If you live in Australia, you can't open a Limited Liability Company (LLC). However, when you need to take advantage of this excellent and popular business structure, you've got an option — setting up a US-based LLC and running it from Australia.
This article will show you how to set up an LLC in Australia. We'll take you through all the steps required, like getting a US bank account and an EIN and setting up your payment processor so you can receive US dollars.
You can't open an LLC in Australia. The country doesn't really have this type of business, primarily because of differences in how the tax system works there.
If you want to open an Australian company that is an LLC, your best option is to form a US-based LLC and run it from Australia as a foreign company. This setup will give you access to the US market while providing other great LLC benefits, like pass-through taxation and protection against personal liability.
As we mentioned, Australia doesn't offer the option of opening an LLC as a legal entity. The closest option it has is a Proprietary Limited Company. Generally shortened to PTY LTD, this is Australia's most popular type of business.
Proprietary companies in Australia are privately owned. In other words, they haven't offered shares to the general public. Ownership of Australian PTY LTD companies is restricted to 50 non-employee shareholders.
One interesting feature of a PTY LTD is how it limits investor disclosure. While these businesses typically operate without investors or backers, they occasionally have small pools of investors. However, these shareholders are afforded privacy under Section 45A of the Corporations Act 2001 (Cth).
Some of the advantages of a PTY LTD in Australia are:
A Limited or LTD company in Australia is at least partially publicly owned. Confusingly for American audiences, these businesses are frequently referred to as limited liability companies because they offer business owners limited liability.
The most significant difference between an LTD and a PTY LTD is the ability to generate capital via public ownership. In order to do this, an LTD is obliged to provide annual public accounts to the ASIC, aka the Australian Securities and Investments Commission, which is similar to the US Security Exchange Commission (SEC).
Some other notable differences between Australian LTD and PTY LTD structures are that:
If you're wondering how to set up an LLC in Australia, this section provides all the answers.
Follow these six simple steps, and you can enjoy the advantages of a US-based LLC run in Australia.
Every small business needs to start from somewhere. And the first step on the path to setting up an LLC in Australia is coming up with a company name.
Coming up with LLC name ideas is pretty exciting. It's the time when your dream is moving into reality. However, it's not just important because it communicates what your business is all about; it's also a legal requirement for filling your business.
The US Secretary of State has established several requirements you must abide by when starting a business. Here are the most important ones you need to know.
Once you settle on a name, you should follow these steps to ensure your name is unique.
The next step in forming an LLC in Australia is to use a Registered Agent for the incorporation process. The Secretary of State requires an LLC to have a Registered Agent (RA) operating in the state where the business is formed. This step is crucial if you want to open an LLC in Australia.
But what is a Registered Agent? In short, an RA is a person or entity that:
If you want to operate a US-based LLC from Australia, you need a representative who is physically based in the country. Essentially, the Secretary of State requires that you have someone who can accept things like tax notices, legal summons, lawsuits, etc., on your behalf.
You can use a US-based friend or family member as your Registered Agent. However, there are some strict criteria. They must:
When you want to cut out the hassle of asking someone you know, you can use doola as your professional RA. We provide a free RA for the first year if you incorporate your LLC from Australia through our service.
Any Australian resident that wants to form a US-based LLC will need a physical mailing address. In the previous section, we explained how you need a Registered Agent with a physical address in your state to receive official correspondence.
However, if you want to open a bank account in the US, you'll generally need an actual, physical address. doola offers its users a physical address with a genuine lease. You can use this legal document as proof of address when you apply for a US bank account.
Additionally, we provide a full mailbox service where we can receive your mail, scan it, and send it over to you. We can even offer this service if you don't hold a US Social Security Number, which distinguishes us from our competitors.
Next up, you'll need an Employer Identification Number (EIN). Also referred to as Federal Tax Identification Numbers, these identifiers are how the Inland Revenue Service (IRS) tracks your business for tax purposes.
An EIN is mandatory if you want to:
Applying for an EIN requires sinking a lot of time into filling out forms. Here are a few of the steps you need to do:
Get state approval for your LLC: You need to get the state to give the go-ahead for your LLC before you apply for an EIN. Failure to do so could mean receiving an EIN for the wrong name or business. Problems like these are a nightmare to solve and swallow up precious time.
Send an SS-4 form: If you're reading an article on how to set up an LLC in Australia, there's a good chance you don't have an SSN. If that's the case, the most straightforward way to get an EIN is by filling out an SS-4 form.
However, you should know that the IRS won't accept your application online. You'll need to fax or mail them the completed form.
Include your US address: While you don't have to have a US mailing address, filling one out in sections 4a and 4b of the form has a few advantages.
Attach your Certificate of Formation: It's not strictly necessary to attach your LLC's Certificate of Formation. However, it's highly recommended.
Wait for your confirmation letter: Once that's all done, it's time to wait for your EIN confirmation letter. The IRS will send this document to the address you've supplied on the form. One popular option is to use a mail forwarding system and have it sent to Australia.
Alternatively, you could get doola to take care of applying for your EIN. The process is included in our business plan. Because we have a lot of experience doing this on behalf of other Australian founders, we can ensure your application is smooth and hassle-free.
The next step when learning how to set up an LLC in Australia is getting a US bank account. This step is absolutely necessary if you are operating in the US but living in Australia: your US-based LLC must have a US bank account.
In general, getting a US-based bank account while living abroad is very challenging. At a minimum, it used to require an in-person visit to the US. However, we built our service to help international founders through this difficult step.
doola has partnered with several US banks. As a result, we can help founders open a US bank account, even if they're not US citizens. Moreover, you won't need an SSN when using our service.
We've taken the time to vet each banking partner thoroughly. You won't need to worry about sending deposits or wiring funds. Additionally, because we know these banks, we can help fast-track your application.
Another good option for receiving payments in USD is to use doola Banking. We've helped thousands of international founders to set up a US bank account with this service, which includes a global business VISA card, account management, and, coming soon, international wires and payments.
doola Banking also gives you access to tax and bookkeeping services. When you want to take the headache out of compliance, use our Total Compliance package to ensure your accounts are paid and up to date.
The last significant step is to decide which payment processor you want to use. This decision isn't something you should take lightly; it will have ramifications for your business.
Some of the factors you'll need to think about are:
So think about your business model and what type of payments you'll receive when deciding which payment processor (or processors) you use.
You'll be able to create a PayPal or Stripe account once you have the following:
For a deeper dive into how to set up a PayPal for a US-based business, read our helpful article How to Create a US PayPal Account - International Founder Guide.
If you're leaning towards Stripe as your payment processor, don't worry, we've got you covered too. Check out our extensive article How To Create a US Stripe Account - International Founder Guide, to get the lowdown on how to process payments with your LLC in Australia.
Setting up a US-based LLC from Australia involves a lot of paperwork and applications. doola is the best option when you are looking for a quick setup because we have a lot of experience setting up US-based LLCs for founders across the world.
The time it takes to set up an LLC from Australia is somewhere between a week to ten business days. However, it can be quicker or longer based on seasonality.
For more details, read our helpful article How long does it take to get an LLC in 2023?
Or if you’re ready to go, click here to get started.