Are you trying to channelize your entrepreneurial spirit? Here are some aspects to make the journey easier! Setting up a company can be quite the task if you go in unprepared. However, you must formally register a company to make it a separate lawful entity. Legally registering the company means that it can acquire debt, sue, and be sued. Moreover, it limits the liability on the company members, and they are not personally accountable to repay debt.
Here is a quick guide to help you with how to set up a company.
1. Pick a Company Name
You need to pick a unique name that hasn’t been used before. Moreover, some words or phrases cannot be used. While selecting a name, you will also have to check if there are any pending or registered trademarks by the same name. The name of the company should reflect its legal status. For instance, proprietary limited companies use “pty ltd” at the end of the name. Registering the name is not the same as registering a business. It does not mean that a separate entity has been created.
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2. Decide on the Governance
Concerning the company’s internal governance, you’ll have to decide whether there will be replaceable rules, an internal constitution, or a mix of both. Replaceable rules refer to the basic framework for managing the internal matters of a company. If you’re a sole shareholder in a proprietorship, you do not need to lay down a formal set of rules for governing internal relationships.
3. Set Up the Officeholders
Officeholders are the people who are ultimately responsible for ensuring companies comply with the law. When you apply to register a company, you need to get written consent from all the people who have agreed to be directors, secretaries, or members. These people must be above the age of 18. You need to secure this written consent as a part of the company records. You should understand your legal obligations as a member and as per the position you hold.
4. Register the Company
Decide on the state or territory you want to register your company in. You need to nominate a principal business location to set up your registered office.If you decide on a place that you do not own, you’ll have to obtain the occupant’s consent. Once you have all the necessary documents, you can register your company by paying a registration fee. You could even pick a private service provider to register the company.
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5. Set Up a Shares Register
You need to maintain proper records for all the shares that you’ve issued for your capital. This record is referred to as the “share register” or the “register of members.” The register must include vital details about the members of the company, including their personal information and holdings.
The Epilogue:
If you’re setting up a business, you should get it registered at the earliest. While the most crucial reason to do so is creating a separate legal entity and minimizing your obligations, there are many other reasons to register a company. Registration allows you to raise plenty of capital and minimize your tax liability. Moreover, separating the business from its owners makes it better for the management. Most importantly, you must register your business to prove its legitimacy!
