Running costs of a Pty Ltd company in Australia: what owners pay each year
A Pty Ltd company costs more to run than a sole trader — here’s why
One of the things new business owners are often surprised by when they move to a company is that the annual running costs are significantly higher than for a sole trader. This is not unreasonable — you are running a separate legal entity with its own compliance obligations — but you need to know in advance so you can budget correctly.
ASIC annual review fee
Each year, ASIC sends your company an annual review statement, together with an invoice for the annual review fee. This is a mandatory fee to keep the company on ASIC’s register.
The fee depends on the company type (proprietary limited) and is adjusted by ASIC periodically — check the current amount at asic.gov.au. Not paying this fee on time leads to a late penalty — and can ultimately result in the company being deregistered (removed from the register).
The annual review statement also asks you to confirm that the company’s details (address, directors, shareholders) are still correct. If anything has changed, you must update it with ASIC — there are also fees for these changes.
Accounting costs — higher than a sole trader
A company must lodge a separate company tax return with the ATO each year — it is not declared in a personal tax return as it is for a sole trader. This means:
- More complex annual bookkeeping
- A company tax return prepared by a registered tax agent
- If you have employees: payroll processing, STP, and quarterly BAS
- A possible audit if the company reaches certain thresholds
Accounting costs for a company are usually higher than for an equivalent sole trader. The specific amount depends on the complexity of the business, the number of transactions, and the accountant you use — ask for a quote first.
Director ID — mandatory for every director
Every director of an Australian company must have a Director ID — a personal identification number for the director role, issued through Australian Business Registry Services (ABRS). This is a one-time requirement but must be completed before you are appointed as a director.
The Director ID helps ASIC and the ATO track directors across multiple companies and prevent director identity fraud.
The obligation to report changes
Any change to the company’s details must be reported to ASIC within the prescribed time:
- Change of director (appointment or resignation): notify within ASIC’s time limit; there is a fee
- Change of registered office address: update promptly; there is a fee
- Change of shareholders: update; there is a fee
Late reporting creates an administrative penalty. Most accountants or a company secretary can handle these updates for you.
Payroll tax — an extra obligation if you reach the threshold
If the total wages you pay employees (and some other amounts) exceed the threshold of the state you operate in, you have to pay payroll tax to that state. This is a state-administered tax — each state has a different threshold and rate.
Payroll tax only applies once the wage bill is large enough — many small businesses never reach this threshold. But as a business grows and you take on more employees, this is an obligation to be aware of in advance.
Summary: the common cost items
To budget realistically for a Pty Ltd company, account for:
Mandatory annual: ASIC annual review fee, company tax return (through an accountant), and quarterly BAS if registered for GST
Arising with employees: Payroll processing, STP, quarterly super, and workers compensation insurance premiums
Arising with changes: ASIC fees for updating company details, and solicitor fees if you change the constitution or shareholders
Optional but often needed: Accounting software (Xero, MYOB, QuickBooks), and a company secretary fee if you outsource it
The total compliance cost for a small Pty Ltd company with no employees usually starts at a few thousand dollars a year and rises with complexity. This is a real cost you need to factor in when comparing against a sole trader.