that in a partnership, all the partners are liable for incurring any costs or liability in case anything goes wrong. In fact it is a legal obligation that each of the partners share together for the business, unless, either one or more of the partners are registered as limited partners.
Limited partnership refers to the business structure where some of the partners do not participate in the day to day running of the business and they also share a limited liability for the business debt. That is, in case anything in the business goes wrong, the maximum money they may lose is only equivalent to the amount they have invested in the partnership. It is vital to keep in mind that any limited partnership must be registered with the respective state or territory government.
Registering for a business name is not mandatory, however, should the partners decide to register for a business name then it costs somewhere between $37 and $87 depending on for what period that name is being registered for along with if the partners are opting for trademarking the business name. In addition to that, the partners can also register a domain for their business which costs between $10 to $100. Choosing a name and registering for a domain is a very important step in this current world of digital era, as that helps you establish your physical and virtual identity.
Therefore, when choosing an appropriate name for your business, you might want to follow the following steps:
If the partners choose to rather run the business on one of the partner’s first name and last name, in that case they would not need to register the business name. As an investor, if you are also involved in other businesses regardless of partnership or not, you can register for multiple names of each of your business ventures.
You may also choose to hire employees in your business. When you are hiring external people, you should be able to distinguish between employees and contractors. This is a very important classification for your business because you are legally obligated to provide a minimum employee entitlement for your employees; however, when it comes to hiring independent contractors you might be legally binded to only make payment of the amount due, unless there are other contractual bindings set by either of the parties.
Employees are qualified for paid annual leave, and other benefits such as superannuation contributions. In addition to that, you might also offer a variety of benefits in the form of fringe benefits. Thus, if you are offering fringe benefits then you also need to register for the Fringe Benefit Tax (FBT), aside from registering for the Pay As You Go (PAYG) with the Australian Tax Office (ATO).
Table below sums up all the different registrations you need to undertake to set up your business in Australia:
|Australian Business Number (ABN)||No Cost||Mandatory|
|Business Tax File Number||No Cost||Not mandatory to register as ATO creates one by default|
|Business Name||$37+||Optional, you can use your own name|
|Pay As You Go (PAYG) Withholding||No Cost||Mandatory if employee is hired|
|Fringe Benefits Tax (FBT)||No Cost||Mandatory if Fringe Benefits are offered|
|Goods & Services Tax (GST)||No Cost||Mandatory if annual GST turnover is worth $75,000 or over|
As a foreign investor you will also need an appropriate visa for you to be able to establish and operate your business. Currently, business visas are provided under the Business Innovation and Investment Program (BIIP). There are four classes of BIIP:
In order to understand which 188 visa class is suitable for you, you can seek professional and reliable immigration legal advice. We have a team of immigration lawyers who are specialists in this field, therefore, if you have any questions please do not hesitate to contact us or book a consultation.
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