Thursday, September 24, 2009

Company Registration

Recently we registered Shoes of Prey as a company. It cost AUD$400 to do this at our local ASIC office. The alternative structure for us was a partnership, which is where Clickversity is at, but we decided to go with a company as a company is likely to be better for tax purposes down the track, it limits our personal liability and if we're going to use this structure doing it now makes sense as we start to open bank accounts and set up credit card merchant facilities etc.

6 comments:

  1. Will you (and can you) register the trademark in the US and UK too?

    http://www.smh.com.au/small-business/managing/katie-versus-katy--why-it-pays-to-protect-your-ideas-and-your-name-20090922-fzhl.html

    Sib

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  2. ipaustralia.gov.au

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  3. Did you register your company in Victoria? There are potential tax issues that can be avoided by registering your company in Victoria, but if you've already registered in another state it is quite difficult to change, and it could actually be worth reregistering a new company and winding this one up if things start getting big.

    The tax issue is a stamp duty one - in Victoria there are fewer stamp duties, so if you're registering a company there and then, for example, a bank gives you a loan or enters into a credit agreement secured by a charge (or charges) you aren't on the hook for stamp duty (or you're on the hook for less stamp duty). If you're registered in other states you will be on the hook for higher duties, depending on what the charge is over - different states have different rules for charges over land, assets, different classes of assets, etc..

    It also means that if you ever have multiple companies and a bank's securities are over the assets of all of them, the tax structuring and legal fees involved with setting up those arrangements can be much more costly (I have worked on deals 30+ charges required to secure all of the assets of a corporation (held through many subsidiaries registered all over Australia) and it was structured with all of those charges in order to avoid certain duties that only apply in some places. A single charge could have done it, but there would have been a lot more tax payable). The same may apply to a sale of the business when it came to stamping the Sale and Purchase Agreement.

    Disclaimer: The above is not legal or tax advice and should not be relied on. Formal advice from a lawyer and / or accountant should be sought.

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  4. Sib and anonymous - your IP related comments are incredibly topical right now. We'll post about the trademark issues we've just struck shortly.

    Anonymous - I wasn't aware of the benefits of registering a company in Victoria but you've just sold me, all our future ones well be! After talking to some accountants there are more tax effective structures available than what we've currently done. Our plan with Shoes of Prey was to keep the company structure as simple, cheap and easy as possible to start, then if/as soon as it's looking like the business might work out we'll speak to an accountant and set up a more tax effective structure, so if/when we do that we'll switch to a Victorian registration, which it sounds like the accountant might suggest anyway. :)

    Thanks for your comments guys. :D

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  5. Hey foxy, the ipaustralia.gov.au was me - Sib. It was just an after thought.

    Total bugger about the trademarking.

    I've got my thinking cap on for you. The best I can come up with for now is shoes of felafel ... coz I'm eating home made felafel. THere is something in this ... I can mold it yourself, I almost burnt the house down cooking it and there's a lovely smokey after taste. Rather like shoe designing.

    What about "stabbed in the juggular"? It's what I think of when I think of stilettos.

    Is there someway you can trademark the business concept itself (like Sass did with their jeans)?

    That's my two cents. Might have an epiphany after some wine. If I do, will let you know.

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  6. Lol Sib - Shoes of Felafel cause ur eating felafel! That's genius!

    From what I read via your SMH link Sass & Bide were able to register the looks of their jeans as a design because it was quite different to any jeans that had been designed before. That's very interesting and if things go well we might think through some design possibilities that are different enough to be protected. Thanks for passing on that link!

    Keep the wine flowing! ;)

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