Starting a business in Australia

With its diversified economy, key position in the Asia-Pacific region and pro-business environment, Australia offers significant benefits to companies that want to grow their international footprint.

Why choose Australia?

There are many compelling reasons why businesses would want to operate in Australia. Here are just a few.

Economic and regulatory strength

Australia has the world’s 13th-largest economy by GDP – and despite being home to just 0.3% of the world’s population in 2023, it accounted for 1.7% of the global economy. The International Monetary Fund (IMF) predicts that the country’s economic growth will continue to outperform advanced economies through to 2029.

Australia’s solid economic foundations are built on a trusted financial system, open trade, strong governance and a highly skilled workforce. The country is home to a fair and transparent legal system and the government has a strong ability to implement sound policies and regulations.

Pro-foreign direct investment environment

The Australian Government actively facilitates foreign direct investment (FDI) through its Austrade department and encourages foreign companies or investors to enter sectors that are the country’s priorities. These include agrifood, energy and resources, technology, health and life sciences, and tourism and the visitor economy.

Austrade also supports the delivery of the government’s Future Made in Australia and net-zero transformation programmes, which include a $22.7 billion package to help facilitate private sector investment. All of this creates a dynamic environment for businesses entering the country.

Business incentives, programmes and grants

Australia also offers a host of other incentives for businesses looking to set up in the country. The Research and Development Tax Incentive, for example, is designed to incentivise eligible entities to carry out qualifying R&D activities in Australia.

Similarly, the Australian Government supports a vast range of businesses through hundreds of specific grants and programmes, including accelerators aimed at smaller businesses.

Strategic location

As an Asia-Pacific country, Australia is a neighbour to some of the largest populations and fastest-growing economies in the world, including China and the ASEAN group. With 15 international airports and 10 major ports, its infrastructure connects it exceptionally well to Asia and beyond. Indeed, more than 70% of Australia’s exports are typically to the Asia-Pacific region, with China and Japan accounting for half of that.

Its connections with its Asia neighbours make Australia an ideal base for expanding business operations throughout the region.

Strong free trade agreements

Australia’s location is further enhanced by its free trade agreements (FTAs) with other countries around the world, but most notably with other neighbouring Asia-Pacific countries. FTAs reduce or eliminate barriers to the trade of goods, services and investment between participating countries.

In 2024, Australia had 18 FTAs in force with five more pending. It has direct bilateral FTAs with China, India, Japan, Korea, the UK and the US, as well as multiple bilateral or multilateral FTAs with ASEAN nations. These agreements provide businesses with access to substantial markets in the region.

A skilled and diverse workforce

Australia has a highly skilled workforce thanks to its emphasis on multiple methods of education. Its technical colleges help develop skills that are essential to the diverse industries that are the lifeblood of the country, while its universities produce professionals and entrepreneurs across a wide range of both traditional and innovative sectors.

According to the ‘Why Australia’ Benchmark Report 2024, the country is the 7th-largest spender on education in the world and ranked 2nd in the Global Talent Competitiveness Index 2023 for high-level skills and global knowledge. Australia is also a magnet for talented workers. The OECD ranks Australia 4th out of 38 countries when it comes to talent attractiveness.

Learn more about our entity formation and administration services

We have considerable experience supporting clients of all sizes with the formation and administration of companies, trusts, foundations and partnerships across key jurisdictions.

Learn more Get in touch

Business structures in Australia

While it is relatively straightforward to set up a company in Australia, the range of business structures available – each with its own key characteristics and rules for establishment – make it essential to choose the correct one as this can have a direct impact on tax liabilities and the regulations that must be followed. Here are the main structures.

Proprietary limited company

In Australia, a proprietary limited company (Pty Ltd) is the most common business structure and has the same qualities as a limited liability company (LLC). In essence, a Pty Ltd creates a distinct legal entity and the liability of its founders and members is limited to their invested share capital. It is attractive to foreign investors for its straightforward legal status.

A Pty Ltd needs at least one shareholder and can have up to 50 non-employee shareholders – it has to have a minimum of one director who must be a resident of Australia. Company directors also need to verify their identify with Australian Business Register (ABR) and obtain a director identification number.

Public limited company

A public limited company shares many of the same attributes as a Pty Ltd, most notably that shareholders are only liable for their invested share capital. There are some differences, however. These include that public companies must have at least three directors, two of whom must be residents of Australia.

Unlike Pty Ltd companies, public companies can have as many shareholders as they wish as there is no maximum cap, and they may list shares on the Australian Stock Exchange (ASX). Public companies must also have at least one secretary who is ordinarily resident in Australia.

Partnerships

A partnership is made up of two or more individuals or entities who distribute income (or losses) between themselves. They are relatively easy and inexpensive to set up and have minimal reporting requirements, but they do have to adhere to certain rules and regulations. For example, partnerships require separate tax file numbers (TFN), must apply for an Australian business number (ABN) and use it for all business dealings, and require a partnership tax return to be lodged with the Australian Taxation Office (ATO) each year. It’s also important to note that each state and territory has its own legislation in place that regulates partnerships.

There are three main types of partnership in Australia:

General partnership. All partners are equally responsible for the management of the business, and each has unlimited liability for the debts and obligations it may incur.
Limited partnership. These comprise both general partners (GPs) and limited partners (LPs) who have different roles and obligations. GPs manage the business and their liability for the debts and obligations of the partnership is unlimited. LPs, on the other hand, have liability that is limited to the amount of money they contributed to the partnership.
Incorporated Limited Partnership (ILP). Partners in an ILP can have limited liability for the debts of the business. However, there must be at least one GP with unlimited liability. If the business cannot meet its obligations, the GP (or GPs) become personally liable for the shortfall.

Trusts

In a trust structure, a trustee holds the business for the benefit of others (the beneficiaries). A trustee can be a person or a company and is responsible for everything in the trust, including income and losses.

Trusts are complex to set up and are typically used to protect business assets for beneficiaries, making them attractive to family-owned companies. Unlike Pty Ltd or public limited companies, trusts don’t require registration with the Companies Register, but trustees must fulfil annual administrative duties and meet statutory requirements.

Branch office

A branch office functions as an extension of the parent company, not a separate legal entity. As a result, the parent company has complete liability for the Australian branch’s obligations. It is mandatory for the parent company to register with the ABR and the ATO and must also appoint a local registered secretary.

Annual submission of financial statements, along with necessary documentation from the parent company’s home country, are required by the Australian Securities and Investments Commission.

Representative office

A representative office is also an extension of the parent company in Australia and is only permitted to carry out non-commercial activities such as market research and marketing efforts. The parent company is fully responsible for the activities and debts of the representative office, and no initial capital is required as it isn’t a separate legal entity.

This structure is popular with foreign investors who want to evaluate market potential before fully engaging in operations in Australia.

“We’ve been working with Hawksford since 2012 when we decided to set up our own entities in Asia. The team is very professional and helpful. They took care of every step of business formation, giving us advice and responding to our needs in a timely manner."

Sophia Zhou, APAC Finance Controller, Moleskine China